Miele & Cie. KG

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Miele & Cie. KG

Carl-Miele-Straße 29
D-33332 Gütersloh
Germany
Telephone: (49) (52 41) 89-0
Fax: (49) (5241) 89-2090
Web site: http://www.miele.de

Private Company
Incorporated: 1899 as Miele & Cie.
Employees: 15,328
Sales: EUR 2.24 billion ($2.22 billion) (2002)
NAIC: 335221 Household Cooking Appliance Manufacturing; 335222 Household Refrigerator and Home Freezer Manufacturing; 335212 Household Vacuum Cleaner Manufacturing; 335224 Household Laundry Equipment Manufacturing; 335228 Other Major Household Appliance Manufacturing; 337124 Metal Household Furniture Manufacturing; 337122 Nonupholstered Wood Household Furniture Manufacturing

Miele & Cie. KG is Germany’s third-largest manufacturer of household appliances and has a strong foothold in the European market as well. The company is best known for its durable washing machines, tumble dryers, rotary irons, dishwashers, built-in refrigerators, freezers, stoves and stove hoods, and vacuum cleaners. Miele & Cie. also makes commercial washing machines used in hotels, commercial dishwashers for restaurants, special washer-extractors for cleaning the protective suits of fire fighters, and washer-disinfectors for hospitals and medical laboratories. Professional appliances sold to businesses account for approximately 10 percent of total revenues. A line of built-in kitchen ensembles, which accounts for roughly 3 percent of sales, complements Miele’s product range. Almost two-thirds of the company’s sales are generated from exports. While Miele appliances are sold all around the world, the company manufactures almost all its components, including electronics, in Germany and Austria. This is done in order to insure Miele’s high standards of quality. The company is owned and managed by the third-generation descendants of the two company founders.

Easing Housewives’ Workload in the Early 20th Century

The initial purpose of the company, which was founded by mason Carl Miele and merchant Reinhard Zinkann in the West-phalian town of Herzebrock in 1899, was the production of cream separators used in farms to separate cream from milk. The eleven workers hired for the job—some tradespeople and the sons of local farmers—operated out of a small workshop on the premises of a former corn mill equipped with one drill and four lathes. Soon the company also started making butter churns with a stirring mechanism that freed the wives and daughters of local farmers from hand-churning. However, it was the decision to include washing machines in the product range that got the Miele enterprise off to a fast start. At the beginning of the 20th century, doing laundry was an exhausting task that involved arduous manual labor and often took several days to accomplish. The dirty laundry was soaked in soapy water over night and wrung out the next morning. After tough stains were rubbed out by hand, the laundry was thrown into a large wood-and-coal fired tub where it had to be manually agitated in the boiling water with a wooden paddle. The laundry was then rubbed by hand on a washboard before it was rinsed and wrung out several times. It was no surprise, then, that Miele’s washing machines were soon in such great demand. Under the motto “forever better,” the two company founders set out to ease the housewife’s workload with a stream of innovative household appliances.

The first Miele washing machine looked very much like the butter churns the company was already making. It consisted of a wooden tub made from expensive oak and paddles in the form of a cross in the center of the tub. These paddles were moved manually by a crank or a lever. After the wooden lid was closed, the rotating cross—called the agitator—moved the laundry placed in the tub around in the hot, soapy water. The machine also included a wring function. Although the process still involved a great deal of manual labor, Miele’s “Hera” washing machine, which was soon manufactured in greater numbers, was a welcome alternative to the old “laundry day.” In 1904, Miele introduced a new model that could be driven by a transmission belt. External motors with transmission belts had already been in wide use on family farms to operate cream separators and butter churns.

By 1907, the company had grown to a considerable size that included a workforce of 60 employees. In that year, Carl Miele and Reinhard Zinkann moved their business to Gütersloh, a city in northwestern Germany. The new property they purchased for the company was much larger and came with an iron foundry and an on-site railway connection. In 1907, Miele and Zinkann also established their first four regional sales offices. Four years later, a number of new production facilities were erected that enabled the company to build all the parts used in its products. These facilities included a foundry for non-ferrous metals; facilities for zinc-, nickel-, and tin-plating; an enameling plant; a pressing shop; and a sawmill. Carl Miele even invented a cleaner and cost-saving technology for zinc-plating that earned him a patent. By 1914, the year in which World War I started, Miele & Cie. employed more than 500 people. To ensure their loyalty, the company founders created an impressive benefits package. In 1909, they introduced a company health plan. One year later, over 200 flats were built for Miele employees. In the same year, Miele employees received their first Christmas bonus. A decade later, a company pension fund was created and more company-owned housing for employees was provided in Gütersloh. Another factory for manufacturing components for milk separators and electric motors was erected in Bielefeld, a city north of Gütersloh, in 1916.

Diversification in the Pre-World War II Era

Miele & Cie. kept refining its cream separators, butter churns, and washing machines. The first electricity-powered cream separator was introduced in 1910, followed four years later by the first electric washing machine. Since many households—especially in rural areas—did not have electricity yet, Miele built washing machines that could be powered by running water. For urban dwellers who already had power outlets in their apartments, the company manufactured a model with an electric motor mounted under the tub. The advent of the electric motor made it possible to design a greater variety of washing machines for different needs. By 1926, there were 24 different models of Miele washing machines on the market.

The 1920s and early 1930s saw a great number of Miele “firsts.” In 1924, the company ventured into the growing market for commercial washing machines and tumble dryers. In 1926, Miele & Cie. started making milking machines. One year later, the company introduced the first Miele vacuum cleaner. In 1928, Miele’s first electric rotary iron was launched, followed the next year by the first electric dishwasher for domestic use in Europe. In 1930, the company put an all-metal washing machine on the market. Two years later, the first Miele ice-box—a predecessor of the refrigerator—appeared.

Another area of new ventures for the company was in the production of motor vehicles. In 1912, Miele & Cie. was among the many manufacturers trying to get a share of the emerging market for automobiles. The company made passenger cars with two and four seats, limousines, and pick-up trucks, manufacturing over 120 vehicles before this business venture was finally abandoned. However, that was not the end of Miele & Cie.’s activities in the automotive arena. In 1924, the company began making bicycles, followed by a model with a supplemental electric motor in 1933. In the same year, Miele & Cie. introduced its first motorcycle.

Miele’s constant stream of innovations helped the company survive the politically and economically unstable period between the two world wars. After World War I came to an end in 1919, the German economy was shaken by hyperinflation in the early 1920s, followed by the worldwide effects of the Great Depression, which was triggered by the New York Stock Exchange crash in 1929. Carl Miele and Reinhard Zinkann successfully led the company through these challenging years. Carl Miele died in 1938, Reinhard Zinkann in 1939. By that time, Miele & Cie. employed 2,700 people, and about 2,000 Miele products were produced daily and shipped to numerous countries around the world. The company had developed a network of warehouses, showrooms, and sales offices in Germany and abroad. Foreign sales offices had been established in Austria, Belgium, France, Poland, and Argentina in 1914, and the company’s first subsidiary abroad was founded in Switzerland in 1931.

Second Generation Leadership during World War II and the Postwar Boom

In 1939, the year when a Hitler-led Germany declared war on Poland, the sons of the two company founders—Carl Miele, Jr. and Kurt Christian Zinkann—took over the leadership of Miele & Cie. For a limited period of time, they were guided by one of their fathers’ most trusted employees, C.H. Walkenhorst, who had worked side-by-side with the two founders for many years. The war interrupted Miele & Cie.’s dynamic growth. The company was ordered to make whatever supplies the German military needed. At the same time, a small part of production capacity was still used to manufacture bicycles and wagons. Many of the company’s factories and sales offices were badly damaged in Allied bombing raids on Germany.

Company Perspectives:

Continuous innovation is the foundation of our business. The customer, for whom we provide first-class products and services, is the center of attention. In keeping with the company motto of “Forever better, “first coined over 100 years ago, we wish to continually improve all activities at our various production facilities. The founding fathers considered it unethical to sell machines which would no longer be of any use after only a few years. In their own words: “Success is only possible in the long term if one is totally and utterly convinced of the quality of one’s products.”

After the war, Miele & Cie. adjusted to the very basic needs of the times and built coal-fired ovens from metal that survived the bombing raids. The company even resumed the manufacture of wooden tub washing machines and continued the production of wagons, which Miele had made since 1919. By 1949, Miele’s product range was considerably smaller than before the war. However, the reconstruction years gave way to the “economic miracle” years of the 1950s and 1960s.

To satisfy the exploding postwar demand for kitchen appliances, Miele & Cie. expanded its production capacities. New factories were built or acquired in Euskirchen, Lehrte, and Warendorf, Germany, and in Bürmoos, Austria. All but the latter were located in close proximity to company headquarters. At the same time, technological standards kept rising. Miele’s first fully automatic appliances, a washing machine and a dishwasher, were launched in 1956 and 1960 respectively. The 1960s and 1970s brought more sophisticated control mechanisms based on microelectronics.

To free production and research capacities for household appliances, Miele & Cie. exited the bicycle and motorcycle market in 1960. In 1969, Miele & Cie. entered the rapidly emerging market for built-in kitchens, their strategy being that, instead of selling just one Miele dishwasher or refrigerator at a time, the company could sell a whole kitchen equipped with a number of Miele appliances to a single customer. Between 1973 and 1975, the company remodeled a newly acquired factory and transformed it into a production facility for built-in kitchens. Over the years, the range of Miele kitchen appliances grew more diverse. Miele’s well-known dishwashers, refrigerators, and freezers were followed in the 1970s by electric and microwave ovens. Stove hoods, steam cookers, and built-in coffee makers and espresso machines later completed the company’s product line.

Another natural extension of the company’s activities was the manufacture of specialized washing machines for commercial use. In addition to larger and stronger washing machines for laundromats and hotels, Miele started manufacturing special washing machines for the protective suits of fire fighters. In 1984, the company launched a new line of commercial washing machines and tumble dryers called the “little giants,” so named because they had a capacity of five to six kilograms. Miele also put out a number of medium-capacity appliances that were built to handle loads of up to 32 kilograms. In the 1980s, the company also refined its line of commercial dishwashers for restaurants and expanded into building special “dishwashers” for cleaning and disinfecting surgical instruments used in doctors’ and dentists’ offices, hospitals, and medical research laboratories.

Continuity and Growth in the 1990s and Beyond

In 1985, three of Miele’s senior managers, including co-owner Kurt Christian Zinkann, passed away. One year later, CEO Carl Miele, Jr. died. They were succeeded by their sons—Rudolf Miele and Peter Zinkann. The grandsons of the company founders opened a new chapter in Miele & Cie.’s history. Reading the signs of the time, they strongly focused on international expansion. By the mid-1980s, the company had added foreign subsidiaries in Australia, South Africa, Ireland, and the United States in addition to their existing subsidiary in Switzerland. Over the next 17 years, the company’s international operations extended to 31 countries. After the Soviet Union disintegrated in the early 1990s, Miele & Cie. expanded into many eastern European countries, including Russia. Another new target market of the 1990s was Asia, where the company founded subsidiaries in Japan, Hong Kong, and Singapore.

The reunification of the two German states in 1990 called for the reorganization of Miele & Cie.’s domestic sales and distribution network. After an almost 50-year absence from the eastern German market, Miele products were instantly popular again. The former sales office in Leipzig, which was lost after World War II, was reopened. Another large sales and distribution center was erected in Berlin later in the decade.

While the company invested heavily in conquering foreign markets, Miele & Cie. did not follow the trend to move production abroad in order to save cost. To the contrary, the company concentrated all manufacturing sites no further than a day’s trip from company headquarters. Two acquisitions further expanded Miele’s production capacity. In 1986, the company took over Cordes, a Westphalian specialist in laundry technology. Four years later, Miele & Cie. acquired Imperial, a manufacturer of built-in appliances and catering equipment.

Maintaining its emphasis on quality, Miele & Cie. disproved the widely held belief that in the 1990s, with rapid economic globalization under way, it was too expensive to maintain manufacturing facilities in a high-wage country such as Germany. As it turned out, customers were willing to pay premium prices for premium quality. To keep standards at the highest possible level, Miele & Cie. had started developing and manufacturing the microelectronic controls used in the company’s appliances. A major strength of Miele’s business strategy was the fact that the company’s high standards of quality resulted in the longevity of its products. With an average life span of 20 years, Miele appliances were built to last. This policy earned the company top ratings from Germany’s leading consumer advocate organization, Stiftung Warentest, and was expressed in the company’s new slogan “Miele—a decision for life.”

Key Dates:

1899:: Carl Miele and Reinhard Zinkann establish a factory for cream separators.
1900:: The company starts making washing machines.
1907:: Business operations are moved to Gütersloh.
1916:: The Bielefeld factory is built.
1924:: The company starts making commercial washing machines and tumble dryers.
1929:: Miele launches Europe’s first domestic dishwasher with an electric motor.
1931:: Miele’s first subsidiary abroad is founded in Switzerland.
1969:: The company starts making built-in kitchen ensembles.
1978:: Miele introduces new computer-controlled appliances.
1980:: The first subsidiary overseas is set up in Australia.
1986:: Miele acquires laundry technology specialist Cordes in Oelde.
1990:: The company takes over appliance manufacturer Imperial in Bünde.
1995:: A Miele subsidiary is established in Singapore.
1999:: The company celebrates its centenary.

During the 1990s, Miele & Cie.’s sales kept growing. In 1990, the company’s revenues passed the DM3 billion mark for the first time. In 1999, the year when the company celebrated its centenary, Miele grossed DM3.9 billion and employed a workforce of 14,364. In that year, 56 percent of the company’s sales came from exports. Moreover, “Miele” was the most popular brand that was sold exclusively by special retailers in Germany and other European countries.

After over 100 years in business, Miele & Cie. was still jointly owned and managed by the two founders’ grandsons. Over 60 shareholders—descendants from the Miele and Zinkann families—held shares in the company. At 72 and 73 years of age, in 2002 Rudolf Miele and Peter Zinkann, supported by three executive managers from outside the family, continued to co-manage the business over breakfast discussions from their glass-walled offices. In an era of national and international mega-mergers and acquisitions, they set out to dominate their niche in the global market, relying solely on the company’s own resources and spending only the money they had already earned. In Rudolf Miele’s opinion, the shareholder-value orientation of a public company would ultimately have a negative impact on product quality. With Marcus Miele and Reinhard Zinkann, the fourth generation was prepared to step in and carry on the family tradition.

Principal Competitors

BSH Bosch und Siemens Hausgeräte GmbH; AB Electrolux; Whirlpool Corporation; GE Consumer Products; Maytag Corporation; Alno AG; NOBILIA-Werke J. Stickling GmbH & Co.; Nolte Küchen GmbH und Co. KG.