Brose Fahrzeugteile GmbH & Company KG

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Brose Fahrzeugteile GmbH & Company KG

Ketschendorfer Straße 38-50
Coburg, D-96450
Germany
Telephone: (49 9561) 21-0
Fax: (49 9561) 21-1429
Web site: http://www.brose.net

Private Company
Incorporated: 1919 as Metallwerk Max Brose & Company OHG
Employees: 8,790
Sales: EUR 2.2 billion ($2.7 billion) (2005)
NAIC: 336322 Other Motor Vehicle Electrical and Electronic Equipment Manufacturing

Brose Fahrzeugteile GmbH & Company KG is a leading European manufacturer of window regulators and car seat adjusters for the automobile industry. According to Brose, every fourth vehicle produced worldwide contains at least one of the company's products. Headquartered in Coburg, Germany, Brose develops high-tech components and systems for automobile doors and seats such as electronic window regulators and seat positioners as well as closing and locking systems for vehicle doors. Through its global network of roughly 40 subsidiaries in 20 countries, Brose delivers its products to the world's leading automakers. Although the company has increased its activities in North America and Asia, four-fifths of Brose's revenues are still generated in Europe. The company is privately owned by descendants of company cofounder Max Brose.

FROM SMALL FAMILY BUSINESS TO GERMAN MARKET LEADER

In 1886, two years after Max Brose was born, German inventor Carl Friedrich Benz received a patent for his "motor wagon." As he was growing up, Brose witnessed how rapidly motorized vehicles replaced horse-powered carriages; his parents had started a company that manufactured car bodies. After he finished his education in business administration at age 24, Brose set up his own trading business for automotive accessories and aircraft materials in 1908. Six years later World War I began, and Brose was drafted into the German army. At the end of the war, Lieutenant Brose, who had fought in Germany's motorized forces on the Western front, was sent to East Prussia to help take down a truck depot. There he met chemist Ernst Jühling, who would become his business partner.

World War I had just ended when Brose and Jühling decided to start a manufacturing company for auto parts. In late spring of 1919 they acquired a former metal parts factory in Coburg, a small town in northern Bavaria. Far away from Germany's industrial centers they founded Metallwerk Max Brose & Co. OHG, known informally as Max Brose Metal Works. The company started out with ten workers making such auto parts as headlights and spark plugs as well as hardware products, including hand tools. After a short time, the company launched its own line of auto parts, including carbide lamps, jacks, vulcanizers, and speedometers under the brand names Atlas and Mabro. The company even offered a stylish model of leather-framed protective glasses for dogs accompanying their owners on their road trips.

The year 1928 marked a turning point for Brose. That year the company started making mechanical window regulators for cars. Following a suggestion by Opel-founder Wilhelm von Opel, Max Brose had acquired a manufacturing license for spring-wound brakes, a major component of window regulators, from an American firm. Within a few years the company evolved as a major supplier of window regulators to German automakers Daimler-Benz, Volkswagen, Borg-ward, and Lloyd.

When the Great Depression arrived in Germany in the early 1930s, the workweek of some 70 employees of Max Brose & Co. was cut to three days. However, foreseeing a growing demand for auto-related products and with the necessary cash at hand, Max Brose and Ernst Jühling nevertheless decided to invest in modern machinery and to add extra manufacturing capacity. During this time the company launched the standardized 20-liter gasoline canister which would be one of the company's most successful products for the next 20 years.

WARTIME CHALLENGES AND POSTWAR BOOM

With the beginning of World War II more and more of Brose's workers had to leave their jobs to serve in the German army, and many were replaced by German women. During the war the company manufactured spark plugs and flag shells in addition to auto parts. After Max Brose successfully prevented the destruction of his factory by the Nazis, it was seized by the American allied forces in 1945 and put under the rule of the U.S. military. Instead of auto parts, the remaining workers manufactured ovens and cookware, irons and hot-water bottles, ski bindings and fishing reels, using steel helmets and grenade casings as raw materials.

The establishment of the Federal Republic of Germany in 1949 put an end to the military rule of the country's economy that had begun with the Nazis. The 1950s ushered in the postwar boom that later became known as the German Economic Miracle. At Brose this was a time of experimentation with new products, including metal frames and guide rails, ventilator latches, and small compressors. In 1951 the company even launched a compact travel typewriter called the Brosette. Despite that product's commercial success, Max Brose decided to abandon the idea of moving further into the office machine market.

Instead, the company focused again on the needs of the auto industry. In 1951 Brose launched a new generation of mechanical vent windows, which were sold to Daimler-Benz, Volkswagen, Opel, Fiat, Borg-ward, and other automakers. Twelve years later Brose introduced the first electric window regulator to the European market. The BMW 3200 convertible was the first passenger car in which Brose's electric window regulators were standard equipment. As more and more European consumers were able to afford cars, the auto industry began to thrive and grow, and Brose with it.

Max Brose died at age 84 in 1968. The legacy he left behind was impressive. With a workforce of roughly 1,000, the company had become the largest German manufacturer of window regulators, generating DM 35 million in annual revenues. His determination and his sense for business opportunities had helped build the company as much as his sincere interest in and care for his workers had. It was mainly due to his legendary frugality (even with several hundred employees there was only a handful of administrative staff far into the 1950s) that he and his partner were able to finance large investments out of the cash flow, therefore maintaining the financial independence of the enterprise.

COMPANY PERSPECTIVES

With innovative capability, leading edge manufacturing technology and logistics, above all, with its strategic investments and stable ownership structure, Brose seeks to have a long-term partnership with the automakers.

GENERATION CHANGE AND INNOVATIONS

After Max Brose's death, his daughter Gisela headed the company for three and a half years. In October 1971 she handed this responsibility over to Michael Stoschek, her nephew and Max Brose's grandson. Only 23 years old at the time, Stoschek had hoped to become a sound recording engineer or photographer rather than CEO of the company. To ensure future continuity in major business decisions, he and his sister Christine initiated an advisory board consisting of three nonfamily members. If members of the owner families were not able to reach a decision among themselves, the advisory board had the power to decide. The two third-generation owners also drafted a charter for the family business and pledged to use a significant part of profits for necessary future investments. Under Stoschek, who would head the company for more than three decades, Brose evolved as a supplier of high-tech modules to the global auto industry.

One of the company's strategic goals was to win new customers abroad. During the 1970s Brose added to its product line head rests, spoilers and dashboard and bumper parts made from plastics and polyurethane foam. With the oil crises of 1973 and 1978, however, the world's automakers were hit hard, and Brose was no exception. In 1974 alone sales plunged by 20 percent. The company cut back one-quarter of its workforce. To use idle production capacity, Brose started making faucets, furniture fittings, and cable winches. After the auto industry picked up speed once again, the company dropped these products. Despite this setback, the share of exports in total sales had increased threefold to 13 percent by the end of the decade. Many new car brands were added to Brose's international client roster, including Volvo, Saab, Jaguar, Ford, Fiat, Alfa Romeo, and Audi.

To retain a cutting edge in technology and to keep up with the company's growth, annual investments in research and development (R&D), modernization, and expansion of production capacity quadrupled during the 1970s. In 1968 Brose had begun to make auto seat fittings for BMW and Daimler-Benz. Within only a few years, seat adjuster technology became a second mainstay for Brose. In 1979 the company launched the first electric seat adjuster in Europe which was built into Daimler-Benz's latest S-Class models. A complex electromechanical construction made it possible to move the seat up, or back and forth, and to change its tilt. Later models made it possible to change the angle of the seatback and headrests.

Another Brose venture of the 1970s was less successful. When a law was passed in the United States that made automatic seat belt devices mandatory for passenger cars, Brose developed an electric seat belt transport system. After the driver or passengers were seated in the car, seat belts automatically fastened around them. However, the regulation was dropped under the administration of President Ronald Reagan, and, consequently, two German automakers withdrew their orders. Brose was left with modest revenues from license agreements with a few American manufacturers.

Brose next entered a period of rapid growth driven by innovations and international expansion. In order to finance the necessary investments, top management decided to focus on technology for automobile doors and seats. In the early 1980s Brose branched out into the development of whole door modules. This decision laid the foundation for sustained growth. The first Brose door module was built into Audi's 1987 Coupé model. Significant technological developments in electronics during this time helped the company develop an electronic memory for positioning car seats as early as 1983. Three years later Brose engineers followed up with an electronically controlled car window regulator. These innovations helped the company maintain a competitive edge in the world market, resulting in double-digit growth rates. By the end of the decade, Brose's revenues had quadrupled while its workforce had doubled.

KEY DATES

1908:: Entrepreneur Max Brose starts a trading business for automotive accessories.
1919:: Newly established Metallwerk Max Brose & Co. begins developing and manufacturing of auto parts.
1928:: Production of window regulators for cars begins.
1956:: Cofounder Ernst Jühling steps back as major shareholder.
1968:: Max Brose's daughter Gisela takes over after the founder's death; the company starts making seat adjusters.
1971:: Max Brose's grandson Michael Stoschek becomes CEO.
1979:: The company debuts an electric seat adjuster, a first in Europe.
1986:: Brose pioneers electronically controlled car window regulators.
1988:: The company's first production sites abroad are set up in Spain and the United Kingdom.
1993:: A Brose factory is set up in Mexico to serve the North American market.
1996:: The company expands its manufacturing activities to China.
2002:: The company acquires the door closure and locking system division from Robert Bosch GmbH.
2005:: Brose ventures into developing electric drives for side doors and trunk latches.

FOLLOWING CUSTOMERS AROUND THE GLOBE

The fall of the Berlin Wall in November 1989 was a stroke of luck for Brose. The company had expanded production capacity at its Coburg factory and was desperately looking for qualified personnel to fill the resulting 100 new job vacancies it had created. The opening of the Czech and Hungarian borders in the late summer of 1989 encouraged young and well-educated East Germans to escape to the West. Many of the new jobs at Brose were filled with such refugees. Shortly after the border between East and West Germany officially opened, Brose began to cooperate with VEB Fahrzeugzubehörwerk Ronneburg, an East German manufacturer of auto parts located just 75 miles northeast of Coburg. In the early 1990s the company rented plant floor space in the nearby city of Gera and set up its own production line of window regulators for Volkswagen's new Mosel factory in Zwickau, Saxony. When Volkswagen decided to use whole door modules made by Brose in its Passat model in the second half of the 1990s, the company's East German production was moved to nearby Meerane to ensure just-in-time delivery of the door modules to Volkswagen. Brose synchronized its working hours with those of the Volkswagen plant working three shifts from Sunday night until Saturday afternoon. If the workers at Volkswagen took a break, workers at Brose took one too. Every 90 minutes a truck left the Brose factory to deliver exactly as many door modules to Volkswagen as had been ordered for the current batch of cars. The Volkswagen contract gave Brose a major boost. In 1998 the company's door module business almost doubled.

As the world's leading automakers began establishing a global network of factories and assembly lines during the late 1980s and throughout the 1990s, Brose followed suit. One of the company's main goals was to counter a sluggish auto market in Germany and Europe by winning new clients and by focusing on promising growth markets elsewhere in the world. Three quarters of the company's revenues were still derived from Germany-based clients. In 1988 Brose acquired the British company Sheridan Engineering Ltd. and established its first foreign subsidiary. In the same year the company set up a second foreign subsidiary in Spain. One of its early new customers from overseas was Japanese car manufacturer Nissan. Nissan had established a factory in England to penetrate the European market and awarded Brose a contract to deliver window regulators. They came from Brose's new factory in Coventry which began operations in 1992. One year later, two new Brose plants followed in Spain and Mexico.

In 1995 Brose established its first joint venture in China. The company's dynamic international growth continued in the second half of the decade with new plants in Mexico, China, Brazil, and South Africa. In addition, sales and R&D subsidiaries were established in Paris, Tokyo, and Detroit. Not surprisingly, the share of revenues from abroad rose to about one-third of total sales which more than tripled during the 1990s. However, foreign profits accounted for roughly half of Brose's total profits. By the end of the decade, one-third of Brose's 5,000 employees worked outside of Germany.

REMAINING COMPETITIVE IN A NEW CENTURY

What started out with globalization in the 1990s continued as fierce global competition in the auto industry, resulting in a number of mega-mergers. Out of the 36 car manufacturers on the market in the 1980s there were less than half of them left in 2000. Aware of their position, the remaining car makers, which concentrated an enormous purchasing power in their hands, put an increasing pressure on their suppliers to lower their prices. As the number of automakers diminished, those remaining demanded even more from their handpicked suppliers. Instead of components or modules they wanted complete systems, pretested and readily delivered to their assembly lines exactly when needed. To stay in the game and remain profitable at the same time, Brose attacked this problem by making fundamental changes in the company's organization and work processes as well as by developing more cost-efficient technological solutions.

In 1992, the company adopted a new business model and reorganized along product lines. Engineering and marketing departments were replaced by customerrelated product teams while engineers, production personnel and salespeople working closely together with vendors and clients. Hierarchies were flattened, manufacturing units were turned into profit centers, and total quality management was put into practice. However, this radical teamwork concept called "Factory within the Factory" was just the beginning.

In 2001 the company abolished fixed work spaces in the administration department at Coburg headquarters. Brose employees, nicknamed "Brosians," were simply given a mobile drawer in which to store papers and a computer password giving them access to their files. Desks were then assigned daily depending on which team members needed to work closely together that day, and that information was gleaned and calculated by new proprietary software.

Under the revolutionary new system, fixed work schedules were abolished altogether, and overtime was replaced by a performance-related bonus system. A fitness center was also made available to employees. Top management reported that the program cut about 20 percent of office and information technology–related costs, increased productivity, and lowered fluctuation and employee absence. A third measure was the initiation of internal competition among Brose's production subsidiaries. Each one of them, from Brazil to China, was invited to apply for each order received by the company, and each one of them operated under similar conditions in terms of know-how, information access, product range, and architecture.

On the technology front, Brose reacted to the difficult market conditions with more innovations and an expanded product range. In order to offer each customer an individual solution at a low price, Brose engineers developed several standardized modules that could be produced at low cost but allowed variations of the finished product at the same time. Another factor that helped reduce cost was the mass application of electronics wherever possible. To have more control over this crucial technology, the company began cooperating with Motorola and with German electronics giant Siemens AG, while also establishing an in-house production line for electronic components. To expand capabilities in the area of door systems, Brose acquired the door closure and locking system division worth DM 229 million in sales with 1,700 employees from German auto parts supplier Robert Bosch GmbH in 2002. Two years later top management decided to add electric drives for side doors and trunk latches to the company's product line.

By 2005 Brose's client roster read like the Who's Who of the global auto industry. The company had managed to become a leading supplier of door modules, including window regulators, wiring harness, loudspeaker, latch and inner door handle, preassembled on a steel carrier plate. At the end of that year Jurgen Otto, who had joined Brose in 1990, replaced Michael Stoschek as CEO. Otto, the first nonfamily member at the top of the company, was a driving force behind Brose's continued international expansion into the Czech Republic, Sweden, Canada, China, India, and Turkey. Top management's future vision was to become a preferred systems supplier to global car manufacturers. Although the necessary amount to finance acquisitions and investments in new technologies had grown exponentially, departing-CEO Stoschek stated that neither taking the company public nor inviting private equity investors were on the shareholders' agenda in the near future. Forty-one-year-old Otto told Süddeutsche Zeitung in December 2005 that, if necessary, the company might refuse to take on new orders if profitability was at stake, adding that "The best can never be the cheapest." Experts estimated, however, that there might be only a handful of automakers left two decades into the future, while the number of automotive suppliers was likely to shrink drastically due to fierce global competition.

Evelyn Hauser

PRINCIPAL SUBSIDIARIES

Brose Canada Inc.; Brose North America, Inc. (United States); Brose México, S.A. de C.V.; Brose do Brasil Ltda. (Brazil); Brose Bratislava, spol. s r.o. (Slovakia); Brose CZ spol. s r.o. (Czech Republic); Brose Chang-chun Automotive Systems Co., Ltd. (China); Shiroki Brose Corporation (Japan); Brose Korea Ltd. (South Korea); RG Brose Automotive Components (Pty.) Ltd. (South Africa); B Pressan Madeni Esya SA, Ve Tic A.S. (Turkey).