[A-List] Germany: capital discontent

["Michael Keaney" <michael.keaney@xxxxxx>]

On Germany's cutting edge
By Peter Marsh
Financial Times; Nov 04, 2002

Alot of concern is being displayed nowadays about the future of Germany -
and it is with a certain sadness that Berthold Leibinger joins in.

A respected figure in corporate Germany , Mr Leibinger, aged 72, is
president and majority owner of Trumpf, the world's biggest maker of laser
cutting tools and one of Europe's leading suppliers of lasers for a range of
applications. He is also chairman of the supervisory board of BASF, the big
chemicals producer, and is on the supervisory board of Deutsche Bank.

Mr Leibinger is one of Europe's best examples of a committed individual who
has stewarded the development of a company in a niche business and made it
into a world leader, while keeping the company resolutely private. Trumpf -
where Mr Leibinger has worked since 1950, buying it from its former owners
in 1973 - last year had sales of $1bn (£640m), more than 60 per cent of this
from outside Germany.

Trumpf has plants in six countries and spends 6 per cent of its sales on
research and development, a higher figure than most other engineering
companies. R&D employs 500 of its 5,500 staff worldwide in a heady mixture
of disciplines including plasma technology, high-speed machining, software
and medicine.

The economic slowdown has had a big impact on Trumpf's net income, which
fell to $54.2m last year from $95.2m in 2000-01. However, reflecting on this
last point in a conversation in his company's sprawling headquarters on the
outskirts of Stuttgart, Mr Leibinger does not seem downbeat.

He argues that even assuming the poor worldwide demand for his company's
equipment lasts until well into next year, as he forecasts, there are plenty
of growth opportunities further ahead. These, he says, should enable Trumpf
to expand its sales over the next five to 10 years by an average of 10 per
cent a year, in line with the company's record in the past 40 years.

But Mr Leibinger's mood shifts to a mix of sorrow and exasperation when the
discussion moves on to the business environment in Germany, which he
describes as "lousy". Asked why this should be, he says: "It's because we
have a lousy government."

Since the government of Gerhard Schröder took power in 1998, it has
repeatedly claimed that it is friendly towards business. Mr Leibinger
believes it has done nowhere near enough to help companies expand and take
on new workers.

"We remain over-regulated and overburdened by social protection, which leads
to less motivated people and a lack of self-responsibility," he says. "They
[government ministers] talk a lot about reform and waking up the country but
nothing happens. We hear the song but we don't believe it."

Mr Schröder's narrow victory in the recent elections, leading him to form a
new Social Democrat-led coalition with an increased dependence on the Green
party, filled Mr Leibinger with despair. Choosing his words carefully, he
says the chance of anything positive coming from the new coalition will be
lessened by "a mixture of naivety, ideology and sheer incompetence" on the
part of the Green party.

Asked why, if conditions in Germany are so awful, it contains some extremely
competent companies - Trumpf included - which have used the country as a
base for strong worldwide growth, Mr Leibinger says: "Good as [some
companies] are, we should be doing better. There are many companies with
good market or product positions, that are doing all the right things but
are performing badly because of the lack of a more supportive business
environment. The average company is in trouble and that's a matter for
concern."

In terms of what companies can do to boost their own performance, a
consistent theme of Mr Leibinger's has been to put money behind new ideas.
The strategy has led to a gradual evolution of products away from the
company's core.

Trumpf started making lasers in the 1980s for its own use in its machines.
Now the lasers are sold to a range of industries for cutting sheet metal;
and last year laser sources sold to outside groups accounted for a fifth of
the company's sales.

Mr Leibinger is keen to expand the company's division that makes medical
lasers for treating diseases such as cancer. He also enthuses about the
prospects for using lasers to form metal powder into complex shapes, which
might be used by the aerospace or car industries. As for existing
applications, Trumpf recently won a ?100m (£63m) order from Volkswagen for
complex machinery containing 260 lasers that will automatically weld
together parts of car roofs on a production line.

"Lasers are going to lead to a lot more applications in the next few years,"
Mr Leibinger says. "The companies that will do best in exploiting the
opportunities are those that have done the work to put down roots in the
technology."

Mr Leibinger has stepped back from day-to-day management of the company,
leaving it to the other three people on Trumpf's management board - two of
whom are his relations. The board comprises Peter Leibinger, his son, and
Mathias Kammýller, his son-in-law, with the sole non-family board member
being Harald Výlker, who is responsible for the company's electronics and
medical activities.

According to Mr Leibinger, a strong family involvement in a business -
assuming family members have the necessary talent and commitment - is key to
an industrial company's chances of success.

While Mr Leibinger is taking things a little more easily than he did a few
years ago, he has no thoughts about completely leaving his job at Trumpf.
"I'm going to be involved with this company until I die," he says.