Diehl Stiftung & Co. KG

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Diehl Stiftung & Co. KG

Stephanstr 49
Nuremberg, Germany
Telephone: +49 0911 9 47 0
Fax: +49 0911 9 47 34 29
Web site: http://www.diehl.com

Private Company
Incorporated: 1902
Employees: 10,500
Sales: EUR 1.7 billion ($2.02 billion) (2005)
NAIC: 331111 Iron and Steel Mills; 332996 Fabricated Pipe and Pipe Fitting Manufacturing; 333512 Machine Tool (Metal Cutting Types) Manufacturing; 333513 Machine Tool (Metal Forming Types) Manufacturing; 334419 Other Electronic Component Manufacturing; 334518 Watch, Clock, and Part Manufacturing; 335999 All Other Miscellaneous Electrical Equipment and Component Manufacturing; 336412 Aircraft Engine and Engine Parts Manufacturing

Diehl Stiftung & Co. KG is one of Germany's major diversified industrial manufacturing companies. Based in Nuremberg, Diehl operates on an international level through three primary divisions: VA Systeme, Diehl Metall, and Diehl Controls. VA Systeme is the company's largest division, accounting for nearly 41 percent of its total revenues of EUR 1.7 billion ($2.02 billion) per year. The companies in the VA Systeme division produce ammunition, artillery rockets, fuses, guided missiles, and surveillance and warning systems; cockpit, aircraft cabin, and related display and utility systems; and flight and engine control equipment. The company, through subsidiary Diehl BGT Defence and others, has long been a major defense contractor for NATO and the United States, producing the Sidewinder missile, among others. Defense contracts continue to account for 33 percent of Diehl's total revenues. Under Diehl Metall, the group includes semifinished steel and metal products, including aluminum strips, copper and copper alloy cables, and wires; and brass and light alloys products, including keyblanks, profiles, tubes, and synchronizer rings. The Diehl Metall division, which includes a production joint venture in Wuxi, Jiangshu, China, and subsidiaries Griset SA in France and The Miller Company in the United States, accounts for 31.5 percent of group sales. Diehl Controls is a world-leading manufacturer of controls for home appliances, cooking equipment, thermostats, and other products, and represents 16 percent of group sales. Founded in 1902, Diehl remains 100 percent owned by the Diehl family; Thomas Diehl, great-grandson of the founders, serves as group chief executive officer.

FOUNDING A METAL WORKSHOP: 1902

Diehl's origins lay in the production of decorative fittings, including plaques, and wrought-iron and cast-iron fittings such as door handles. Founded by Heinrich and Margarete Diehl in Nuremberg in 1902, the company's production soon expanded to include semifinished items, such as brass rods. With the outbreak of World War I, Diehl turned its production to the German war effort, producing shells for artillery and other ammunition. By 1917, the company had built a second, dedicated plant for its shell and related cast metal and casing production. In the interwar years, the company expanded again, adding an extrusion press in 1920, which enabled it to extend its production of rods, and add the production of tubes as well. The company emerged as a major producer of semifinished products for the German automotive and railroad industries, as well as a leading supplier to the plumbing market.

The Diehls were joined by son Karl, who quickly emerged as the driving force behind the company's expansion. The younger Diehl launched the company's shift from relatively unsophisticated semifinished products to a new range of mechanical precision products, such as watch and clock movements. The company set up this operation in a third factory in Nuremberg, which became the Diehl headquarters in 1937. Diehl continued to expand its semifinished products side, opening a new factory in Rothernbach in 1938. Founder Heinrich Diehl died that year, and son Karl took over as head of the company. By then, Diehl already counted nearly 3,000 employees.

Diehl entered a dark period during the war, when, classified as a strategic business, the company again turned its production to the German war effort. The company launched production of ammunition and fuses at this time, both of which would remain important products for the group. During the war, in order to supplement its workforce, Diehl also began using prisoner-of-war labor, and then slave laborers. (Diehl denied its use of slave forced labor during the war until the late 1990s.) By the end of the war, much of the company's production capacity had been destroyed.

POST-WORLD WAR II EXPANSION

The company rebuilt its factories in the aftermath of the war and in the immediate postwar period produced cookware. By 1946, however, the company had already resumed its production of mechanical components. Diehl now went further than producing simply the components for clocks, and in 1947 the company launched its first fully manufactured clock. This production led the company to develop a new branch of operations, and during the 1950s, the company also began producing calculators, preset timers, and other timepieces. In the early 1950s, Diehl took over development of the Archimedes brand of calculating machines. The company's first calculating machine debuted in 1952 and featured some 2,800 parts. The company quickly introduced a fully automatic version, and by the beginning of the 1960s had established itself as one of the world's leading producers of calculating machines.

In the meantime, Diehl's experience producing fuses and ammunition during the war enabled it to redevelop this activity again in the postwar era, with the formation of the Bundeswehr. As such, during the 1950s, Diehl already laid the basis for its three core divisions.

Diehl's drive to diversify its operations also led it to make the first of a number of acquisitions, including a majority control of Junghans, a timepiece specialist based in Schramberg, in 1957. The company added production of brass fittings in 1958, with the acquisition of Sundwiger Messingwerk, originally founded in 1698. The following year, the company bought a foundry, Remscheid Backhaus, followed by the purchase of a foundry in Mariahutte in 1960. Diehl continued to look for new diversification opportunities as well. In 1959, for example, the company launched an aircraft maintenance subsidiary. The company also succeeded in producing the world's first battery-driven timepiece, the "Mini Clock," that year.

COMPANY PERSPECTIVES

Diehl Stiftung & Co. KG is one of the largest German corporations with an international orientation. 10,500 employees in more than forty independent companies, making up the three Divisions, Metall, Controls and VA Systems, are generating profits exceeding 1.7 billion Euros. The company has been an entirely family-run enterprise since its foundation one hundred years ago.

Timepieces and calculating machines formed a major part of the group's operations into the early 1960s. Yet the company had already recognized a need to adapt to the future, noting the potential of the fast-developing electronics industry, and the threat the new technology posed to its mechanically driven components. As such, Diehl launched its own Data Technology and Text Systems operation in 1960, and began developing its own electronic products, notably in the fields of data and word processing. Diehl also began adapting its timepiece production, phasing out its mechanical movements in favor of new quartz crystal-based movements. The group slowly phased out its mechanical component operations, ending production of the last of its mechanical calculator line in 1972.

By then, Diehl had already established itself as a leading manufacturer of quartz-based and electronic-drive timepieces, a position that was highlighted when the company, through its Junghans subsidiary, was selected to provide the timekeeping equipment for the 1972 Munich Olympic Games. The following year, Diehl established a dedicated Timers and Data Equipment division.

DIVERSIFIED INDUSTRIAL GROUP

Diehl added a number of new acquisitions in the 1970s. In 1975, for example, the company purchased Konstanz-based CTM Computer Technik Muller, as well as majority control of Eurosil, based in the United States, which specialized in the production of integrated circuits. In 1977, Diehl purchased Emde KG, based in Bremerhaven, which specialized in rubber-metal components. Two years later, Diehl added Mauser Werke Oberndorf, which included subsidiaries in France and the Netherlands. By then, Diehl had also added a subsidiary in Brazil.

Diehl's control business began taking shape in the late 1970s and early 1980s as well. A significant step in this market came in 1977, when Diehl debuted its first electronic stove timer. The company quickly emerged as a leading producer of control systems for a variety of home appliances. In support of this, Diehl launched a dedicated controls division at the end of the decade, building a new headquarters and production facility for the division in Nuremberg in 1989. The company's developing control business was aided by its status as one of the world's timepiece innovators. For example, in 1984, Diehl unveiled the world's first solar clock, and also, through Junghans, produced its first clock that could be set and controlled remotely. By 1993, Junghans succeeded in combining and miniaturizing the two technologies, presenting a solar-powered, radio-controlled wristwatch, the Mega Solar.

KEY DATES

1902:: Heinrich and Margarete Diehl establish art foundry in Nuremberg.
1920:: Company launches semifinished products business; begins production of metal rods and tubes.
1934:: Karl Diehl joins company and leads it into production of precision mechanical components.
1939:: Diehl begins production of fuses and ammunition for German military.
1947:: Company enters clockmaking.
1952:: Company produces first calculating machine.
1955:: Company begins production for defense industry.
1957:: Diehl acquires Junghans, a timepiece maker.
1973:: Company phases out precision mechanical products division in favor of developing electronics business; founds Timer and Data Equipment division.
1975:: Diehl acquires Eurostil, an integrated circuits maker in the United States.
1979:: Company acquires Mauser Werke, adding subsidiaries in France and the Netherlands.
1989:: Company forms Control Division; acquires Bodenseewerk Geratetechnik.
1993:: Company acquires VDO Luftfahrtgerate in Frankfurt.
1994:: Diehl acquires AKO Werke, becoming leading maker of control systems for European appliance industry.
1997:: Diehl acquires Griset, semifinished products manufacturer in France.
1998:: Company is renamed Diehl Stiftung & Co.
1999:: Diehl opens plant in Shenzhen, China.
2000:: Diehl acquires The Miller Company in the United States, and becomes world-leading producer of phosphor bronze strips.
2002:: Diehl celebrates 100th anniversary.
2003:: Company forms subsidiary in Kuwait.
2004:: Company opens new control system manufacturing plant in Mexico.
2006:: Diehl opens avionics development center in Rostock, Germany.

Diehl's defense production was also preparing to undergo a transformation. The fading of the Cold War during the 1980s led to a drop in the group's traditional ammunition orders. In response, Diehl adapted its electronics expertise to its defense work, and began developing its capacity in guided missile production. This led to construction of a new automated factory for the production of the Multiple Launch Rocket System (MLRS) in 1988. Diehl further expanded its defense division with the acquisition of Bodenseewerk Geratetechnik in 1989, Friesen's IWS Industriewerke Saar in 1992, and then VDO Luftfahrtgerate, based in Frankfurt, in 1993. These acquisitions, which placed the company as the prime contractor for the NATO's AIM-9L air-to-air missile, helped refocus Diehl's defense operations onto the avionics and aerospace markets. Diehl began producing Sidewinder missiles under license through the 1990s as well. By the end of the decade, the group's defense and avionics operations, regrouped under the VA Systeme division, had become the largest part of its diversified businesses.

Diehl's Control Systems subsidiary achieved a major breakthrough in 1994 when the company acquired home appliance control maker AKO-Werke, based in Wangen, in 1994. As a result, Diehl emerged as one of the leading European producers of control mechanisms to the white goods. In addition to AKO's Wangen headquarters and production plant, the purchase also brought the company a new production facility in Kisslegg.

Diehl continued developing its semifinished products operations as well. In 1995, the company launched production of cadmium-free trolley wire. In 1997, the company expanded this division into France, where it purchased Griset SA. Founded in Paris in 1769, Griset had evolved into a pioneering producer of aluminum by the end of the 19th century, and later became one of France's leading independent producers of semifinished products.

THREE CORE DIVISIONS FOR THE NEW CENTURY

Diehl, which remained guided by Karl Diehl until 2002, reincorporated under a new family foundation in 1998, and changed its name to Diehl Stiftung & Co. In that year, the company faced international shame when Karl Diehl's claims that the company had never made use of slave labor were finally proven false. The company subsequently set up a fund to compensate the people it had brutalized during the war.

Diehl launched a restructuring of its operations at the end of the 1990s and into the early 2000s, selling its Junghans watchmaking division in 2000, to EganaGoldpfeil. The company briefly attempted to expand its defense operations with an entry into the repair of armored and other military vehicles. In support of this, the company acquired, then merged several companies, including FFG Flensburger Fahrzeugbau and Neubrandenburger Farhzeugwerke. However, this effort proved only temporary, and, with a downturn in the repair market, the company consolidated its repair operations to a single facility in 2001.

By the mid-2000s, Diehl's operations had been refocused onto three core divisions: VA Systeme, Diehl Metall and Diehl Control Systems. Diehl Metall continued to grow strongly, notably with an extension into mainland China with the establishment of a strip cutting plant in the Shenzhen development zone in 1999. The following year, the company acquired Connecticut-based The Miller Company, a specialty copper strip producer, with a strong capacity in phosphor bronze. The addition of this latter capacity placed Diehl as the world's leading producer of phosphor bronze strips. The company further expanded its metals production, notably its production of automotive components, with the opening of a new facility in Wuxi, in China.

Celebrating the company's 100th anniversary in 2002, Karl Diehl turned over the chairmanship of the company to his sons, Werner Diehl, who became company chairman, and Thomas Diehl, who emerged as the company's chief executive officer. As it entered its second century, the Nuremberg-based company continued to seek new expansion opportunities. In 2004, the company formed a joint venture with Raytheon to modernize the Sidewinder missile. In that year, also, the company's controls division established a new plant in Queretaro, Mexico. Into the mid-2000s, the company also began to target expansion in the Middle East, setting up a subsidiary in Kuwait in 2003. In February 2006, the company expanded its avionics operations with the opening of a new development center in Rostock, Germany. With strong growth in its core markets, Diehl remained committed to its tradition of family ownership and its position as a major German industrial group.

PRINCIPAL SUBSIDIARIES

Diehl AKO Stiftung & Co. KG; Diehl Avionik Systeme GmbH; Diehl BGT Defence GmbH & Co. KG; Diehl Controls Italia S.r.l.; Diehl Controls Ltd. (U.S.A.); Diehl Controls Polska sp.z.o.o.; Diehl do Brasil Metalúgica Ltda. (Brazil); Diehl Metall (Shenzhen) Co. Ltd. (China); Diehl Raytheon Missile Systeme LCC (U.S.A.); Diehl Synchro Tec Manufacturing (Wuxi) Co., Ltd. (China); Diehl VA Systeme Stiftung & Co. KG; EuroSpike GmbH; Franconia Industries Inc. (U.S.A.); Griset S.A. (France); SMH Südeutsche Metallhandelsgesellschaft mbH; Sundwiger Messingwerk GmbH & Co.; The Miller Company (U.S.A.).

PRINCIPAL DIVISIONS

Diehl Metall; Diehl Controls; VA Systeme.

PRINCIPAL COMPETITORS

C Grossmann Eisen- u Stahlwerk AG; Arcelor S.A.; Corus Nederland B.V.; MAN AG; ThyssenKrupp Stahl AG; European Aeronautic Defence and Space Company EADS N.V.; Salzgitter AG; SKF (AB); Mittal Steel Company N.V.; Honeywell International Inc.; Raytheon Company.