Gildemeister AG

Gildemeisterstrasse 60
Bielefeld,
Germany
Telephone: +49 05205 74 0
Fax: +49 05205 74 30 81
Web site: http://www.gildemeister.com

Public Company
Incorporated: 1870 as Gildemeister & Comp
Employees: 5,174
Sales: EUR 1.17 billion ($1.4 billion) (2005)
Stock Exchanges: Frankfurt Dusseldorf
Ticker Symbol: GIL
NAIC: 333512 Machine Tool (Metal Cutting Types) Manufacturing; 333513 Machine Tool (Metal Forming Types) Manufacturing; 333514 Special Die and Tool, Die Set, Jig, and Fixture Manufacturing; 333518 Other Metalworking Machinery Manufacturing

Gildemeister AG is a leading manufacturer of tools and machinery, focusing on turning and milling applications. The company's product line ranges from low-cost, mass-produced tools to highly specialized, high-tech machining systems. The company's lathes are marketed under the Gildemeister, Graziano, and Famot brand names, and its milling machines are marketed under the Deckel Maho brand. In addition to turning and milling machinery, Gildemeister has extended its reach to include laser technology and, since its acquisition of the Sauer brand in 2001, ultrasonic machining systems. These technologies enable the highly precise machining and engineering of precision components; the company's ultrasonic technology also enables the machining of traditionally difficult, brittle substances such as glass and ceramics. The adoption of these technologies comes as part of the company's shift from being a tools producer to becoming a leading provider of machining and engineering services. Gildemeister operates production subsidiaries in Germany, Poland, and Italy; the company added production facilities in Shanghai, its first outside of Europe, in 2003. Germany remains Gildemeister's largest market, at 60 percent of sales; the rest of Europe accounts for an additional 25 percent of sales. North America represents 8 percent of group revenues. Gildemeister has targeted the Asian markets for future growth; this region accounted for 6 percent of Gildemeister's revenues of EUR 1.17 billion ($1.4 billion) in 2005. Gildemeister is listed on the Frankfurt and Dusseldorf stock exchanges.

19TH-CENTURY TOOLING ORIGINS

Gildemeister was founded by Frederick Gildemeister in the town of Bielefeld, Germany, in 1870. The original factory, located at the Cöln-Minden Rail Station, began producing machine tools, and by the end of the century had established an extended range of tools. In 1899, Gildemeister reorganized the business as a limited liability company. After nearly 40 years in business, Gildemeister retired in 1906.

The direction of the company was then taken over by Wilhelm Berg, who remained as head of the company through World War II. Under Berg, the company began simplifying its range of machine tools, a process begun in 1907. The more limited range permitted the company to adopt the newly developing industrialized production techniques pioneered by Henry Ford. By 1915, Gildemeister had reduced its production to just four main product areas: automatic multi-spindle lathes; drum turret lathes; longitudinal milling machines; and vertical and horizontal machines.

The company's fortunes met a roadblock at the end of World War I, however, when the Allied powers placed the company on its banned companies list. Unable to continue production, Berg led the formation of a new company, Berg & Co., which specialized in the manufacture of tool components, specifically chucks and drives, rather than the machine tools themselves. Berg continued its production, even after Gildemeister was allowed to resume its operations in the 1920s.

Two factors enabled the company to grow during the economic crisis of the late 1920s and into the 1930s. The first was Wilhelm Berg's successful patent for a system for the clearance and disposal of wood chips created by its lathes and mills. The new tooling system also featured automated operations. The second factor was the rapid industrialization of the Soviet Union by the young Communist government. With large orders coming from Russia and elsewhere in the Soviet Union, Gildemeister was able to maintain continuous production throughout the crisis years. At its height, the company numbered some 600 employees.

The company was less fortunate during the war, when the factory was destroyed by Allied bombing raids. Once again on the wrong side of victory, the company faced the end of operations, and in 1945 was placed on the list of companies slated for dismantling by the Allied authorities. Gildemeister won a reprieve, however. In 1947, the company was placed under new management led by K. B. Grautoff, who had spent the war years interned in India. The company was allowed to resume operations and production got underway with just 25 employees in 1948.

POSTWAR MACHINE TOOL BOOM

Gildemeister quickly regained its former size, before growing into one of Europe's leading machine tools specialists. The company made its mark through the launch of a series of innovative products, such as the RV 50 turret lathe, introduced in 1950. In 1951 the company added two new product categories, a range of multi-spindle automatic bar machines, and a line of multi-spindle automatic chuck lathes. Toward the mid-1950s the company added the first eight-spindle automatic chuck lathe and, at the end of the decade, launched full-scale production of an economical single-spindle lathe.

Gildemeister's growth reflected the boom in the German economy in the 1950s and 1960s, as the country rebuilt itself into Europe's industrial powerhouse. The rising economy had stimulated an entirely new consumer market, which in turn stimulated the demand for a wide variety of products, most of which required Gildemeister's machining tools as part of their production process. As such, Gildemeister became an important supplier to the German automotive, automotive parts, machine construction, fittings, bicycle, and electrical industries.

The company's growth led it to purchase a new 300,000-square-meter site in 1961, in Sennestadt. The company began construction of new production facilities for itself and its subsidiaries, including Berg & Co., which were completed in 1965. By then, the company had begun to focus its production more specifically around lathes. In 1964, for example, the company discontinued its production of longitudinal milling machines. Instead, Gildemeister had begun to develop its first numerically controlled lathe, the RSA, which debuted in 1965. Featuring four coordinates, the RSA became the first on the market in 1967; at the same time, the company launched a smaller numerically controlled lathe, the RN.

COMPANY PERSPECTIVES

To remain successful in the market, customers expect highly reliable products and comprehensive services. To safeguard our future success, we have optimised our product portfolio and have developed further the group's orientation towards a full-line company in the turning, milling and laser/ultrasonic technologies as well as in services. The GILDEMEISTER group has the industry's most complete sales and services network. More than 5,000 employees in 58 group-owned sales and services companies are ready to serve our customers in 32 countries worldwide. The sales and services network stands out because of its consistent market proximity, direct selling covering all areas and customer-related services.

ACQUIRING SCALE: 1969–89

Gildemeister also continued its external expansion. The company moved outside of Germany for the first time, taking over the global export operations of Italy's IMIS, a producer and exporter of small multi-spindle machines, in 1967. By 1969, Gildemeister had bought majority control of the Italian company, which then became known as Gildemeister Italiana S.p.A. The company continued buying up shares in Gildemeister Italiana through the 1970s. By then, Gildemeister itself had opened up its shareholding. In 1969, the company sold a minority stake to Westdeutsche Landesbank Girozentrale; following that sale, the company went public, listing its shares on the Dusseldorf and Frankfurt exchanges.

The public offering enabled Gildemeister to continue its expansion drive through the 1970s. The company bought up Heidenreich & Harbeck, based in Hamburg, in 1970. The new subsidiary's production was subsequently transferred to the group's Bielefeld site in 1972. In that year, Gildemeister added Langenhangen-based machine tool maker Max Muller Brinker.

Through the mid-1970s, Gildemeister launched a factory expansion program, adding new capacity to the Sennestadt site. By 1976, the company was able to transfer all of its production to the site, and ended production at its Bielefeld headquarters. That relocation was completed in 1977.

Gildemeister continued to innovate during this period. In the mid-1970s, for example, the company launched its Elektropilot M computer-numerical-control system. By the late 1970s, the company had begun development of a new generation of microprocessor-controlled multi-spindle automatic lathes. The first of these was introduced in 1977.

KEY DATES

1870:

Frederick Gildemeister establishes a business producing machine tools in Bielefeld, Germany.

1899:

Gildemeister & Comp. incorporates as a limited liability company.

1906:

Wilhelm Berg takes over direction of the company and leads the streamlining of its product line.

1918:

Gildemeister is banned from production by Allied authorities; Berg forms Berg & Co. to produce chucks and drives.

1928:

Gildemeister grows based on a patented chip clearance system and contracts with the Soviet government.

1945:

Gildemeister's factories, destroyed during the war, are placed on the Allied dismantling list.

1948:

The company is taken over by KB Grautoff, and resumes production.

1951:

The company introduces new multi-spindle automatic bar machines and a multi-spindle automatic chuck lathe.

1961:

The company buys a new 300,000-squaremeter site in Sennestadt.

1965:

New production facilities open at the Sennestadt site.

1967:

The company launches the first NC lathe, the RSA; the export operations of IMIS in Italy are acquired (later becoming Gildemeister Italiana).

1969:

Gildemeister goes public.

1970:

The company acquires Heidenreich & Harbeck, based in Hamburg.

1977:

The company launches Elektropilot M computer-numerical-control system and microprocessor-controlled multi-spindle automatic lathes.

1982:

A new subsidiary, Gildemeister Automation, is created for computer controlled and electronics-based products.

1989:

The company acquires 50 percent of Witzig & Frank Turmatic, a maker of automatic drum transfer machines and flexible transfer lines based in Offenburg.

1993:

The company restructures and creates Gildemeister Drehmaschinen GmbH.

1994:

The company acquires most of Deckel Maho, adding contract lathe work and moulding engineering operations.

1998:

The company acquires LCTec Laser- und Computertechnik.

1999:

Gildemeister enters Poland through the acquisition of Famot Pleszew.

2001:

The company acquires majority control of Sauer GmbH.

2003:

A production facility is established in Shanghai.

2005:

Sauer and Lasertec are merged.

This effort, developed as part of a partnership with the Soviet Union's Ministry of Machine Tool Construc-tion launched in 1972, fit in with the company's newly developed strategy, which called for its international expansion. The need to step up its presence in and development of foreign export markets came in the face of growing competition in Japan, and later Korea, Taiwan, and other fast-growing Asian markets.

Gildemeister developed a growing number of automatic and computer-controlled lathes in the early 1980s. The fast-growing electronics and automated product family was then spun off into a dedicated subsidiary, Gildemeister Automation, in 1982.

The company continued adding to its operations. In 1989, the company bought 50 percent of Witzig & Frank Turmatic, based in Offenburg, a maker of automatic drum transfer machines and flexible transfer lines. The company also acquired a stake in Varioline Handelsgesellschaft before the end of the decade.

NEW PRODUCTS IN THE LATE 20TH CENTURY

Into the early 1990s, Gildemeister remained focused on the production of lathes and lathes systems. This placed the company at somewhat of a disadvantage, particularly during the extended economic recession of the period. Gildemeister was particularly hurt by the slump in the automotive market, which accounted for as much as 40 percent of the group's sales.

To counter this, Gildemeister launched a restructuring exercise in 1993, merging several of its production units into a new subsidiary, Gildemeister Drehmaschinen GmbH. Gildemeister also sought to extend its production into new areas. This interest led the company to a major acquisition in 1994. In that year, the company took over most of Deckel-Maho, a maker of universal milling and boring machinery and machining centers, which had gone bankrupt in the early 1990s. The acquisition enabled the company not only to expand its product focus, but also to redefine itself, from a simple manufacturer to a full-service provider of assembly and engineering services.

The addition of Deckel-Maho helped shift the group's revenue balance. By the mid-1990s, 40 percent of the group's turnover now came from its contract lathe work/machine tool and moulding engineering operations. By then, the automotive industry accounted for less than 10 percent of total group sales.

Gildemeister's sales once again took off in the second half of the 1990s. The revitalization of the European economies helped drive the group's sales. Europe, together with Germany itself, continued to account for 85 percent of the company's revenues. Nonetheless, the company made increasing headway in its effort to establish a global presence. A step toward this direction came through the expansion of the company's technologies, notably through the acquisition of LCTec Laserund Computertechnik in 1998. The addition of the Pfonten-based company allowed Gildemeister to develop a new generation of milling tools. By the end of that year, the company's revenues had passed the DEM 1 billion mark.

Gildemeister continued its expansion into the 2000s. The company moved into Poland in 1999, buying Famot Pleszew, that market's largest metal-cutting machine tool manufacturer. Also that year, the company bought full control of Gildemeister Italiana, which had previously operated as an independent public company. In 2001, Gildemeister once again added to its range of technology, buying up majority control of Sauer GmbH. That acquisition added new ultrasound technology to the group's range, enabling the machining of hard brittle materials. The company boosted its stake in Sauer to 95 percent in 2002.

Gildemeister next turned its target to the rapidly growing Asian, and especially Chinese, markets. In 2003, the company set up a production facility in Shanghai, its first manufacturing operation outside of Europe. In the meantime, the company's growing range of high-technology driven machine systems led it to merge its Sauer and Lasertec subsidiaries in 2005. In that year, the company celebrated its 135th anniversary, as its sales neared EUR 1.2 billion ($1.5 billion). Gildemeister remained one of the world's leading machine tool names in the new century.

PRINCIPAL SUBSIDIARIES

a&f Stahl- und Maschinenbau; DECKEL MAHO Geretsried; DECKEL MAHO Pfronten; DECKEL MAHO Seebach; DMG Microset; DMG Shanghai Machine Tool; DMG Vertriebs und Service GmbH (Holding); FAMOT; GILDEMEISTER Drehmaschinen GmbH; GILDEMEISTER Italiana S.p.A.; GRAZIANO; SACO; SAUER GmbH.

PRINCIPAL COMPETITORS

DaimlerChrysler AG; Renault S.A.; ThyssenKrupp AG; Tata Sons Ltd.; NKMZ; Mondragon Corporacion Cooperativa; Giddings and Lewis Machine Tools L.L.C.; Johann A. Krause Inc.; ThyssenKrupp Technologies AG; Faur S.A.; Elabuzhskiy Light Vehicle Plant; Benteler AG; Liebherr-International AG.

FURTHER READING

"German Lathe Firm Invests in China," AsiaPulse News, May 27, 2002.

"German Machine Tool Maker Gildemeister Targets China Market," AsiaPulse News, November 1, 2000.

"Gildemeister Plans New Plants," Metalworking Insiders' Report, October 15, 2003, p. 6.

Houlder, Vanessa, "Gildemeister System to Speed Up High-Volume Production," Financial Times, May 27, 1999, p. 15.

Page, Michael, "Gildemeister on a Rebound, Picks Up a Laser-Machining Company," Metalworking Insiders' Report, March 5, 1999, p. 1.

"Performance Plus Thanks to Linear Technology," Eurotec, April 2001, p. 24.