Viessmann Werke GmbH & Co.

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Viessmann Werke GmbH & Co.

Viessmannstrasse 1
D-35108 Allendorf
Germany
Telephone: (49) (6452) 70-0
Fax: (49) (6452) 70-2780
Web site: http://www.viessmann.de

Private Company
Incorporated: 1917 as Johann Viessmann, Hof
Employees: 6,700
Sales: DM 1.7 billion ($867 million) (1999)
NAIC: 333414 Heating Equipment (Except Warm Air Furnaces) Manufacturing; 333415 Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing; 22133 Steam and Air-Conditioning Supply

Viessmann Werke GmbH & Co., based in Allendorf, Germany, is one of the world’s leading manufacturers of furnaces, boilers, and heating systems and equipment. In Germany Viessmann leads the market of ground-based furnaces with a share of about 38 percent, while it maintains a market share between 10 and 20 percent for wall-based heaters. Viessmann has 11 production facilities in Germany and abroad, and 22 foreign subsidiaries. About one-third of Viessmann’s sales come from exports, and ten percent of export sales are generated in Eastern Europe. Viessmann products are also manufactured under license agreements in Japan and Korea.

Viessmann Origins in 1917

The founder of the Viessmann Werke, Johann Viessmann, was born in 1879 in the German town of Kulmbach. He worked there as a master locksmith until World War I. Thereafter, he set up his own small locksmith business in Hof on the river Saale. At first Viessmann’s business concentrated on repairing farm machinery. However, he didn’t hesitate to help when a machine in a local textile factory broke down or when one of the early automobiles, fashionable but sensitive, didn’t run the way it was supposed to. Possessing a creative mind, Viessmann also invented new machinery, such as vulcanizing chambers for the re-treading of old tires and automatic targets for himself and other members of his gun club.

Inspired by suggestions from local gardeners Johann Viessmann started building furnaces in 1928. At that time most furnaces were made from cast iron. Recognizing the potential for improvement of the prevailing technology Viessmann developed a new generation of furnaces. Sturdy steel pipes were welded together, giving overall construction much more stability under pressure. Viessmann’s furnaces also used less fuel and produced heat more quickly than other models. Within a short period of time, Viessmann had begun manufacturing these new furnaces in his own workshop. Because of their cost-saving advantages, they became popular among greenhouse farms in and around Hof as well as in nearby Leipzig.

During the 1930s central heating systems became a dominant technology and the market for furnaces was constantly expanding. At the same time electrical welding technology increased the speed and quality of their manufacture. Viessmann began experimenting again and developed a new furnace design whereby steel pipes were replaced by sheet metal. The new design allowed him to build furnaces which were smaller but still effective and economical. Viessmann was also able to customize his furnaces for certain industries. For restaurants he designed a very cost-effective warm water circulating heating system with heating pipes mounted along the walls under the benches on which people sat, rather than under the windows. For a shoe factory, Viessmann built combined furnaces in which coke as well as leather, paper, and carton waste from the factory could be used as a fuel. For public buildings, factories, and residential buildings, Viessmann developed special low-pressure steam furnaces. He received patents for his inventions and worked with a sub-contractor based on a license agreement for a while. However, in 1937 he moved his business to Allendorf on the river Eder, where he set up a new factory with 30 employees.

Son of Founder Takes Over in 1947

During World War II, Viessmann Werke continued to produce steel furnaces for the German war economy. Hans Viessmann, the son of the company’s founder, served as a soldier in Greece. However, in his spare time he took law classes at the Athens University and designed new furnace models. In 1945 after Germany’s defeat, he came back home with a thick folder full of drawings, plans, and ideas. Two years later Hans Viessmann took over the family business from his father. It employed 35 people at that time. At first, the younger Viessmann focused on modernizing the production facilities to enable substantial growth and on new product development. By 1949 the number of employees at the Viessmann Werke had almost tripled.

The German economic boom of the 1950s created an expanding market for heating systems. At the same time, as Europe was flooded with less expensive Arab oil that started replacing coal and especially coke as a fuel, the industry underwent a substantial change. Oil, in turn, spurred the development of new technologies which allowed for fully automated heating systems based on circulating warm water. Their low maintenance contributed greatly to the growing popularity of these heating systems in all kinds of buildings. Viessmann responded with the development of oil-based furnaces. However, the company also pioneered another technology that enabled the system to be converted from coke to oil with very little effort. The innovative Viessmann Triola furnace was presented at the Hannover Trade Fair in 1957. The new model also contained a powerful water boiler made out of copper pipes.

This new generation of Viessmann steel furnaces was eventually able to gain considerable market share in comparison with the traditional cast-iron models. The optimal design, and the possibility of including an appliance for heating water in particular, won the acceptance of many customers. Automated heating systems based on burning oil also required the development of new automated control systems which Viessmann Werke added to its product range. At the end of the 1950s, the company employed about 350 people and produced 5,000 furnaces annually.

Viessmann Heating Technology in the 1960s

In the 1960s oil and gas replaced coal as primary fuel on a large scale. The use of oil to heat residential buildings increased from 15 percent in 1960 to 45 percent at the end of the decade. In big cities, in particular, gas generated as a byproduct of making coke from coal—so called Stadtgas —became more and more important for central heating systems. Viessmann’s new furnaces—Imperator-Duo and Imperator-Triola—were in high demand. To keep up with production, welders were replaced by automated production systems at the company’s manufacturing facilities.

Another development of the 1960s was a new generation of heating systems for tap water. The older systems collected deposits of calcium in their pipelines which couldn’t be cleaned without chemicals and which therefore had to be replaced periodically. In 1962 Viessmann introduced a new system that used pipelines made from nickel-bronze which could be cleaned mechanically.

In 1965 Viessmann used that same material for its water boilers that were built into furnaces, to protect them from corrosion as well. Due to the decreasing demand for furnaces that could be run with coke Viessmann developed a new product generation that was solely based on the use of oil or gas— the Parola series. The new design was optimized for low emissions and high energy-efficiency, and the water boiler was placed on the bottom of the furnace instead of on top. The Viessmann product range of the 1960s also included a new range of control systems called 4-Way-Mixers. The new systems included electrical regulation of the furnace based on room or outside temperature along with electronic systems that lowered the temperature automatically at night.

In the late 1960s Viessmann’s annual output amounted to 40,000 furnaces per year, while its work force had increased to 1,400. In 1969 a new production facility was erected in Battenberg, Germany. By the end of the 1960s, steel furnaces, with a market share of 65 percent in Germany, had successfully defeated cast-iron furnaces.

Oil Crisis and Expansion in the 1970s

In winter 1973 a sudden increase in oil prices shocked the world economies and caused crises in many countries. For the first time in 30 years, world energy consumption dropped. Like many countries, Germany reacted with special programs to cut energy use. At the same time, legislation was passed to limit environmental pollution. The two most important laws—the Bundes-Immissionsschutz-Gesetz of 1974 and the EnergieEinsparungsgesetz of 1976—had a direct impact on the demand for heating systems. One resulting trend was toward the increasing use of natural gas. Within a decade, the market share of natural gas as a primary energy source almost tripled, from 8 percent up to 22 percent by the end of the 1970s. German municipal heating systems were switched over to natural gas because that fuel was less harmful to the environment than the Stadtgas produced from coal.

Company Perspectives:

Within our company we see strengthening the self-reliance of our employees as a major task…. With the help of suitable measures of human resources development our employees will become entrepreneurs. That is the only way besides utilizing the full market potential to achieve the increase of efficiency that is crucial for a positive and sustainable development of the company in the future. Facing fierce competition and increasing price pressure we are forced to boost our productivity.

Despite the oil crisis, the 1970s marked a decade of significant expansion for Viessmann. In Germany new production facilities started operation in Oberkotzkau and Unterkotzkau, near Hof, with metal and other materials processing, furnace production, and assembly units put into operation. Existing factories in Battenberg and Allendorf were modernized and enlarged. Other production sites were taken over in Hamburg and Berlin. An important step for Viessmann was the acquisition of the foundry Weso-Aurorahiitte. In 1972 the first Viessmann production plant outside Germany was opened in Faulquemont, France; the first Viessmann subsidiary outside Europe was established in Waterloo, Canada, in 1978.

One of Viessmann’s strategies for coping with the structural changes in the energy market was new product development. In 1972 the company presented the world’s first furnace made from stainless steel. The novelty had several advantages in comparison to other models. It was lighter than other furnaces; it was highly effective in terms of the ratio of fuel input and heat output; it was easy to clean; and it contained a larger water boiler. The innovation was successful and Viessmann began using stainless steel on a broad scale in its heating technology products. The oil crisis of 1973 spurred research and development on the energy efficiency of furnaces. As a result, Viessmann introduced two new furnace models both of which were able to use either oil or gas as fuel. One of them—the symmetrical Rotola model—was the first furnace that could be turned upside down to be used as an upper or lower hot water tank. Beginning in 1976 Viessmann started making solar energy collectors as an alternative to conventional heating technology. Two years later, the company introduced its first heat pump and the first microprocessor-based control systems. A significant innovation of the late 1970s was the introduction of new low-temperature water-based heating systems. Instead of keeping a constantly high water temperature of about 70 degree Celsius, the new technology allowed for adjusting the temperature according to current needs. The water temperature could be as low as 40 degrees Celsius, which saved about 30 to 40 percent of the energy used by the older heating systems.

Environmentally Friendly in the 1980s

Growing concerns about the greenhouse effect and the possibility of a significant climate change caused by burning fossil fuels influenced the heating system industry in the 1980s. Viessmann responded with a low-temperature furnace that was very energy-efficient. The Vitola series used a combination of two heating surfaces that were linked together. More than one million of the two models—Vitola-biferral with a combined cast-iron and steel heater and Vitola-uniferral with a steel-steel heating surface—were sold during the 1980s. Beginning in 1984 the new technology was also used in furnaces with a higher performance of between 70 and 5900 kilowatts (kW). In 1989 Viessmann introduced the Paromat-Triplex model, the first furnace with three combined heating surfaces.

To reduce environmental pollution Viessmann also developed new burner-systems, after research had shown that an optimal combination of furnaces and burners had a great impact on emissions of pollutants. Beginning in 1981 Viessmann Vitola furnaces were equipped with a Unit-oil-burner that was pretested and preset for best results. In 1984 Viessmann used the results of research done in the United States to develop the Renox-System, which achieved lower nitric oxide emissions through cooling the burning flames. The technology was soon adopted by other leading European manufacturers of heating systems.

Another trend of the 1980s in heating technology was the replacement of electronic control systems with digital ones. The main feature of the new systems was self-diagnostic systems and the ability to communicate with other control systems. With these features, it was possible to directly control heating systems that were connected to a furnace. Viessmann introduced two of these control systems, the Viessmann Trimatik-MC in 1988 and the Dekamatik system in 1990.

In 1989 company CEO Dr. Hans Viessmann was named a Fellow of the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), a membership grade that recognized distinction in the arts and sciences of environmental technology. At that time Hans VieBmann held 62 German patents, five U.S. patents, six Canadian patents, and 75 patents in other countries. Of more than 50,000 ASHRAE members throughout the world, only about 400 held Fellow ASHRAE honors at that time.

International Expansion and a Lawsuit in the 1990s

The year 1991 marked one of the best years for German producers of heating systems. The major reasons were the construction boom caused by the German reunification, along with a new law linking a tax break to the modernization of buildings that would go into effect at the end of the year. Viessmann’s sales in that year jumped to DM 1.8 billion, DM 700 million more than in the year before. However, after that the market normalized again.

In January 1993 Martin Viessmann, son of Hans Viessmann, took over the family company as CEO. He had received his Ph.D. for a dissertation on the adjustment of corporate strategy and culture, and at Viessmann he made it a priority to improve communication among employees on all levels.

Key Dates:

1917:: Johann Viessmann sets up his own locksmith business.
1928:: Viessmann starts building furnaces for greenhouses.
1937:: The company moves from Hof to Allendorf.
1947:: Hans Viessmann takes over the family business.
1957:: Viessmann’s innovative Triola furnaces are presented at the Hannover trade fair.
1972:: Viessmann’s first production plant outside Germany is opened in Faulquemont, France.
1972:: The company presents the world’s first furnace made from stainless steel.
1976:: Viessmann starts producing solar energy collectors.
1978:: The company’s first subsidiary outside Europe is established, in Waterloo, Canada.
1993:: Martin Viessmann takes over as CEO.

In 1995 the German market for furnaces shrank by 15 to 20 percent, caused partly by a slump in the construction industry. Competition in Germany turned fierce, and Viessmann decided to focus more on markets abroad. By that time, Viessmann’s main foreign markets were in France, Austria, Belgium, Switzerland, and Italy. In addition to its Canadian subsidiary, the company had established another one in the United States, in Warwick, Rhode Island, in the early 1990s. Eastern Europe was a high priority for Viessmann because it promised high growth potential and low production cost. In 1994 the company was planning to build a production facility in the Czech Republic where production costs were DM 3 an hour compared with DM 43 in Germany. The plan threatened many of Viessmann’s German jobs. When German Viessmann workers agreed to work three hours more per week without any extra compensation in spring 1996, the company dropped its plans to move. However, the most powerful German union, IG Metall, sued Viessmann for breaching the agreement that had been worked out between the union and the industry. In September 1997 the Landesarbeitsgericht in Frankfurt/Main ruled that both parties should negotiate a special complementary contract, which was finalized in March 1998.

Another strategic market for Viessmann was Poland, where in 1991 the company had established a subsidiary in Breslau. By 1998 Viessmann employed over 100 people in five Polish sales offices. In the same year new subsidiaries were opened in Moscow, Russia, and Bejing, China. As a result, Viessmann’s export sales grew by 12 percent in 1998 and reached one-third of total sales.

Principal Subsidiaries

Viessmann Belgium B.v.b.a.; Viessmann China Ltd.; Viess-mann A/S (Denmark); Viessmann S.A. (France); Viessmann Ltd. (United Kingdom); Viessmann S.r.l. (Italy); Viessmann Manufacturing Company Inc. (Canada); Viessmann Manufacturing Co. (United States) Inc.; Viessmann Hrvatska d.o.o. (Kroatia); Viessmann Nederland B.V.; Viessmann Ges.m.b.H. (Austria); Viessmann Sp.z o.o (Poland); Viessmann SRL (Rumania); Viessmann OOO (Russia); Viessmann Varmeteknik AB (Sweden); Viessmann (Schweiz) AG (Switzerland); Viessmann s.r.o. (Slovakia); Viessmann d.o.o. (Slovenia); Viessmann SL (Spain); Viessmann Spol.s r.o. (Czech Republic); Viessmann Isi Teknikleri Ticaret A.S. (Turkey); Viessmann Futestechnika Kft. (Hungary).