Körber AG

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Körber AG

Kurt-A.-Körber-Chaussee 8-32
D-21033 Hamburg
Germany
Telephone: (49) 40 7250-04
Fax: (49) 40 7250-3250
Web site: http://www.koerber.de

Public Company
Incorporated: 1947 as Hauni Maschinenfabrik Körber & Co. KG
Employees: 8,083
Sales: EUR 1.37 billion ($1.44 billion) (2002)
NAIC: 333999 All Other Miscellaneous General Purpose Machinery Manufacturing; 333291 Paper Industry Machinery Manufacturing; 333993 Packaging Machinery Manufacturing; 333512 Machine Tool (Metal Cutting Types) Manufacturing

Körber AG is the holding company for a diversified machinery manufacturer based in Hamburg, Germany, with 30 production and engineering subsidiaries in Germany, Switzerland, Italy, France, Hungary, the United States, Brazil, and Malaysia and almost 80 sales offices around the globe. Hauni Maschinenbau AG, the Körber group's largest business division, is the world market leader for filter cigarette and tobacco processing machines. The group's machine tool division, led by Körber Schleifring GmbH, delivers every fifth grinding machine purchased worldwide, mainly to the automotive industry, machine tool manufacturers and manufacturers of turbines. Körber PaperLink GmbH is the world's leading manufacturer of systems for sheeting, processing, and packaging fine paper, cardboard, tissue and absorbent hygiene products to the paper making and processing industry with a market share of over 50 percent. Hauni generates roughly half of the Körber group's revenues, the other two divisions add about one-quarter each. About half of Körber's sales are made in Europe, almost onequarter in Asia and about one-fifth in the United States. In 2002, the group added a new division for pharmaceutical packaging machinery to its portfolio. Körber AG is owned by the German Körber Stiftung, a nonprofit foundation that sponsors programs in the areas of inter-cultural dialogue, civic involvement, education, science, and culture.

Starting with Nothing after World War II

Company founder Kurt A. Körber was born in Berlin in 1909 and learned the electrical technician's trade. For two semesters, he studied at a technical college and then worked for several firms before he started a successful career as an engineer at Universelle Zigarettenmaschinenfabrik J.C. Müller & Co., a cigarette machine manufacturer in Dresden, in 1935. In 1944, at the height of World War II, Körber became the company's Technical Director. With a good portion of luck, he survived the bombing inferno the southeastern German city suffered during the war. After the war ended, Russian occupation forces immediately began dismantling whatever was left intact at the plant. However, they seemed to have no interest in Universelle's cigarette making machines. A friendly Russian officer helped Körber secure a large order of 35 such machines for delivery to Moscow, an action that protected Universelle from further dismantling. The same officer gave Körber a few desperately needed machines the Russians had found at Dresden's Technical University. With more than 500 employees back at work, Universelle was on its way to recovery. However, the future of the Russian-occupied German sector was uncertain. Körber was able to convince the head of Universelle to let him travel to British-occupied Hamburg in order purchase badly needed replacement parts and to set up a subsidiary there, where three major German cigarette manufacturers were located.

As soon as Körber arrived in Hamburg in mid-summer 1946, he contacted friends and business partners of Universelle to find out the best way to go into business. From his contacts with Reemtsma, one of the three large Hamburg-based cigarette manufacturers, he learned about the Hanseatische Lehrenbau-Gesellschaft (HLG) in the Hamburg suburb Bergedorf. HLG was located in the eastern part of Hamburg which, unlike the rest of the city, survived the war almost untouched. Twelve days after he arrived there, Körber rented a small office and basement room on HLG's premises. The new enterprise was named Universelle Dresden, Abteilung Hamburg and legally treated as a department of HLG, which gave Körber access to the host company's resources, including skilled workers.

Starting out with a workforce of eight, Körber helped Hamburg's cigarette makers Reemtsma, British American Tabacco (BAT), and Kyriazi get their production going again by repairing whatever machinery was there. However, this turned out to be a difficult task. At a time when literally everything was scarce, Körber's workers had to supply some of their own tools, and getting the necessary replacement parts for an old machine often meant finding and disassembling other old machines that were partly destroyed. Körber's first financial success came with a hand-operated tobacco cutter that looked much like an old fashioned pencil-sharpener. In the first years after the war, cigarettes had become a valuable good that was widely accepted as a "second currency" and could be exchanged for almost anything on the flourishing black markets. Since cigarettes were scarce at that time, many Germans grew their own tobacco. Körber had successfully tapped into a market niche. The money made from selling tobacco cutters was used to buy materials and parts needed to repair cigarette making machines. Hamburg's cigarette makers in turn supported Körber's small enterprise with even more unfinished goods and machinery (bartering was another hallmark of the time).

Emancipation from Parent Universelle in 1947

Körber's success would not have been possible without the support he received from Universelle and the contacts he had made there. After he got the business up and running, Universelle sent out a memorandum to clients in the industry authorizing the newly established workshop as the preferred repair service provider in the three western German zones. The parent company also helped get the tobacco cutter production going. However, growing differences between Körber's and the parent company's ideas and interests, which were amplified by the political pressure from the Soviet occupation authorities towards separation from the rest of the country, resulted in the official split between Universelle and its Hamburg subsidiary.

The first big order Körber received from Reemtsma in 1946 could be traced back to his visits as a Universelle representative in 1944, when he was trying to interest the cigarette maker in machines that filled cigarettes into the now common "soft packs." Such soft cardboard packages started replacing wooden boxes or tins in the United States but did not arouse much interest in Germany at a time when packaging material was becoming more and more scarce. Convinced that the new packaging was the way of the future, Körber, in cooperation with other companies in Dresden, developed "A III"—Universelle's prototype of a "soft packaging machine." When Reemtsma ordered several such machines in the fall of 1946, Universelle refused to let Körber have the necessary technical plans. Although it remains unclear how much support Körber ultimately received from the parent company, the development of successor, "A IV," was based on the work Körber had done in Dresden.

In January 1947, Körber explained to Universelle why he thought it would be best if he established the Hamburg subsidiary as a legally independent business. Rising competitive pressures, growing concerns of western German clients about the trend towards expropriation of private businesses in East Germany, and the insecurity about the future of HLG were the reasons Körber gave for wanting to found his own company. A few weeks later, in February 1947, his enterprise was officially registered as Hauni Maschinenfabrik Körber & Co. KG—with "Hauni" an abbreviation for Hanseatische Universelle. In March 1947, an agreement between Universelle and Hauni granted Körber's firm an exclusive license for the manufacture and distribution of Universelle's machines and parts in western Germany at Körber's own risk. Six months later, HLG was liquidated because of the company's involvement in military production during the war. Beginning in 1948, Körber's Hauni leased the whole HLG building and took over 55 employees and the remaining tools, machines, and office furniture and equipment.

Innovation and Internationalization: 1950s–1960s

The license agreement with Universelle initially allowed Körber access to technical documentation from Dresden. However, he and his staff—some of whom Körber had persuaded to leave Universelle and move to Hamburg—soon launched their own innovations. To make sure that he would not run into legal problems down the road, Körber convinced Johanna Schwerin, the daughter of Universelle's former owner (who had moved to western Germany), to become a silent partner in Hauni.

Company Perspectives:

Independence is our most cherished value. The name Körber stands for entrepreneurial decisiveness. There is an entrepreneurial climate within the Group that is focused on the needs of our customers and that has been responsible for some groundbreaking engineering innovations. The premium quality and cost-effectiveness of our products and services are a consequence of our global market orientation that has earned us the leading position in our markets. Since it was founded, the Körber Group has grown from within. Our autonomy is founded on sustained profitability and the long-term strengthening of our equity.

In 1947, the company delivered the first "A IV" soft packaging machines to Reemtsma. In the late 1940s, Hauni focused on the development of cigarette making machines with a high output. The company's "Excelsior-Rapid-KDC" model produced 1,350 cigarettes per minute. Its successor, "Super-Rapid-KDZ," which was introduced in 1951, was able to put out 1,400 cigarettes per minute. In the same year, Hauni exhibited its new tobacco cutting machine, "KT 400," which processed 1,000 kilograms of tobacco in an hour and was equipped with a blade sharpening module that made the usual procedure of taking the blades out of the machine to re-sharpen them much less frequent. Long before the market was ready for his new invention, Körber presented "KFZ," a machine able to produce filtered cigarettes, which began to replace the unfiltered variety during the 1950s, at a rate of 2,500 per minute. The 1956 model "MAX," named after head engineer Max Pollmann and the successor of the "KFZ"-series, became a best-seller during the 1960s. The "GARANT" series was a new generation of cigarette making machines conceived by Körber. The further development of this machine type led to a quantum leap in output, which reached 4,000 cigarettes per minute with the model "GARANT 4." Investment in research and development remained a high priority for Körber. Despite occasional legal disputes, he encouraged his engineers to take risks and to design machines that outperformed those of the competition.

With the German economy getting back on its feet, Hauni expanded rapidly. After only two years, Körber's operation employed more than 200 workers. By 1950, 760 people worked for Hauni. Five years later, there were over 1,200 employees on the company's payroll. In 1955, Körber moved his enterprise to a former food processing plant in Bergedorf. After the war, cigarette smokers began to outnumber cigar smokers. In the early 1950s, however, the public debate about the health risks of smoking moved from the United States to Europe. Instead of giving up their habit, smokers switched to filter cigarettes, which accounted for 20 percent of the market in 1952 but had a share of 90 percent by the end of the decade.

Hauni's growth was greatly supported by the help of the sales affiliates whom Körber and his former colleagues who followed him to Hamburg knew from their days at Universelle. Contacts in cities such as Munich, London, and Rotterdam opened the door for Körber to former Universelle clients. It was through such recommendations that he was invited to participate in the advisory committee the British had established in order to reorganize the German tobacco industry in their zone. These contacts were also instrumental in Hauni's being invited to exhibit their machines at a congress of the international tobacco industry in Amsterdam in 1951, where Körber made further contacts with potential clients from all over the world. One year later, Hauni received an order to fully equip a brand-new cigarette factory in Burma.

Since the domestic market for cigarette making machines was limited, Körber made the development of export markets one of his foremost concerns. In late 1948, he took his first trip to the United States, where he convinced Eric Warburg, a reputable Jewish banker who had left Hamburg during the Nazi era and settled in New York, to open a Hauni sales office there. On his many other trips to the United States that followed, Körber found a magic formula that gave him access to top executives in the American cigarette industry. All he had to do is mention that he was a friend of Philipp Reemtsma, his loyal German client who also recommended Hauni's "KFZ" filter cigarette machine to his American contacts. In turn, Körber—a master communicator with an intimate knowledge of Hamburg's cultural scene—entertained Reemtsma's American business partners when they visited the German city. With one of Hauni's main international competitors, American Machinery and Foundry Company (AMF), Körber signed an agreement on the mutual use of patents in the early 1950s. In the spring of 1955, Körber acquired property in Richmond, Virginia, the center of the American cigarette industry, where the company's U.S. subsidiary, Hauni Richmond Inc., was established. To better serve his American clients, Körber chartered more than 30 airplanes in the mid-1950s to deliver several hundred cigarette machines across the Atlantic.

During the 1950s and 1960s, Hauni opened a number of sales offices and production plants in other parts of the world. In 1955, a Hauni sales office opened in Rome, followed by a subsidiary in London in 1956. By the middle of the 1960s, the company had established subsidiaries in Argentina, Mexico, and Switzerland and production plants in South Africa and Ireland. Concerned about international political conflicts, given relatively recent historical events such as the Korean War or the Cuban missile crisis, Körber organized all foreign Hauni subsidiaries under the umbrella of a holding company in Switzerland—in case he had to leave Germany for some reason. As early as in the mid-1950s, Hauni machines were shipped to 69 countries around the globe. Ten years later, Körber claimed that most of the world's major cigarette makers used Hauni machines.

Diversification and Reorganization: 1970s–1980s

In the late 1960s, Körber gave in to the pressure from his own top managers as well as from outside advisors to expand into new markets. Despite Hauni's strong market position and despite the fact that the health-damaging effects of smoking did not seem to discourage smokers, they believed that the market for cigarette machines would reach its saturation point and would therefore not be sufficient to secure the company's long-term future. In 1970, Hauni acquired Hamburg-based E.C.H. Will, a manufacturer of paper processing machines with a workforce of roughly 200. The move turned out to be a good one. Notwithstanding two severe crises, in the mid-1970s and again in the early 1980s, the company developed into a profitable activity for Hauni. The takeover of Stuttgart-based Womako Maschinenkonstruktion in 1976 further strengthened the new paper processing arm.

Key Dates:

1947:: Hauni Maschinenfabrik Körber & Co. KG is incorporated.
1955:: The company's U.S. subsidiary Hauni Richmond Inc. is established.
1970:: Paper processing machine firm E.C.H. Will is acquired.
1978:: The company takes over grinding machine manufacturer Blohm.
1979:: French cigarette machine maker Decouflé is acquired.
1987:: Körber AG is established as the Körber group's parent company.
1992:: Körber Foundation becomes the group's sole owner.
1995:: Körber AG becomes a management holding for three independent business divisions.
2002:: The Körber group ventures into the market for packaging systems and materials for the pharmaceutical industry.

Another move into a new field followed in 1978 when Hauni bought grinding machine maker Blohm. Helmut Schmidt, the Democratic German Chancellor at the time and a good friend of Kurt A. Körber, had asked him to help the struggling firm which was located in Hauni's Hamburg neighborhood. When Körber learned that there was a significant number of highly skilled workers at the firm, he gave green light for the takeover. More than 120 Blohm employees started working for Hauni. The remaining workforce of about 40 kept working for Blohm, which became a Hauni department. The year 1983 saw the acquisition of Stuttgart-based Schaudt Maschinenbau, another machine tool maker.

By the mid-1980s, paper processing machines and machine tool manufacturing had grown to business divisions of a considerable size. In 1987, the company was reorganized to reflect the change. Hauni-Werke & Co. KG was transformed into a privately owned stock corporation with Körber being for all practical purposes its sole shareholder. By that time, the company had grown into a group with almost 6,000 employees who worked in 15 subsidiaries that together grossed over DM1 billion per year.

Foundation Becomes Sole Owner in 1992

Long before Körber AG was created, the company founder had taken steps towards the future that he envisioned for his enterprise. In 1969, Körber founded Hauni Stiftung, a nonprofit foundation that he determined would succeed him as the company's sole owner. Eleven years later, it was merged with A. Körber Stiftung, another nonprofit foundation he had set up in 1959. At the same time, Körber had to find someone who would take over his top management position after he retired. He and his wife had no children, and he decided that neither of his two nephews was suitable for this task. He considered a number of candidates and finally chose Eberhard Reuther, a longtime Hauni employee. Under Körber's tutelage, Reuther took over the management of Blohm and later managed Hauni's production. In 1986, he became the company's CEO. When Körber AG was founded one year later, Körber became president of the new company's board of directors. Although he still reserved the right to make final decisions about key people and major business decisions, Körber retired from the day-to-day business and immersed himself in political, social, and cultural activities through his foundation. Among his main concerns were education and the encouragement of social innovation. Kurt A. Körber died in the summer of 1992, only a few days after he had finished his autobiography. He was 82 years old.

After Körber's death, the nonprofit foundation he set up became the company's sole owner. Three years later, his enterprise was reorganized into three independent business divisions: tobacco machinery, paper and tissue machinery, and machine tools. Körber AG became the group's holding company, with Eberhard Reuther as CEO. In 2000, Reuther became president of Körber AG's advisory board and was succeeded as CEO by the head of the machine tool division, Werner Redeker, an engineer who had joined the Körber group in 1979.

Hauni Maschinenbau AG remained the Körber group's major revenue generator and strengthened its leading position for cigarette machines. In 1989, the company had founded UNIVERSELLE Engineering, a new German subsidiary that reconditioned older Hauni machines. Five years later, a Hungarian cigarette machine manufacturer was taken over, followed by the establishment in 2001 of a subsidiary in Malaysia that offered reconditioning services. With an output of 16,000 cigarettes, Hauni's latest generation of cigarette machines made as many cigarettes in one minute as two average smokers consumed in a year. However, with cigarette consumption stagnating and cigarette manufacturers consolidating and facing the risk of potentially devastating lawsuits, Hauni's future did not look promising. The division was able to profit from the trend towards "light" cigarettes, the production of which required that cigarette manufacturers buy new machinery. On the other hand, Hauni ceased the production of cigarette packaging machines, for which the company had built a new production facility in 1993.

The machine tool division struggled to get out of the red throughout the 1990s. This situation was due to several causes, including high restructuring costs following several acquisitions in Germany and Switzerland, high volatility in the price of raw material, currency exchange rates, and fierce competition that resulted in unsustainable price levels. In 1993, the Schleifring Maschinenbau GmbH was established as the division's managing company. A decade later, to consolidate the division's activities, Schleifring stopped offering special-order machines and complex installations, focusing instead on the serial production of grinding machines. After a severe slump in 2003, when incoming orders plummeted by 50 percent, two production plants in eastern Germany were to be closed down and the division's workforce cut by one fifth.

The group's paper processing division was strengthened by a number of acquisitions in the 1990s, including the purchase in 1994 of majority shares in Italian tissue processing equipment makers Cassoli and Fabio Perini, which had a production facility in Brazil. Renamed Körber PaperLink GmbH, the division saw an increase in demand for tissue processing machines as the worldwide consumption of paper towels, bathroom tissue, and absorbent hygiene products was on the rise. In 2002, Körber AG ventured into a new field when it acquired two Swiss firms—Rondo AG, a producer of a wide variety of packaging solutions for the pharmaceutical industry, and Dividella AG, a manufacturer of machinery for packaging liquid medicines. One year later, Klöckner Medipak, a German maker of packaging machinery for drugs in solid and powder form, joined the group.

Despite the dynamic changes the Körber group of companies was going through in the first years of the 21st century, its new CEO was optimistic about the future. Following the guiding principle of the company's founder, Körber AG's management still made it a priority to be independent from outside investors and to use its own resources for growth. With long-term debt at a minimum, above average investments in research and development, and more than $250 million in liquid assets, CEO Redeker believed that Körber AG was well positioned for the years to come.

Principal Subsidiaries

Hauni Maschinenbau AG; Hauni LNI Electronics S.A. (Switzerland); Hauni Richmond Inc. (United States); Hauni Hungaria Kft. (Hungary); Hauni Malaysia Sdn. Bhd.; Körber Schleifring GmbH; Körber PaperLink GmbH; Schmermund Verpackungstechnik GmbH; Topack Verpackungstechnik; K. Jung GmbH; Blohm Maschinenbau GmbH; Kugler-Womako GmbH; Fabio Perini S.p.A. (Italy); Fabio Perini North America Inc. (United States); Fabio Perini S.A. (Brazil); Baltic Metalltechnik GmbH; E.C.H. Will GmbH; Schaudt Mikrosa BWF GmbH; UNIVERSELLE Engineering U.N.I. GmbH; Casmatic S.p.A. (Italy); Decouflé S.a.r.l. (France); Ewag AG (Switzerland); Intamag AG (Switzerland); Mägerle AG (Switzerland); Pemco Inc. (United States); United Grinding Technologies Inc. (United States); Diatec S.r.l. (Italy, 76.3%); FinCostruzioni S.p.A. (Italy); Fritz Studer AG (Switzerland); Rondo AG (Switzerland); Dividella AG (Switzerland); Sealand Agency Treasury Company (Ireland); Sofiter S.A. (Luxembourg); Baltic Elektronik GmbH.