Zumtobel AG

Höchster 8
A-6850 Dornbirn
Austria
Telephone: +43 (5572) 390-575
Fax: +43 (5572) 390-602
Web site: http://www.zumtobel.com

Private Company
Incorporated: 1976
Employees: 9,515 (2001 est.)
Sales: EUR 1.3 billion (2001 est.)
NAIC: 335122 Commercial, Industrial, and Institutional Electric Lighting Fixture Manufacturing

Zumtobel AG has emerged as Europe’s leading supplier of commercial, industrial and public sector lighting fixtures and components. Starting as a post-World War II manufacturer of fluorescent light ballasts, the Austrian holding company now oversees five autonomous operating units: Thorn, Zumtobel Staff, Tridonic Atco, Luxmate Controls and Reiss International. Together these companies manufacture and market lighting systems for hospitals, stadiums, tunnels, airports, office buildings, factories, museums, and similar facilities. The zealous pursuit of export markets and product innovation—plus acquisitions and mergers—has enabled family-owned Zumtobel to climb to the top. The usually quiet company made its biggest splash in 2000 when it acquired UK-based conglomerate Wassail and its important subsidiary Thorn Lighting Group. Industry analysts believe the nearly $1 billion deal made Zumtobel the largest lighting company in Europe, surpassing Dutch lighting giant Philips.

1950: Walter Zumtobel Saw Fluorescent Future

Austrian-born Walter Zumtobel (1907-1990) provided the technical aptitude, determination and charisma that launched Zumtobel. Enrolling at Munich Technical University in 1924, Zumtobel earned a doctorate in engineering there eight years later. During his studies, he met Gertrude Kappler, his future wife. In 1934, Zumtobel became plant manager of a German-owned company in Vienna that manufactured gas masks and gas filters. When Germany, under Adolph Hitler, annexed Austria in 1938, Zumtobel’s work shifted to designing a high-altitude breathing system for German fighter pilots. In 1943, with the war in Europe well underway, he became general operations manager for another German company in Vienna that produced electrical components for the military.

After Germany surrendered to the Allies in 1945, Zumtobel—never a member of Germany’s National Socialist party—was appointed by French occupation forces as administrator for three local German-owned manufacturing companies in Austria. One was the electric component company Michel-Werke, located in Hard. Zumtobel saw limited prospects for these company’s products. But the energetic engineer did detect a budding opportunity in fluorescent lighting. Using one-fifth the energy of incandescent lights, fluorescent lamps had been developed prior to World War II, and were just making their marketplace debut in the late 1940s. In 1950, in his hometown in Dornbirn, he founded Elektrogeräte und KunstharzpreBwerk W. Zumtobel KG/, a partnership with his wife. Housing the business in two rented rooms, Zumtobel planned to produce starters and ballasts, key fluorescent light components.

In the early days of fluorescent lights, the starter functioned as a switch to deliver electricity to electrodes at each end of the tube-shaped lamp. The ballast served as a transformer, providing an initial electric arc that started a current flowing through ionized gases contained in a lamp. Critical to Zumtobel’s business plan was his license to manufacture an improved starter developed by the Swiss lighting company Knobel AG. Whereas conventional starters often required flipping a switch two or three times to light the lamp, the Knobel starter consistently triggered the lamp the first time. Zumtobel’s interest in the more reliable starter illustrated his enthusiasm for innovation and gaining a technology edge on his competition. A year later, he had already improved on the idea by developing ballast that incorporated the starter.

At the end of his first year in business, Zumtobel had 31 employees, an Austrian sales network, and sales totaling 1.32 million Austrian schillings (ATS). In spring 1951, the company opened its first production plant in Dornbirn. Michel-Werke, which Zumtobel began leasing in 1950, also relocated into the new building. At the start of 1953, Zumtobel’s two companies merged and began operating under a shorter name: W. Zumtobel KG.

1952: Debut of First Light Fixture

Zumtobel soon decided to build complete fluorescent light fixtures—also called “batten luminaries”—in addition to ballasts. His inspiration came from two sources. One was the costly cancellation of a large ballast order for a Vienna railway station lighting project, exposing the young company’s single product vulnerability. The other was the suggestion from his corporate ballast customers—Siemens and AEG—that he build light fixtures they could sell through their catalogs. At the risk of competing with these powerful German patrons, the company developed its first complete Zumtobel light fixture in 1952. Sold under the brand name Profilux, the fixtures carried the first company patents and were marketed as “the slimmest batten luminaries in the world.” The Profilux line proved a market success. Zumtobel developed a moisture-proof version the following year. Then versions that included louvers, lenses, and a one-man installation rail that made it easy to attach to the ceiling.

Zumtobel ballast design kept moving ahead as well. Using a random wiring and transverse interleaving, Zumtobel engineer Ernst Wiesner in 1957 developed the new LXG ballast that required less copper and silenced the humming often associated with fluorescent lighting. Most leading lighting component manufacturers soon adopted the breakthrough. The late 1950s also saw light experiments begin in the company’s first light laboratory located inside a Dornbirn barn with painted black walls.

By the mid-1950s, neighboring Germany and Switzerland had already become export markets for the company, partly due to Walter Zumtobel’s regular and engaging appearances at trade fairs. But Zumtobel especially concentrated on Germany, the largest national market in Europe. He exhibited company products for first time at the 1958 Hanover Fair, the country’s annual high-profile industrial design showcase. He also established a sales company in Munich that same year, then another in Lindau in 1959.

At the end of its first decade, and by offering the lighting products Europe needed for the rebuilding process, Zumtobel looked like it had survived the business startup frenzy that followed the war. Zumtobel ended the 1959/1960 fiscal year with an average of 323 employees on the payroll, and sales of ATS 47.6 million.

1960s: Product Line Expands

Company growth continued in all directions in early 1960s. New production facilities were added at the main Dornbirn plant, and the growing employee population led to company-sponsored sports clubs and even a volunteer fire brigade. New sales offices with showrooms opened in Austria. The company began producing its first recessed ceiling lights and track lighting. To define lighting effects and more precisely plan lighting solutions, color charts came into use to test the reflecting properties of walls and surfaces.

Second-generation Zumtobel family members also began to join the company. Jurg Zumtobel (1936- ), Walter Zumtobel’s oldest son, took over production planning in 1961. Younger son Fritz Zumtobel (1939- ) joined the company in 1966. Walter Zumtobel not only added family, but he also added specialized companies during this period. To offset the lack of suppliers in post-war Austria, he bought nearby toolmaking and machine shops. In 1964, he co-founded Electro-Terminal to produce junction and power supply boxes, terminal blocks and strips, and other “connection technology.”

Development of fiberglass-reinforced polyester fixtures—which resisted impacts, corrosion, water and fire—helped make Zumtobel a supplier for tunnel lighting projects, starting with the Karaj Tunnel near Teheran, Iran, in 1962. Product evolvement also moved ahead in 1967 with the successor to the Profilux fluorescent fixtures. Designed for industrial settings, the “Z System” included a variety of reflectors, optics, and grilles. In 1969, Zumtobel introduced the first European “air-handling” lights that removed lighting heat along with warm air from the room. The cooled lamps also yielded better light.

The increasing production of light fixtures—many of them earning industrial design awards—prompted an organizational change at Zumtobel. The company created separate lighting and ballast development departments in 1968. At the same time, the company simplified its name, dropping the “W” and settling on Zumtobel KG. At the end of the 1969/1970 fiscal year, sales for the company year had reached ATS 277.3 million and the average employee count totaled 820.

Company Perspectives:

Using light to create worlds of experience—this is the corporate mission of the Zumtobel group. Our products and services are designed to make an innovative contribution to raising the quality of the spaces we live in, while conserving the resources of our natural environment through reduced usage of materials, intelligent control technology, user-friendliness and timeless design. Together with its various partners, the Zumtobel group is targeting global leadership. The key to our success lies in consistent attention to customer requirements, proactive cooperation with our partners in a spirit of mutual trust, and confidence in the commitment and competence of our employees. Our top-priority values are: technology leadership, an unshakeable faith in creativity and innovation, and growing the value of the Zumtobel group in the medium- to long-term. Our objective of becoming global market leader as an innovative supplier of quality lighting components, lighting solutions and lighting management systems, means that each division of Zumtobel AG faces its own demanding strategic objectives.

1970s: Beyond Bavaria

Zumtobel celebrated its 20th anniversary in 1970. The anniversary event coincided with the opening of yet another new production plant in Dornbirn. Ballast evolution moved ahead in the early 1970s with introduction of the LXYG, a compact unit with fewer parts and built on a highly automated production line. Improvements also were made to tunnel light fixtures, metal vapor HID lamps, and flat recessed lights used with false ceilings. Zumtobel also worked with office furniture makers—without marketable results—on developing small flat illuminators that fit into chairs and desks.

Zumtobel extended its market even further beyond Bavarian country borders during this period. In 1970, the company acquired a small stake in a Spanish light manufacturer and, in 1976, purchased a 24 percent stake in British lighting company Tridonic. In 1973 it established an Italian sales company in Bolzano. That same year it crossed into the southern hemisphere, acquiring a 20 percent stake in an Australian ballast producer Soltra, with an agreement to manufacture Zumtobel lighting components at a new plant in Sydney. The production work at Soltra was later moved to a new Australian venture, Atco Controls. In 1976, Zumtobel slipped into the South African market creating a subsidiary lighting company in Johannesburg.

Zumtobel ventured into other new territory, too. It opened its first computer center in 1973 to handle bookkeeping. In 1978, it began using desktop computers to handle complex lighting calculations. The company also adopted an electronics focus. In 1979, it established an Electronic Components Department and, in conjunction with Vienna Technical University, started development work on electronic ballasts. And, the company pondered its first sizeable merger. Serious merger talks began with German light fixture company Staff, a strong industry player that developed the Variolux electronic phase dimmer and innovative track lighting and spotlight systems. Walter Zumtobel eventually balked at the cost of acquiring Staff, however.

The oil crisis and global recession in 1973 caused Zumtobel management to reassess the company and consider a new diversification strategy. Management consultants presented the idea of creating four autonomous company divisions and allowing executives outside the family manage them. The company took a first step in that direction in 1974 by creating the Luminaires, Electrical Components, Toolmaking, and Investment divisions. It took another step in December 1976, when it incorporated as Zumtobel AG. The restructuring paved the way for professional outside management to help run the company. Walter Zumtobel was elected chairman of the new management board. Zumtobel executives Jütirg Zumtobel, Fritz Zumtobel, Walter Dünser, and Helmut Hutter were appointed board members. At the end of the 1969/70 fiscal year, Zumtobel had sales of ATS 824.2 million and employment averaged 1,189.

1980s: Design Focus Elevated

At a development meeting in 1979, Walter Zumtobel suggested elevating design elements in Zumtobel light fixtures. Company management agreed, and product development gained a strong aesthetic orientation in the 1980s. The company sought out notable industrial designers to fashion its fixtures and began to sponsor symposiums and exhibitions related to lighting design issues. In the mid-1980s, the company began working closely with German lighting designer Hans T. von Malotki and Ettore Sottsass’ Italian design studio. The design emphasis was later extended to corporate communications, with top graphic artists contracted to prepare Zumtobel annual reports.

During the decade, the company also pushed forward in research, production automation, and cutting-edge products. Zumtobel debuted its EC magnetic ballast in 1980. Over the next two decades, more than 403 million units were built at plants in Austria, South Africa, and Australia. Contracts for electronic ballasts were also being signed, with lighting projects at Innsbruck railway station (1983) and Frankfurt/Main airport (1984) among the first to use them. Other high-profile projects included lighting systems for a new BMW plant at Steyr, Austria, and the control center of the nuclear power plant in Leibstadt, Switzerland. Zumtobel light fixtures, and their designers, garnered a raft of awards over the period.

Key Dates:

1950:

Walter Zumtobel establishes Elektrogerate und KunstharzpreBwerk W. Zumtobel KG to produce ballasts for fluorescent light fixtures.

1952:

The company produces its first complete fluorescent light fixtures.

1953:

The company begins operating under the shorter name W. Zumtobel KG.

1958:

Zumtobel exhibits lighting products at the Hanover Fair.

1961:

Jtirg Zumtobel becomes the first second-generation Zumtobel family member to join the company; he is followed in 1966 by his brother Fritz Zumtobel.

1976:

The company becomes a stock corporation (AG); Walter Zumtobel founds ballast manufacturer Atco Controls in Australia.

1979:

An Electronic Components Department is created and starts development work on energy-saving electronic ballasts.

1984:

The company opens its first U.S. sales office in Garfield, New Jersey; work on a production plant there begins in 1989.

1991:

Zumtobel converts to a holding company; the Lighting Solutions and Lighting Components divisions become independent operating companies.

1993:

Zumtobel acquires a majority holding in German light fixture manufacturer Staff and obtains the remaining shares a year later.

1998:

New subsidiary Luxmate Controls is founded to focus on electronic lighting management; sales offices are opened in Hong Kong and Kuala Lumpur.

2000:

Zumtobel becomes Europe’s largest lighting company by acquiring UK-based Wassal and its subsidiary Thorn Lighting Group.

Corporate changes during this time carried less impact than the previous decade’s. Retiring as chairman of the company’s management board, and from day-to-day involvement in the company, Walter Zumtobel became chairman of the supervisory board of Zumtobel AG in 1981. Jürg Zumtobel took over as chairman of the management board. The company adopted its first mission statement in 1989, and it continued to invest in computer technology. Computer-aided design (CAD) workstations came to Zumtobel in 1984 following the company’s development of the lightning design software package Cophos. Over time, Cophos became a standard tool in the lighting industry. Zumtobel also worked with the regional government to create a CAD training center at the company in 1987. Company employees were among the instructors.

Zumtobel established new sales companies in Great Britain in 1983 and Spain in 1989. In 1984, the company also arrived in the U.S., opening a sales office in Garfield, New Jersey. Five years later it would build a light fixture production facility there. Political uncertainty prompted Zumtobel to decrease its presence elsewhere. It combined its South African operations with other companies to minimize risks and sold its interest in an Iranian lighting company. At the end of the 1989/1990 fiscal year, Zumtobel revenues totaled ATS 3,123.4 and employment had averaged 2,654. The company also said goodbye to founder Walter Zumtobel, who died in 1990.

1990s: Transition to Holding Company

At the turn of the decade, Zumtobel management and its consultants concluded that European lighting industry was heading toward the same kind of consolidation seen in the U.S., where five lighting suppliers had cornered 65 percent of market. They decided changes were required if Zumtobel wanted to become a dominant supplier in Europe. “The decisive step came in 1989 when a strategic analysis conducted in conjunction with external consultants revealed that we were too big to retreat into the role of a niche provider, but still far too small to hold our own in the face of the foreseeable market trends,” explained board chairman Jürg Zumtobel in an interview in Light Years, Zumtobel’s corporate history. “Our only option was to adopt a proactive expansion strategy.”

Management’s “expansion strategy” mirrored the restructuring that occurred in the mid-1970s but took it to another level. The plan called for repositioning Zumtobel as a holding company and transforming the Luminaires and Electrical Components divisions into independent operating companies. The changeover occurred in 1991, with the Luminaire Division becoming Zumtobel Licht and the components divisions taking the name of subsidiary Tridonic. Jürg Zumtobel became chairman of the holding company, which retained the Zumtobel AG name. Other members of the executive board were Fritz Zumtobel and Walter Diinser. Fritz Zumtobel assumed the chairman title in 1996.

A mergers and acquisition binge followed the reorganization. In 1993, Zumtobel Licht succeeded in bringing long-coveted German light manufacturer Staff into the fold by acquiring a majority stake. Staff transferred the remaining shares to Zumtobel in 1994, and two years later Zumtobel Licht was renamed Zumtobel Staff. The merger brought a critical product sector—display lighting—to Zumtobel.

In 1996, Tridonic took over the Swiss lighting component manufacturer Knobel AG, which had licensed its starter technology to Walter Zumtobel in 1950. In 1998 the Australian company Atco Controls came under the wing of Tridonic, which changed its name to Tridonic Atco. The Luxmate electronic lighting management system, jointly developed by Tridonic and Zumtobel Licht, had made its debut in 1992. By 1998, Luxmate Controls had become a separate operating company of the Zumtobel group, focusing on lighting management services that improve energy efficiency and automatically adjust lighting levels. Finally, the group acquired the German lighting manufacturer Reiss International as a subsidiary in 1999.

The company meanwhile continued to pursue new markets. Sales offices were opened in Sweden in 1990 and, following the reunification of Germany, the East German city of Jena in 1991. Zumtobel Staff added the first Asian sales offices in Hong Kong and Kuala Lumpur in 1997 and in Norway in 1999. New products included the Orea waveguide luminaire, which helped drive the trend for glare-free workplace lighting. Awards and honors rolled in again during the 1990s for Zumtobel products and their designers.

2000: Zumtobel Doubles in Size

Zumtobel entered the new millennium proposing the largest merger in the European lighting industry, and one that would make it among the largest lighting companies in the world. On February 11, 2000, Zumtobel and international financial investment group Kholberg, Kravis Roberts (KKR) announced it had made an offer for the British mini-conglomerate Wassal. Wassal subsidiary Thorn Lighting Group—Europe’s second largest light fixture maker—was Zumtobel’s target. The corporate strategy was to bring Thorn’s outdoor and airfield lighting segments into the group to round out its product and service portfolio and gain access to the company’s core markets in the U.K., France, Scandinavia, and the Far East. A Zumtobel corporate fact sheet stated that with the addition of Thorn the company had attained “the global critical mass required for future market success.”

The European Commission sanctioned the merger and Zumtobel acquired Wassal two months later. Zumtobel immediately integrated Thorn as an autonomous operating company. The transaction gave KKR a 34 percent holding, leaving the Zumtobel family with a 66 percent majority holding. Thorn’s lighting component manufacturer, Atlas, was folded into Tridonic Atco. Overnight, Zumtobel almost doubled its volume of business. Sales for the group rose almost 94 percent to ATS 18.4 billion (EUR 1.33 billion). The employee count rose to an annual average of 9,515.

Looking Ahead

Strategic product innovation, market development, and corporate restructuring propelled Zumtobel into the new century as a powerful international player in the lighting industry. Looking forward, the company had begun to anticipate new industry movements. Management recognized the impact of new lamp technology such as T5 fluorescents, LEDs (light-emitting diodes), and ceramic metal halides, and the trend toward using indirect general office lighting. And, while the company had yet to establish itself in the huge North American market, it was casting an optimistic eye toward South America.

Principal Operating Units

Thorn; Zumtobel Staff; Tridonic Atco; Luxmate Controls; Reiss International.

Principal Competitors

Siemens AG (OSRAM SYLVANIA); Koninklijke Philips Electronics N.V. (Philips Lighting); General Electric Company (GE Lighting); SLI, Inc.

Further Reading

Dawley, Heidi, “Storming Fortress Europe,” Business Week Online, October 16, 2000, http://www.businessweek.com.

Dorman, Paul, “Austrian Link-up Ahead as Wassail Backs KKR Offer,” The Times (London), February 12, 2000, Lexis-Nexis Academic Universe, accessed March 26, 2002, http://www.lexis-nexis.com/universe.

Harris, Tom “How Fluorescent Lamps Work,” How Stuff Works, accessed March 15, 2002, http://www.howstuffworks.com/fluores-cent-lamp.htm.

“Kohlberg Kravis Buys Britain’s Wassail PLC in $998.7 Million Deal,” Wall Street Journal, February 14, 2000. p. B16.

“Light Management,” Der Standard, May 15, 1999, p.6.

Riewoldt, Otto, ed. Light Years: Zumtobel, 2000-1950, Basel, Switzerland: Birkhauser, 2000.

Yee, Roger, “Light the Way,” Architecture, December 2001, p. 28.

Zumtobel, Jürg, “Of Courage and Change,” Zumtobel AG Editorial, accessed March 15, 2002, http://www.zumtobel.com.

“Zumtobel AG Invests Sch760m,” Wirtschaftsblatt, November 3, 1999, p. 2.

“Zumtobel Announces Opening of U.S. Manufacturing Plant,” Business Wire, June 9, 1989, Lexis-Nexis Academic Universe, accessed March 26, 2002, http://www.lexis-nexis.com/universe.

“Zumtobel Turns On the Light in the U.S.,” Wirtschaftsblatt, August 29, 1998, p. 8.

—Doug Cooley