Braun GmbH - Company Profile, Information, Business Description, History, Background Information on Braun GmbH

Frankfurter Strasse 145
D-61476 Kronberg im Taunus

Company Perspectives:

The company views its brand image--based on the core values innovative, reliable, and distinctive--as a key success factor. "Our objective is to develop products responding to the consumer's needs which are always a step ahead of the competition in technology and design," Braun chairman Bernhard Wild has stated. Braun refuses to make any quality compromises. Extensive ongoing tests in its own test laboratories guarantee that all products meet the high Braun standards of safety, reliability, and long service.

History of Braun GmbH

Braun GmbH is one of the world's leading manufacturers of small electric appliances. Headquartered in the small German town of Kronberg near Frankfurt am Main, the company sees itself as the world market leader for electric foil shavers, electric toothbrushes, kitchen appliances, and electric hair removers. They also make electric water kettles, coffee makers, juicers, irons, hair dryers, stylers and curlers, infrared ear thermometers, blood pressure monitors, clocks, and calculators. Braun's product range includes about 200 products which are manufactured at its ten production plants in Germany, Ireland, France, Spain, China, Mexico, and the United States. Braun products are distributed worldwide by Boston-based Gillette Group, which has owned the company since 1967. Braun's widely acclaimed reputation for innovative product design goes back to German engineer and inventor Max Braun.

Company Origins in the Early 1920s

Max Braun, the sixth of seven sons of sailor and farmer Friedrich August Braun, grew up in a small town in eastern Prussia. At age 14 he started an apprenticeship at a nearby machine building company. His entrepreneurial spirit first emerged when, after finishing his four-year professional education as a machinist, he invented a steam-powered thresher and made his living leasing out himself and his machine to local farmers around harvest time. In 1910, Max Braun left eastern Prussia for Hamburg, where he worked at precision mechanics and machine-building company Wilhelm Fette. However, only a few months later he was drafted to serve in the German army in Berlin. After finishing the required six months of army service, Braun decided to stay in Berlin and started working for engineering firm and electrical equipment manufacturer AEG as a machinist. Later he worked for Siemens as a technical drawer and at yet another machine building firm, Storck & Co., where he became a tool designer. Besides working, Braun took evening classes at a private technical school and began studying English. In 1914, he graduated from technical school. In the same year, World War I began, and Braun was drafted again into the German army, where he served in the engineering corps. However, after only a few months he was lucky enough to be "reclaimed" by AEG to work at their turbine plant. In November 1920, following Germany's defeat in the war, Braun married and moved to Frankfurt am Main.

In 1921, Braun set up his own workshop in a space rented in Frankfurt. Starting out with one apprentice, he invented a small apparatus to fix, expand, or cut belts for machinery that he was building at the time. When he showed his invention, which he called "Trumpf," at the Frankfurt Fair in 1921, he stirred the interest of English businessmen, who started selling it in England.

One year later, a new era began in Germany, when the first regular radio shows were broadcast. The new medium inspired Max Braun. To learn about the new technology, he started taking evening classes organized by the Gesellschaft der Freunde der Radio-Phonie und -Telegraphie, a society of the friends of radio broadcasting and telegraphy, in Frankfurt. The first element of radio technology that caught Braun's attention was the so-called detector, a crystal connected to a needle that listeners used to tune in to different stations. This technology was neither easy to handle nor precise. For months Braun, together with a pharmacist friend, conducted experiments in the laundry room of the house where he lived, until he came up with a better solution. Instead of using unevenly shaped crystals, he heated crystal powder and formed it into a cylinder which he then connected to the contact point. By means of this device, listeners could tune in the radio stations much easier by turning the crystal cylinder. A trade journal hailed Braun's new detector, which he had exhibited at Germany's second radio trade show, as the most functional and best model on the market. In 1925, after Braun passed the examination at the evening course in radio technology, the German post office granted him admission to set up and run a radio receiver for private use.

Growth and Destruction: 1925-45

The quickly emerging market for radios became Braun's mainstay for the following two decades. In 1925, Braun became interested in the plastic powders he had seen at a trade show in Frankfurt. He designed machines that processed these powders to mold them into parts used in radio receivers, such as tube sockets, dials, knobs, and plugs. Braun also pioneered the existing technology for radios with new high-frequency transformer sets for two wavelengths, improved condensers, and a new scale for fine tuning radio stations. Braun's business grew so quickly that he had to find a new location for his 20 employees in 1926. Two years later, the company's workforce had swollen to 400, necessitating the construction of a new factory. In 1929, the company expanded its product range to include speaker amplifiers. Braun was now also manufacturing whole appliances in addition to individual components. It was mainly the good reputation of Braun radios and turntables that helped the company through the Great Depression.

The 1930s marked Braun's first massive expansion abroad. Max Braun's experience with independent salespeople encouraged him to set up his own distribution network outside of Germany. The company's English salesman in London had imitated the Braun's plastic molding machines and made and sold similar products on the side. Another German representative followed suit when he exported Braun products to Belgium, Switzerland, and the Netherlands, keeping the profits for himself. It was only natural that Max Braun decided to take over control of the export end of his operations, and he established sales offices in France, Switzerland, Spain, Tunisia, Morocco, and the Netherlands in the early 1930s. To avoid the usually high customs costs at the time, he also established manufacturing sites in England and France and an assembly workshop in Belgium.

The rise of the sound recording industry created another related market that Braun started catering to. His company became a vendor of motors and pickups for turntables. The combination of the two technologies was only a matter of time. In 1932, Braun was among the first manufacturers to launch a radio and turntable in one unit, the "Cosmophon 777." The first radios Braun made were sold under the name Sevecke. The Frankfurt-based firm Sevecke owned a license for a technology patented by German radio manufacturer Telefunken that Braun used in its radios. In 1935, Braun acquired Sevecke's license and launched the "Braun" trademark used from that time on. In 1936, the company launched its first battery-powered portable radio. Two years later, the company's growth--Braun employed about 1,000 people at that time--made it necessary to rent additional production space.

In 1933, the National Socialists under the leadership of Adolf Hitler took over political power in Germany. To spread their propaganda, they promoted the distribution of a cheap radio called the "Volksempfänger"--the people's receiver. However, the receiver the Volksempfänger was equipped with was so weak that only the German Reichsrundfunk could be received and not radio stations from other European countries. Braun was among the firms that built the Volksempfänger. But the company also offered an add-on appliance that made it possible to listen to radio stations of other European countries.

It was almost inevitable that Max Braun's liberal spirit collided with the narrow-minded Nazi ideology. Denounced by one of his employees in 1934 for secretly putting aside earnings in foreign currency, the Nazis put Max Braun under home arrest for several days and searched his offices for evidence, which was not found. Four years later, the Gestapo tried to take away Max Braun's company leadership position by claiming that Braun, who admittedly had an easily excitable temperament, was not mature enough as a person to head a corporation. Braun demanded that a lawsuit against him be brought by the German authorities. After five hearings, they concluded that Braun was a rebel but a harmless one. After Braun had initially refused to take in orders for war goods, his company made two-way radios, radio control devices, and land mine searching equipment during World War II. When accusations were brought against Max Braun again in 1943--including charges that he had an anti-Nazi mindset, connections with non-Aryans abroad, listened to enemy radio stations, and refused to follow the Nazi's economic guidelines--his company's importance for the German war industry rescued him. In 1944, both Braun factories in Germany were almost completely destroyed during bombing raids.

New Beginnings after World War II

After Germany's defeat, it seemed almost certain that Braun's factories would be dismantled. But Max Braun threw all of his energy into doing everything possible to save his company from that fate. After lengthy negotiations, he succeeded. In October 1945, Braun started out with 150 employees to rebuild his enterprise. The company's first postwar product was actually a product of the war: a pocket flashlight powered by a hand-dynamo. Braun also started making chassis for phonographs again and in 1947 resumed the production of radios. By 1948, the year when a new currency was introduced in the western German sectors, the company's workforce was up to almost 400. One year later, the reconstruction of Braun's second plant in Frankfurt am Main was finalized.

Max Braun had used the slack period right after the war to think about possible areas of innovation for his firm. His vision was to make articles for the world market that required little material input. He finally decided to venture into two new product categories: electric dry shavers and kitchen appliances. During the war, Max Braun had already started thinking about making dry shavers. After inspecting the ten or so models of electric dry shavers available in 1947 in terms of cost and performance, Braun, together with a few other people, developed a new technology. During this time--so the story goes--all of Baun's male staff was shaved by the boss personally at least once. The result of this effort was Braun's first dry shaver, the "S 50," which was composed of a small universal motor powering an oscillating block of sharp round blades covered by a perforated metal plate. This device was patented in 1950. The company's first electric kitchen appliance, a blender called "Multimix," was also patented in 1950. In the following year, Braun Commercial GmbH, a new subsidiary for marketing Braun's blender and dry shaver, was established. Sales from household appliances went up quickly, especially abroad, and soon surpassed the company's revenues generated by radios and turntables. However, Max Braun was not to witness the overwhelming commercial success of his innovations. On November 6, 1951, he died suddenly while at work in his office.

Braun's Sons Take Over in 1951

Max Braun's sons Artur and Erwin, who had both joined the company in 1950, took over its leadership after their father's death. Artur Braun, 26 years old at the time, took over the technical side of the enterprise. He had a degree in engineering and had also helped his father develop Braun's first electric shaver. Thirty-year-old Erwin Braun had earned a degree in business administration and assumed responsibility for marketing and finances. He oversaw a market research project that involved an undercover interviewer who traveled throughout Germany during 1953 to find out which retailers carried Braun products and how they perceived, presented, and sold them to consumers. As a result, Braun decided to invest in an ongoing informational campaign, hiring representatives who traveled around Germany to educate specialized retailers about the company's products and to build a closer relationship with them.

Thorough market research was used not only to improve Braun's relationship with customers but also as a basis for the company's design strategy. In 1953, the company co-sponsored research conducted by Germany's Allensbach Institute relating to consumer trends in interior design. Based on that study, Braun products became a synonym for simplicity and longevity. With a new vision in mind to clearly distinguish itself from other manufacturers, Braun's whole product range was given a brand-new design between 1954 and 1958. In 1954, New York's Museum of Modern Art included a number of Braun products in its design collection. Ten years later, the museum opened a new design exhibition with the entire Braun product range.

In the 1950s and 1960s, Braun introduced a great variety of new products. The 1950s saw the company launch an electronic flash for cameras, a juicer, a hand-held mixer, a television set, an automatic slide projector, and a hot-air heater. Novelties of the 1960s included a table-top heater, a toaster, an electric water kettle, a coffee grinder, a battery-powered dry shaver, a reel-to-reel tape recorder, a table-top cigarette lighter, a citrus press, and a hi-fi system with headphones. Braun also acquired two German companies, one that made 35-mm film and one that manufactured electronic thermostats. In 1963, the company started distributing microphones by U.S. manufacturer Shure in Germany.

In addition to expanding its product range, Braun extended the company's international reach. In 1954, the company sold a license for its shaver line to U.S. firm Ronson. Between 1958 and 1962, Braun established subsidiaries in Canada, Finland, the Netherlands, Denmark, France, Spain, and Japan which were organized under the umbrella of Switzerland-based holding company Braun Electric International S.A. Subsidiaries in other countries were later established.

Reorganization and Renewal after Takeover in 1967

Braun got its share of the postwar consumer boom in West Germany. To finance further growth, the company had been transformed into a public stock company in 1962. Two years later, Braun shares were publicly traded on the Frankfurt Stock Exchange for the first time. By 1967, Braun AG employed about 5,700 people, and the company started moving its headquarters to its current location in Kronberg. At the end of 1967, the Boston-based Gillette Company bought a majority share in Braun.

In the 1970s, 1980s, and 1990s Braun kept developing and launching new products for which it was awarded many design prizes. In fact, Braun's high rate of innovation--new products continuously contributed between 50 and 70 percent of total revenues--secured the company a leading position among the world's electric appliance makers. However, there were also disadvantages. First, many of Braun's competitors tried to take a shortcut to commercial success by copying Braun designs without delivering the same performance. The lawsuits Braun launched to limit the damage done by this practice to the company's image cost millions. Second, diversification had reached a point where Braun's broad product range got in its own way. While the company had successfully ventured into stereo sound systems and semi-professional and professional photo equipment, including video cameras, these areas demanded high-level investments on a constant basis. Kitchen appliances, electric shavers, and oral care products had become the company's mainstay, and Braun's managers realized that consumers might hesitate to buy a high-tech stereo system from a company that made razors and juicers. Therefore, in the early 1980s, Braun initiated two decades of strategic refocusing, cost consolidation, and reorganization.

In 1981, the company's hi-fi division, which grew out of Braun's former core business of radios and turntables, was spun off into Braun Electronic GmbH. The legally independent Gillette subsidiary put out its last hi-fi set in 1990 before the business was discontinued. Also in the early 1980s, Braun sold its photo division to Robert Bosch GmbH. In 1982, Gillette tied Braun closer to the parent company by taking full control over its operations. In 1984, Braun ceased the production of cigarette lighters. By the late 1980s, the company made over 70 percent of its sales outside of Germany. The United States and Japan had become the company's two major markets abroad. New production plants were established in Ireland, Spain, Mexico, and China, while staff in Germany was reduced.

By the mid-1990s, almost half of Braun's workforce was located outside of Germany, where about 40 percent of the company's appliances were made. Oral care products such as electric toothbrushes had become the company's main market besides electric shavers and kitchen appliances. In 1996, Braun added infrared thermometers to its product range with the acquisition of the U.S. firm ThermoScan. Two years later, Gillette decided to transform Braun AG into a private company before it bought back a 19.9 percent share in its subsidiary The Gillette Company Inc., which Braun had acquired in 1988, to avoid taxes it would have to pay in a public stock transaction. In 1999, Braun's sales organization was merged with those of Gillette's other business divisions to cut cost and to simplify the ordering process for customers. At the end of the 1990s, Braun and Gillette suffered losses in several areas, partly caused by the Asian financial crisis. Looking for ways to attain the high level of financial performance it had experienced in the past, the razor blade maker was considering the disposal of some of Braun's less profitable divisions, such as electric toothbrushes, kitchen appliances, and thermometers, but abandoned the idea a few months later when finding a buyer turned out to be difficult, and Braun's sales in those areas started picking up again. However, many of the company's kitchen appliances, such as coffee makers, water kettles, irons, and hair dryers, were offered in selected markets only, mainly in Europe, while Braun's design strategy became more open to incorporating consumer trends, such as popular colors, without compromising the company's product philosophy of longevity and high technical standards. In 2000, the readers of markt intern, a German trade journal for retailers of electric appliances, voted Braun Germany's number one "Electro Retail Partner" ahead of three of its competitors. Apparently, the company's image for superior design and cutting-edge technology was strong enough to carry Braun's success of eighty years over into a new century.

Principal Subsidiaries: Consul GmbH (Germany); Braun Beteiligungsverwaltung GmbH (Germany); Braun Ireland Ltd.; Braun Espanola, S.A. (Spain); Silk-Epil S.A. (France).

Principal Competitors: Remington Products Company, L.L.C.; Conair Corporation; Koninklijke Philips Electronics N.V.; Sunbeam Corporation.


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