Leica Microsystems Holdings GmbH

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Leica Microsystems Holdings GmbH

Ernst-Leitz-Strasse 17-37
D-35578 Wetzlar
Germany
Telephone: (49)(6441) 29-0
Fax: (49)(6441) 29-2599
Web site: http://www.Leica-microsystems.com

Private Company
Incorporated: 1849 as Optical Institute C. Kellner, Wetzlar
Employees: 3,600
Sales: DM 880 million ($449 million) (1999)
NAIC: 334516 Analytical Laboratory Instrument Manufacturing

Leica Microsystems Holdings GmbH (LMS) is one of the world’s leading manufacturers of microscopes and related scientific equipment for research in the healthcare, semiconductor, and other industries. LMS is based in Wetzlar, Germany, and produces a broad range of optical and opto-electronic instruments in 11 factories in Germany, Switzerland, Austria, En-gland, the United States, China, and Singapore. About 90 percent of the company’s sales are generated outside Germany, supported by 18 sales organizations and associated dealers around the world. Light microscopy has been at the core of the LMS’s business since the company’s founding. LMS is also among the world market leaders for automatic measurement and inspection systems for the inspection of microchips and wafers in the semiconductor industry. Another important business area are confocal microscopes based on laser technology which allows the creation and analysis of 3D images in clinical diagnostics, cytogenetics, and materials science.

Beginnings in 1849

In 1849, in the German town of Wetzlar, 23-year-old Carl Kellner founded his own Optical Institute. Kellner was very talented in detailed mechanics and interested in optical studies, to which he also applied his studies in mathematics. Specifically, Kellner invented an optical corrected eyepiece with a new combination of lenses that significantly improved the image quality in field glasses and telescopes. His invention was a success among scientists, and Kellner decided to use his knowl-edge to build a new kind of microscope.

In his workshop in Wetzlar, which employed 12 assistants, Kellner started manufacturing microscopes. The first micro-scope was delivered to Geneva, Switzerland, for testing in 1851. Kellner’s microscopes soon earned a reputation among scientists. Because he designed them based on mathematical principles, they generated images of exceptionally high quality. Two years later there were more microscopes leaving the Optical Institute than telescopes. The institute’manufactured three types of microscopes with a different number of lenses. As word spread about their high quality, demand grew.

Increased demand presented difficulties for Kellner, as the old-fashioned production techniques of his small workshop limited the number of microscopes that could be produced; in the first five years in business only 130 were manufactured. In 1855 Kellner died at age 29 of tuberculosis; his widow married Friedrich Belthle and secured the existence of the Optical Institute. However, the firm’s fortunes went up and down and was seriously threatened when Belthle himself became ill.

In 1864 Ernst Leitz joined the company. A talented mechanic, Leitz had learned his craft as an apprentice for a German company that manufactured laboratory equipment and in Switzerland with a manufacturer of precision instruments such as electric clocks and telegraphs. One year after he joined the Optical Institute, Leitz became a partner and the firm’s name was changed to Optical Institute Belthle und Leitz, Wetzlar, vorm. C. Kellner. In 1867 the Optical Institute manufactured its 1000th microscope.

After Belthle’s death in 1869 Ernst Leitz—at that time just 26 years old—became sole proprietor of the company and renamed it Optical Institute E. Leitz, Wetzlar. The outbreak of the Franco-Prussian War in 1870 made Leitz’s business difficult in its first year. However, his organizational talent and extensive experience together with an expanding market for microscopes led to the growing success of the company. One of the major decisions he made as an entrepreneur was to switch from the slow, labor-intensive manufacturing by hand to serial manufacturing, which would soon became the industry standard. In addition to its economical efficiency, the new production techniques improved the quality standards of the microscopes, which in turn made them more reliable for scientific research. Leitz also presented and demonstrated his products at many scientific congresses. In the last decades of the 19th century the use of microscopy increased rapidly with the rising popularity of natural sciences. In 1892 a sales office was opened in New York City which later became E. Leitz, U.S.A. By the turn of the century the Leitz company had gained a worldwide reputation.

By 1900 the Leitz company consisted of several facilities, oversaw 400 employees, and produced about 4,000 microscopes a year. By 1910, the company was manufacturing 9,000 microscopes annually and employing a workforce of 950. From a product line of fewer than 20 different types of microscopes and three different tripods, the company had expanded to produce 34 different microscope types including 21 different microscopes for medical and biological research as well as for scientific education in schools and universities; four different microscopes for geological and mineralogical research; and nine microscope types with distinct tripods for special uses such as for museums, measurement, brain research and other specialties. Also during this time, the 100,000th Leitz microscope was shipped to German bacteriologist and Nobel Prize Laureate Robert Koch. During World War I, between 1914 and 1918, the Leitz company was obliged by the German government to convert to war production.

New Generation of Leitz Leadership in the 1920s

Although Ernst Leitz’s eldest son Ludwig had been involved in management of the family business, he died in an accident in 1898. Leitz’s second son, Ernst Leitz II who joined his father’s company as an apprentice in 1889, was then groomed for leadership, becoming responsible for new business development and management of the production facilities and eventu-ally becoming his father’s partner. Leitz II placed a high priority on research and development, adding optical measuring instruments for industrial use to the Leitz product line. When his father died in 1920, Ernst Leitz II took over the business and transformed it into a public limited corporation.

Four years later Ernst Leitz II decided to begin mass production of a new invention, the first Leitz camera, called the Leica. The company had long offered drawing aids for reproducing images seen under microscopes when Leitz II tapped Oskar Barnack to experiment with developing a small-format still camera for that purpose. The result was Barnack’s invention of the world’s first 35-mm camera. Barnack’s idea of reducing the format of photo negatives and enlarging them after exposure revolutionized photography. The first photos with this new camera taken in 1914 were of exceptional quality. However, the further development of the new technology was interrupted by World War I. The Leica camera was finally offered to the public for the first time at a trade show in 1925 in Leipzig. In 1926 the first Leitz 35-mm projector for slides or film strips was produced. The first auto-focus enlarger followed in 1933. In the field of cameras, lenses, and photography accessories, the Leica set the quality standard for the world until well after World War II.

Leica camera technology provided new inroads to micros-copy, merging the two into the new field of photomicrography, in which a camera affixed to a microscope by a connecting tube could capture highly magnified images. Other new Leitz products of the time included a biological polarization microscope and the photometer, a device that measured illumination. The photometer was designed by Max Berek, a microscope expert who had worked for Leitz since 1912 and developed the very successful f/3.5 Elmar lens for the original Leica camera.

After World War II, a new glass research laboratory was established in Germany. In 1951, one year after Ernst Leitz II turned 80, the one-millionth Leica lens was produced at the Leitz Werke. In the same year a Canadian subsidiary was founded, and a camera production plant was built in Midland, Canada. E. Leitz, Canada became a leading lens producer, which in 1961 developed the first lens for underwater photography. Ernst Leitz II died in 1956. His three sons, Ernst Leitz III, Ludwig Leitz, and Gtinther Leitz, who had been involved in the business as directors from 1930 onward, took over the business.

New Partners and Owners in the 1970s-80s

The Leitz Werke remained in the ownership of the Leitz family and by the 1970s was known as Ernst Leitz Wetzlar GmbH, boasting a workforce of 6,600 employees. With the speed of technological innovation accelerating and globalization of the world economy shifting into high gear, it became necessary for the company to look for a partner. In 1972 Leitz started working with Wild Heerbrugg AG, a large Swiss optical company founded in 1921 by Jacob Schmidheiny, Heinrich Wild, and Robert Helbling. Wild Heerbrugg was known for its surveying instruments, stereo microscopes, tool plotters, and optical systems for industrial and military use. When the share capital of Ernst Leitz Wetzlar GmbH was increased in 1972, Wild Heerbrugg purchased a 25 percent stake in the company, and the two companies agreed to cooperate in product development, production and distribution. Two years later Wild Heerbrugg bought another 26 percent of the Leitz shares.

Company Perspectives:

Leica Microsystems’ mission is to be the world’s first-choice provider of innovative solutions to our customers’ needs for vision, measurement, lithography and analysis of micro-structures. Leica has developed from five brand names, all with a long tradition: Wild, Leitz, Reichert, Jung and Cam-bridge Instruments. Leica symbolizes not only tradition, but also innovation.

The year 1986 marked the beginning of a period of company reorganization. After Leitz struggled with financial losses for several years, Dr. Stephan Schmidheiny, from one of Switzerland’s wealthiest families, bought out significant Leitz shareholdings and took the company under the wings of his investment group Unotec AG. The Leica camera division was thereafter organized as part of an independent private company, Leica GmbH. Ernst Leitz Wetzlar GmbH and Wild Heerbrugg AG merged to form Wild Leitz AG. The new optical concern was headquartered in Switzerland and employed 9,000 people.

1990s Mergers and Reorganizations

In 1990 Wild Leitz merged with The Cambridge Instrument Company, a company rich in optical history, founded in 1833. Having struggled in the 1970s, Cambridge had come under the management of Terence J. Gooding, who took it public in Great Britain, made several acquisitions, and returned it to profitability. In 1988 the company was realizing an annual profit of $10 million on $230 million in sales, and CEO Gooding took the next step. He approached Wild Leitz AG, which was three times as big as Cambridge but also producing losses and dealing with a heavy debt load, and suggested a merger of the two famous optical groups. Gooding’s endeavor was successful. The Cam-bridge Instruments group at the time included the German microtome maker R. Jung based in Heidelberg; Austrian optical company C. Reichert of Vienna, which pioneered fluorescence microscopy; the optical systems division of the American Bausch & Lomb group; and American Optical Company, an optical group with a tradition reaching back even further than that of the Leitz company.

The new holding company, Leica Plc, was headquartered in St. Gallen, Switzerland, registered in Bar Hill, England, with shares trading on the London stock exchange. Stephan Schmidheiny’s Unotec Holding AG held over 40 percent of Leica Plc stock, while Gooding’s investment group owned over eight percent. Other major shareholders of the new Leica group included the Warner Lambert Company, Midland Montagu Equity Ltd., and Anton Schrafl Associates. With combined sales of $800 million the new Leica group became one of the largest producers of optical and scientific instruments in the world. About half of Leica’s sales were generated in Europe while 35 percent came from North America. Optical microscopes and surveying instruments each accounted for about one-fourth of total sales. Another 19 percent of Leica’s revenues came from defense and other optics; 16 percent from scientific instruments; ten percent from metrology systems; and eight percent from other professional products.

After the merger, the whole group was represented under the Leica name, which had gained widespread recognition in its capacity as the camera brand of choice among photojournalists. Wild Leitz AG, Heerbrugg, the largest of the Leica subsidiaries, was renamed Leica Heerbrugg AG. The second largest Swiss subsidiary of the Leica group, Kern & Co. AG, a manufacturer of industrial measuring systems and specialty optics based in Aarau, became Leica Aarau AG. All products of the Leica group were marketed under their original brand names, including Wild Leitz, Leica, Kern, R. Jung, C. Reichert, and Britain’s Cambridge Instruments in Europe, and American Optical in the United States. The merger expanded the distribution networks of the former Wild Leitz group into the United States and the Far East, putting the Leica group in a better position to compete with Japanese firms Nikon and Olympus in Asia.

In 1992 Leica Heerbrugg made headlines when it re-measured the summit height of Mount Everest from the Chinese side with its GPS survey system. The new measurement established that the mountain was some two meters lower than the previous official elevation. That same year, the Leica group sold its camera business to a group of the company’s management. Leica Camera was allowed to use the Leica brand name for its products, but the Leica name would remain the property of the former Swiss parent.

In 1997 the remaining companies of the Leica group were split into two independent units: Leica Microsystems and Leica Geosy stems. Leica Mikroskopie and Systeme GmbH became Leica Microsystems Holdings GmbH and the management of the group returned from Switzerland to Wetzlar, Germany, where it all began 150 years earlier. In 1998 the Geosystems group was sold to the international investment group Investcorp. The Leica Microsystems group was bought by London-based venture capital firm Schroder Ventures in a $500 million deal in the same year. Schroeder provided financial resources for business development to make Leica Microsystems fit for an initial public offering in the year 2000.

Key Dates:

1849:: Carl Kellner founds an Optical Institute in Germany.
1869:: Ernst Leitz becomes sole proprietor of the Optical Institute.
1892:: A sales office is opened in New York City.
1920:: Ernst Leitz II takes over the business, which is transformed into a public limited corporation.
1924:: Ernst Leitz II decides to mass produce the Leica camera.
1951:: Canadian operations commence.
1971:: A production facility for stereo microscopes is established in Singapore.
1972:: Wild Heerbrugg buys 25 percent of Leitz.
1986:: Ernst Leitz Wetzlar GmbH and Wild Heerbrugg AG merge to form Wild Leitz AG.
1990:: Wild Leitz Holding AG merges with The Cambridge Instrument Company; Wild Leitz AG becomes Leica Heerbrugg AG.
1992:: Management buyout of the Leica camera business.
1997:: Leica group is split into Leica Microsystems and Leica Geosystems.

Despite its organization turmoil, Leica Microsystems (LMS) continued to expand its geographical reach and product lines. In 1992 LMS researchers developed a scanning acoustic microscope that was able to image elastic constants of materials and could be used to detect defects below the surface of microchips. In 1993 and 1994 the company launched two joint ventures for specimen preparation instruments and for microscopes in China. A year later, LMS partnered with German competitor Zeiss to establish LEO, a joint venture for electron microscopes, and introduced the first automatic fluorescent microscope. In 1996 LMS bought the E-beam Lithography business from the Jenoptik group; the U.S. National Institutes of Health ranked its laboratory microscope, the Leica DM LB, Top Product for bio-medicine. Business partnerships of the late 1990s included a joint distribution alliance with Zymed Laboratories, Inc, a manufacturer of immunochemical reagents and monoclonal antibodies, as well as an alliance with Renishaw PLC, a leading British manufacturer of physical, laser, and video measurement and inspection equipment, as well as spectral analysis systems for new product development. In 1998 LMS acquired Jenoptic Silmetric GmbH from the German Jenoptik group.

Principal Subsidiaries

Leica Mikrosysteme Vertrieb GmbH; Leica Microsystems Ltd. (Hong Kong); Leica Microsystems (Canada) Inc.; Leica Micro-systems K.K. (Japan); Leica Microsystems (SEA) Pte Ltd (Singapore); Leica Microsystems Inc. (United States); Leica Microsystems (UK) Ltd; Leica Microsystems AG (Switzerland).