Württembergische Metallwarenfabrik AG (WMF) - Company Profile, Information, Business Description, History, Background Information on Württembergische Metallwarenfabrik AG (WMF)

D-73309 Geislingen (Steige)

Company Perspectives:

WMF sees itself as a leading, internationally competent supplier of products and services centering on table and kitchenware in both the private and commercial sectors. WMF is determined to set standards. WMF considers that success in the marketplace, economic efficiency, and profitability are factors essential to fulfilling its responsibilities and commitments towards its customers, employees, investors, the environment, and the public in general.

History of Württembergische Metallwarenfabrik AG (WMF)

Württembergische Metallwarenfabrik AG (WMF) is one of the world's leading manufacturers of commercial coffee makers and high quality solid silver and stainless steel cutlery, cookware, and tableware for private consumers and catering establishments. Headquartered in Geislingen, Germany, where the company's main production facility is located, WMF also manufactures in He Shan, China. WMF's consumer products, which account for roughly 70 percent of sales, are sold through the company's own 149 retail outlets in Germany and 16 WMF stores in Austria, the Netherlands, and Switzerland and through upscale department stores and special retailers all around the globe. Besides WMF AG, the WMF group of companies includes the German hotel and catering industry suppliers Gebrüder Hepp and Boehringer Gastro Profi, cutlery manufacturer Auerhahn, enamel cookware producer Silit, bake ware maker W.F. Kaiser, thermos and gift item manufacturer alfi Zitzmann, and the Swiss buffet system maker Hogatron. One third of WMF's ordinary shares is owned by Helvetic Grundbesitz Verwaltungs GmbH; Deutsche Bank AG, Munich Re, and Wüstenrot Stiftung e.V. own about 17 percent each.

Silver-plated Tableware in the 1860s

The history of WMF began in 1853. Daniel Straub, a miller's son with a strong entrepreneurial spirit, founded a metal-plating business in his hometown Geislingen, a small German town near Stuttgart. Having grown up at the dawn of industrialization, the 38-year-old who had married another wealthy miller's daughter put the two mills he owned to new uses. Within a decade, he transformed the water-powered mills from grain mills for local farmers into power-stations for his industrial ventures. In addition, the construction of a railway through the mountain town had not only earned Straub--who had invested his inheritance in the project--a considerable sum, it also connected him to the world.

In 1850, Straub established a mechanical workshop which soon grew into a factory for mill equipment such as big iron wheels and gears, pumps, and turbines. Straub's first company was later called Maschinenfabrik AG and eventually taken over by Heidelberger Druckmaschinen AG in 1929. In 1853, Daniel Straub, together with his childhood friend Friedrich Schweizer, founded a second business--the small metal-plating factory Straub & Schweizer. Schweizer, the son of a lathe artisan and metal turner, had gathered the crucial know-how in a new technology for silver-plating sheet copper while working in various regional tinware factories. He and his brother Louis oversaw the manufacturing of the silver-plated, richly decorated coffee and tea pots, candleholders, and boxes that were soon made at Straub & Schweizer by the company's 15 employees. The demand for such items was high in the second half of the 19th century, when the bourgeois class emerged as the leading force behind industrialization. Heavily influenced by the culture of nobility, nouveau-riche merchants and the emerging upper middle class wanted to decorate their living rooms as lavishly as noblemen did. Often lacking the funds to purchase solid gold or silver items, they chose the silver-plated imitations which created the same "noble" impression.

In 1862, Straub & Schweizer's elegant silver-plated serving trays, candleholders, and wine coolers received excellence awards at the World Exhibition in London. By the end of the 1860s, the company employed about 160, mostly experienced metal craftsmen such as metal chasers, brass workers, founders, and bronze painters, who soon had to be recruited from all over Germany. Straub & Schweizer's finely engraved and polished tableware was shipped as far as the Netherlands, Denmark, and Russia, while northern Germany emerged as one of the company's major domestic markets. The company's first sales office with a showroom was established in Berlin in 1868.

When Friedrich Schweizer abruptly left the company in 1866, Straub bought his business partner out. He managed the company until his son Heinrich, an engineer, became a co-owner of the business, which was renamed Straub & Son. For the next six years Heinrich Straub, who was also actively involved in his father's first enterprise, the machine works, helped his father oversee the continuous expansion of the silver-plating factory. However, in 1876 Heinrich caught a severe cold and contracted tuberculosis, from which he died. His son's early death devastated Daniel Straub, and his natural entrepreneurial drive came to a sudden halt. On top of that, a significant investment in a local ore mine in 1875 had put considerable debt into his company's balance sheet. Five years later, Straub's main creditor, the Württembergische Vereinsbank, or Wurttemberg Union Bank, urged him to merge his business with another nearby silver-plating factory: A. Ritter & Co.

Merger in 1880 Creates WMF

A. Ritter & Co. was founded by Alfred Ritter and chemist Carl Haegele in 1871. Initially established in Stuttgart, the company soon moved operations to nearby Esslingen, where there was more space to expand production facilities. The company not only started competing with Straub & Son but also lured away some of the company's experienced staff. However, A. Ritter & Co. focused on lavishly decorated, luxury items and used a different technology to make them. At Straub & Son, high mechanical pressure and heat were used to attach the silver layer to the sheet metal. At A. Ritter & Co., the metal was dipped in a bath of silver. With the help of an electrical current, it was covered with a fine, even layer of silver. This new method, which was called galvanization, was more flexible and economical and could be applied to more complex items. When the company ran into serious financial difficulties in 1874, Hermann Ostertag replaced Alfred Ritter as a business partner. Four years later, the company had recovered somewhat but still carried considerable debt. By 1880, A. Ritter & Co. employed about 250 people. Around the same time, Straub & Son had roughly 200 employees. The latter company had established a name for itself and was financially successful. However, Straub & Son was still a huge workshop for craftspeople rather than a factory. On the contrary, A. Ritter & Co. had invested in a modern industrial production but was still a newcomer in the market.

In June 1880, the owners of Straub & Son and A. Ritter & Co. met with representatives of the Wurttemberg Union Bank and signed a merger agreement. The newly formed public limited company was called Württembergische Metallwarenfabrik AG, Wurttemberg Metal Goods Factory, or, in short, WMF. Wurttemberg Union Bank owned three quarters of the company's share capital. The remaining quarter was divided between Daniel Straub, Carl Haegele, Hermann Ostertag, and some bank managers. Soon afterwards, Gustav Siegle, the owner of a Stuttgart paint and dye factory and a member of Wurttemberg Union Bank's supervisory board, acquired the bank's majority share in WMF. Siegle knew all the owners of the two factories to be merged. Haegele had worked for him as an engineer, one of Ostertag's nephews was his son-in-law, and he went to college with Straub's son Heinrich.

Daniel Straub, however, was not happy with the merger. He refused to cooperate with Haegele, who had been appointed as WMF's managing director. Nevertheless, the reorganization of the two operations progressed fairly quickly. Geislingen turned out to be the better location and the equipment and staff from Esslingen were relocated there in the second half of 1881. In February 1882, Straub stepped back from his duties at WMF. A few days before the merger, he had founded a new holding company for his other businesses, such as the machine works, which gave him plenty to do. By the end of 1882, all the key management positions at WMF had been taken over by former A. Ritter & Co. employees.

Dynamic Growth between 1880 and 1897

After the merger, WMF entered a period of dynamic growth. This growth was driven by two major factors: expansion of production capacity and product range, mainly through acquisitions, and expansion of the company's distribution and sales network, domestically as well as internationally. In 1883, WMF established its own glass-making workshop to end the company's dependence on outside suppliers. The skilled workers from Bohemia hired for this job moved to Geislingen and started making the artistically engraved glass inserts for tea glass holders, butter and mustard dishes, salt and pepper shakers, and other tableware and decorative items.

Straub & Schweizer had made silver-plated cutlery for hotels and institutions since 1859. Thirty years later, with the takeover of Berlin-based cutlery manufacturer Alexander Katsch, WMF gained crucial know-how for a product range that later became the company's hallmark. Another step that advanced WMF's cutlery-making know-how came about with the acquisition of the Munich Galvanoplastic Art Institute, a major manufacturer of large and small statues for buildings, fountains, tombstones, and gardens in 1890. The institute's chemists developed a new galvanizing technology that made it possible to vary the thickness of the silver layer on any given object. This process was used to apply more silver to the parts of cutlery pieces that wore out the fastest. This in turn eliminated the otherwise necessary replacing of worn-off silver. The competitive advantage of WMF's "patented silverware" immediately turned into cash flow. Ten years later, sliver-plated cutlery had become one of the company's main product lines.

After the takeover of one of WMF's main German competitors, Berlin-based Deutsche-Industrie-Aktien-Gesellschaft, in 1889, the company established a silver-plating operation and a warehouse in Berlin to better serve customers in northern Germany. The retail stores that carried WMF items--mainly jewelers and a few housewares stores--were regularly visited by the company's traveling salesmen to inform them about new products. WMF's customers from rural areas were invited to central sales seminars. Carl Haegele was the driving force behind the company's effort to add a direct sales channel to the mix: WMF's own sales outlets. In 1880, the company took over A. Ritter's sales branch in Stuttgart and transformed it into a factory outlet store. In the following years, a network of WMF-stores was set up at highly frequented locations in major German cities. The company-owned stores gave the WMF-brand premium exposure and made it stand out among its competitors. The direct contact with customers also provided valuable information about their preferences and tastes. In the early 1890s, WMF stores began generating more sales than traveling salesmen did.

International expansion began in 1884, when WMF bought a stake in former A. Ritter & Co. associate A. Köhler & Cie in Vienna. The first WMF store in Vienna opened the same year. Two years later, another subsidiary was set up in Warsaw, which at that time belonged to the Russian Empire. Each of the two companies established a silver-plating operation that purchased sheet metal or unfinished goods from WMF. That way, WMF gained access to the Austro-Hungarian and to the Russian market without having to pay the high import duties for luxury goods. Within a short period of time, revenues from Russia accounted for about one fifth of WMF's total sales.

Major Supplier to the Military in 1914

The acquisition of another competitor--Göppingen-based Schauffler & Safft--in 1897 marked a new chapter in WMF's history. The company was founded in 1876 by two former employees of a Göppingen tinware factory, Hans Schauffler and Adolf Safft, and was the leading German manufacturer of nickel-plated metal goods such as cooking utensils, tea and milk urns, lanterns, tabletop stoves, and, later, coffee makers. Due to Hans Schauffler's exquisite sales skills, the company exported roughly half of their output. Nickel-plated items, which did not tarnish and were easier to clean, represented serious competition for WMF's silver-plated products. They could be polished by machines and therefore be made comparatively cheaply.

Less than one year after the takeover, WMF's supervisory board replaced Carl Haegele with Hans Schauffler as the company's new executive director. Schauffler focused on boosting sales, and within seven years revenues from the so-called "Göppingen ware" doubled, while the factory's workforce rose from roughly 500 to almost 1150. However, Schauffler's sudden death in 1904 left WMF without a leader. The supervisory board decided to establish a board of five directors, each of them with a clearly defined area of responsibility. In 1905, WMF bought another competitor, Cologne-based Orivit AG, a manufacturer of stylish metal tableware and decorative articles which were covered with a layer of brass, bronze, silver, or gold. WMF had paid a significant sum for Orivit. Nevertheless, the company's efforts to transform the financially struggling firm into a profitable operation eventually failed.

By 1914, WMF had become a leading supplier of silver-plated household items and the largest employer in the state of Wurttemberg. About 4,000 people worked for WMF in Geislingen and another 2,000 worked at other locations in Germany and abroad. There were more than 25 WMF sales outlets in Germany and cutlery accounted for roughly one-fifth of their sales.

The outbreak of World War I in the summer of 1914 brought WMF's first period of extensive growth to a sudden halt. Metal was a crucial ingredient for the German war economy and not available any longer for civil uses. Exports were halted. WMF's production in Warsaw was shut down and later sold. In addition, 760 WMF employees were called up by the military. In order to avoid the company's shutdown, WMF became a major contractor for the German army. Because of its patented process for making cartridges and shells from high-quality steel, the company became almost the sole supplier of these munitions during the war. An increasing number of female employees replaced the men drafted into the army. At its wartime peak, WMF employed about 8,000 workers and put out a total of roughly 200 million bullets and shells for the infantry. Meanwhile, the company's retail outlets sold products made by other firms.

Economic and Political Turmoil: 1919-45

The decade that followed World War I gave WMF only a short time for recovery between two severe economic downturns. The 1920s started out with two years of accelerating inflation, resulting in the financial ruin of the German middle class. When WMF tried to cut personnel cost by extending work hours in spring 1922, while the wages paid were not sufficient to cover the cost of daily living, a part of the company's workforce went on a three-month strike.

Despite the economic turmoil, WMF tried to stay on the leading edge of product design and quality for household consumer goods made from metal. Since the demand for decorative items declined due to widespread economic hardship, the company focused on cutlery, serving dishes and kitchenware such as metal graters, colanders, pots, casseroles, and frying pans. In 1920, WMF introduced a new line of cookware made from high-quality steel, which was called "Silit Steel." Seven years later, WMF launched three product innovations: the company's first "Siko" pressure cooker, WMF's first electric coffee maker for commercial use with two different brewing functions, and a non-rusting, acid-resistant, and "taste-free" pan made from Krupp's V2A stainless steel with a high chrome content. Soon after, a whole new line of this type of cookware was launched under the brand name "Cromargan."

In 1924, WMF's patent for its special silver-plating process for cutlery expired. Although many competitors immediately adopted the technology, WMF managed to expand its cutlery business. In 1926, the company started making solid silver cutlery. By 1928, cutlery sales accounted for roughly two-thirds of WMF's total revenues. In 1932, the company introduced a line of Cromargan cutlery.

The worldwide economic depression that was initiated by the New York Stock Exchange crash in late October 1929 reached Germany in the early 1930s. WMF's exports--which accounted for about one-third of the company's revenues--dropped by 67 percent between 1930 and 1933. Although WMF shut down all production plants except the one in Geislingen and laid off hundreds of workers, the company still found itself in the red for the first time. The National Socialist (Nazi) Party that came into power in 1933 launched a massive government-financed program designed to lift the nation out of the depression, resulting in a short period of recovery for WMF. While exports were down, the company greatly expanded its domestic network of sales outlets to 141 by the end of the 1930s. While the Nazi government's economic policy initially was a success, it soon became apparent that it had another agenda. In 1936, the leader of the National Socialist Party, Adolf Hitler, demanded that the German economy had to be ready for another war within four years.

In order to continue operations after World War I, WMF had certified to the Allied Control Commission that all the machinery that was used to produce ammunition had been sold or destroyed and that in the future WMF would not make any more war goods. However, immediately after Hitler's call for rearmament, WMF's executive director Hugo Debach once more set the course to become a military contractor. Two months after the beginning of World War II, in December 1939, he suddenly died.

Before and during the war, WMF struggled with increasingly severe shortages of raw material. Once again, the company became a major supplier of ammunition and manufactured parts for airplanes. Beginning in 1940 a growing number of prisoners of war--and later forced laborers--were employed by WMF. These workers, about half of whom came from the Soviet Union, lived in camps around Geislingen and accounted for about one-third of the company's total workforce by mid-1944. Beginning in February 1944, a separate concentration camp was established by WMF in Geislingen for hundreds of Jewish women from Hungary who were originally destined to die in Auschwitz. As the war came close to the end in April 1945, over 900 female concentration camp prisoners were set free by the American Forces that occupied Geislingen.

Postwar Growth and Diversification

WMF's plant in Geislingen survived the bombing raids during World War II, but the company lost twelve sales outlets to the war and 33 in the Soviet occupied zone. While Arthur Burkhardt, WMF's Technical Director and driving force behind a rigorous modernization program that started in the early 1940s, underwent a denazification process for former members of the NSDAP (National Socialist German Workers Party), the company manufactured everything that could be made with the raw materials available, such as tin milk cans and light metal pots and containers. Back at work after the currency reform in western Germany in 1948, Burkhardt initiated the automation of as many production processes as possible, starting with the silver-plating of cutlery. Production capacity was expanded, but the Galvanoplastic Arts Workshop closed down in 1953. Meanwhile, WMF tried to fill the Germans' seemingly insatiable demand for new silverware, tableware, and cookware in a more modern style. The cooperation with renowned design professor Wilhelm Wagenfeld during the 1950s won WMF new recognition as a design-oriented manufacturer of upscale consumer goods. During this time, Chromargan stainless steel replaced silver as the main surface material.

The end of the 1950s marked the end of the postwar consumption wave for basic household goods in Germany. To make up for the slowing sales to consumers, WMF focused more on institutional customers to whom the company had started marketing directly. New WMF sales subsidiaries were established in western Europe and North America to boost exports. As a cost-cutting measure, WMF's product range was cut back, the enamel cookware and pressure cooker line Silit was sold off in 1964, and a production facility was set up in Greece in the same year. On the other hand, the company started making forged blades for table knives which had previously been purchased from outside vendors. In the second half of the decade, the company marketed some of its products as promotional items to businesses, modernized its sales outlets, and launched a new brand for upscale tableware, "Marke Tischfein," which in 1969 made its way onto the shelves of selected department stores. However, after the cooperation with Wagenfeld had ended, WMF fell behind in regards to design standards. By the end of the decade, the company had lost its image as a trendsetter.

After Burkhardt's departure in 1969, WMF's new management board decided to branch out into new fields to overcome the company's problems, including highly volatile prices for raw material, rising labor costs and an increasingly saturated domestic market. The electronic circuit boards that had been made in-house for WMF's line of commercial coffee makers were now also offered to others. In 1972, the company took on the selling of U.S.-made vending machines for hot beverages which were modified for the German market. However, the machines flopped in Germany and Europe at that time. Another "modern" invention from the mushrooming fast food chains across the Atlantic was throw-away plastic tableware, which WMF started making in 1972. Three years later, WMF once more set up a production facility abroad--this time in Singapore--after its plant in Greece had been closed due to political turmoil. In the same year, the company invested in a brand-new, fully automated warehouse and distribution center in Geislingen, which went into full operation in 1981.

Change and Renewal in the 1980s and Beyond

While Germany slipped into another recession with the onset of the 1980s, WMF underwent fundamental changes in ownership and management. The early 1980s were characterized by the streamlining and reorganization of the company's business. The production of glass was ceased, as was the contract manufacturing of circuit boards and the marketing of hot beverage vending machines. The business was organized into three divisions: one for cutlery, tableware and gift items; a second one for cooking utensils and household goods; and a third for all the company's products that were sold to the hospitality industry.

Up until the end of the 1970s, the descendants of Gustav Siegle held the majority of WMF's shares. Siegle's daughters had married into some of Wurttemberg's most influential noble families, who thereby gained a decisive influence on WMF's supervisory board. In 1979, the German metal conglomerate Rheinmetall AG acquired a majority stake in WMF from a number of Siegle heirs. However, in 1985 Rheinmetall sold its majority stake in WMF to the lawyer Wolfgang Schuppli for anti-trust reasons. Schuppli brought in Rolf Allmendinger, a former executive manager of the Einkaufsgesellschaft Nürnberger Bund, as WMF's new CEO. Allmendinger initiated a turnaround in an increasingly complex and competitive environment. To get the company back on a profitable track--in the 1980s WMF generated DM600 million in sales but almost no profits--he completed the process of focusing on the company's core business and initiated new growth through innovations and acquisitions. In 1993, Schuppli sold all but 27.9 percent of his WMF shares to investment subsidiaries of Deutsche Bank, Munich Re, and Wurttembergische AG Versicherungs-Beteiligungsgesellschaft.

When the Berlin Wall fell in November 1989, WMF immediately sent 50 salesmen to East Germany to scout suitable locations for new sales outlets, including the old stores that were lost after World War II. By July 1990, when East Germans exchanged their money for the West German Deutschmark, there were already 252 specialty retailers in eastern Germany where they could purchase WMF silverware. Within three years, WMF grossed about DM100 million in the new German states that joined the Federal Republic of Germany in October 1990.

After this "inner-German boom," the reality of saturated markets, consolidation, and increasing global competition set in. WMF reacted with a number of acquisitions that were designed to develop the company into a leading supplier of kitchen utensils and tableware to both private consumers and commercial customers. In 1987, WMF bought thermos maker alfi Zitzmann, followed one year later by Pforzheim-based Hepp. Founded in 1863, Hepp had an international reputation as a manufacturer of upscale cutlery and serving utensils for hotels. Also in 1987, WMF acquired a 24.9 percent share in German porcelain manufacturer Hutschenreuther. In the 1990s, the company expanded its product range with three more acquisitions: Hogatron, the Swiss maker of buffet serving and storage systems for the restaurant industry, German cutlery maker Auerhahn, and the financially struggling cookware maker Silit, which again became part of the WMF group in 1998. Another addition to the WMF group followed four years later when German baking tin maker W.F. Kaiser & Co. was acquired.

To regain a leading edge in design, WMF started working with a number of freelance designers. Distribution was expanded to include a growing number of furniture stores, where WMF's latest lifestyle-oriented creations were presented around the themes coffee and tea, wine and bar, and breakfast. Long gone was the period in the early 1990s when one-third or more of WMF's total sales came from cutlery. Within a decade, that percentage had fallen to 23 percent. Most competitors had moved their production to Asia and price pressures increased. In 2002, WMF moved its Asian production plant from Singapore to China. Production there was forty times cheaper than in Geislingen, where most of the company's output still originates, and eight times cheaper than in Singapore.

In a shrinking domestic market, the company has set its sights abroad and invested in new and innovative products. WMF's Exports accounted for almost 45 percent in 2002. In that year alone, the number of WMF shops-in-shops in Japanese department stores tripled and reached 65. Korea emerged as the company's most important foreign market for cookware. One of the most promising future sectors for WMF, however, might be the booming worldwide market for specialty coffees.

Beginning in the late 1960s, the commercial coffee makers WMF's institutional division launched--from the first electronically controlled bulk-brewing coffee maker "Programmat" in 1969 to the "Bistro" model line launched in 1995 to WMF's latest modular specialty coffee makers "combiNation" introduced in 2001--increasingly gained acceptance in the national and international hospitality market. They are in use on cruise liners and trains as well as in hotels and fast food restaurants. Not surprisingly, the newly renovated WMF sales outlet in Dusseldorf was equipped with a little café. The company's new CEO, Thorsten Klapproth, who succeeded Almendinger in mid-2003, was planning to revive consumer interest in upscale cutlery through a new, emotional advertising campaign but saw the highest potential for future growth in commercial coffee makers, which accounted for roughly 15 percent of total sales. In mid-2003, WMF acquired a 34-percent stake in the Swiss market leader M. Schaerer AG. Built on a solid financial basis, the company seemed well positioned to claim its stake in the global market.

Principal Subsidiaries: W.F. Kaiser & Co. GmbH; Gebrüder Hepp GmbH; Silit-Werke GmbH & Co. KG (96%); WMF Immobilienverwaltungs GmbH; alfi Zitzmann GmbH; Carl Zitzmann GmbH; Auerhahn Bestecke GmbH; WMF Gastronomie Service GmbH; Boehringer Gastro Profi GmbH; Silit-Werke Beteiligungs-GmbH; BHS tabletop AG (24.9%); WMF (He Shan) Manufacturing Co. Ltd. (China); WMF Manufacturing Co. Ltd. (China); Silit France S.a.r.l. (96.2%); WMF Belgium S.A.; WMF Española S.A. (Spain); WMF Italia S.p.A. (Italy); WMF Nederland B.V. (Netherlands); WMF Nederland Filialen B.V. (Netherlands); WMF in Österreich Ges. m.b.H. (Austria); WMF (Schweiz) AG (Switzerland); WMF of America Inc. (United States); WMF Flatware (Pte.) Ltd. (Singapore); WMF Singapore (Pte.) Ltd.; WMF Italia Gestione Immobiliare S.r.l. (Italy); WMF Hogatron AG (Switzerland); WMF France S.a.r.l.; WMF United Kingdom Ltd.; WMF Far East K.K. (Japan); WMF Japan K.K.; Kaiser Italia S.R.L. (Italy); Kaiser Bakeware Inc. (United States); Kaiser & Co. Polska Sp. z o.o. (Poland); Gastromedia Sp. z o.o. (Poland; 20%); G.T.I. Manufacturing Company Ltd. (China; 33.3%).

Principal Competitors: Wilkens Bremer Silberwaren AG; SEB S.A.; Guy Degrenne S.A.; WKI Holding Company, Inc.; Tchibo Holding AG; IKEA International A/S.


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