Buderus AG
Address:
Sophienstrasse 30-32
D-35576 Wetzlar
Germany
Telephone: (49)(6441) 418-0
Fax: (49) (6441) 418-1901
http://www.buderus.de
Statistics:
Public Company
Incorporated: 1731 as Friedrichshütte, Johann Wilhelm Buderus I
Employees: 9,577
Sales: DM 3.41 billion ($1.74 billion) (1998--99)
Stock Exchanges: Frankfurt/Main
Ticker Symbol: BUD.ETR
NAIC: 333414 Heating Equipment (Except Warm Air Furnaces) Manufacturing; 331111 Iron and Steel Mills; 331513 Steel Foundries (Except Investment); 331221 Rolled Steel Shape Manufacturing; 33634 Motor Vehicle Brake System Manufacturing; 32731 Cement Manufacturing; 32739 Other Concrete Product Manufacturing
Company Perspectives:
Fossil fuel resources are finite. In the interest of future generations we are looking for innovative solutions to use existing resources sparingly. Solar technology is based on sun power. Our diffusion-absorption heat pump, which currently is being subjected to field trials, turns heat present in ambient air into caloric output. It has the potential to further reduce the discharge of CO2 in the interest of our natural living bases. Designing the future means to go new ways.
Key Dates:
1731: Johann Wilhelm Buderus leases the iron works and foundry Friedrichshütte.
1807: Sozietät J.W. Buderus Söhne is founded.
1870: OHG Gebrüder Buderus zur Main-Weser-Hütte bei Lollar is incorporated.
1899: Buderus shares are traded for the first time at the stock exchanges in Frankfurt and Berlin.
1911: Buderus's own distribution company for heating products is established.
1917: Buderus starts producing stainless steel.
1935: Hessen-Nassauischer Hüttenverein merges with Buderus.
1956: Friedrich Flick KG in Dusseldorf takes over majority of Buderus shares.
1965: Buderus is integrated into the Flick concern.
1981: The last blast-furnace for raw iron ceases production.
1987: Buderus becomes a management holding company with five operating companies.
1992: Metallgesellschaft acquires majority of Buderus shares.
1994: Buderus becomes independent again.
Company History:
Buderus AG is the holding company for the German Buderus concern, best known for three main divisions producing steel, cast iron pipe systems, and heating systems. The Heating Products division, Buderus Heiztechnik, produces furnaces, burners, boilers, solar heating systems, and heating control systems and supplies. This division operates five production facilities in Germany and two in the Netherlands; it distributes its products through more than 45 German sales offices and through subsidiaries and licensed wholesalers worldwide. The company's Castings division, Buderus Guss, makes cast iron pipes, as well as castings for automotive and other precision applications. Buderus Guss is also active in the fields of waste water treatment systems and drainage technology. It operates five production facilities in Germany, as well as on in Austria. The company's Special Steel Products division, Edelstahlwerke Buderus, produces high-quality steel products such as rolled steel, closed-die forgings, and other forged materials. It operates a major production facility in Wetzlar, Germany, and a second location in Pont Salomon, France, as well as 28 warehouses and 48 sales offices throughout the world. The heating products division accounts for about two-thirds of the group's total sales, the Castings division for about 19 percent, and the Special Steel Products division for 17 percent. One-third of Buderus' total sales come from abroad.
Foundations in the 18th Century
On March 14, 1731, a dream came true for Johann Wilhelm Buderus. That day an administrator at the Friedrichshütte iron works made a down payment and became the official lessee of the business (located in central-western Germany near the river Lahn and north of Frankfurt) owned by Count von Solms-Laubach. Having envisioned the day he would take over the Friedrichshütte, Buderus had invested heavily in the iron works and owned most of its operating capital by 1729. Shortly after being awarded the new title 'Hochgräflicher und Herrschaftlicher Hüttenmodiator,' he married for the second time (his first wife having died at age 30 when delivering her fifth child.) His new wife, a daughter of a priest who also served a countess, gave Buderus a leg up in society via access to people in upper-class positions. However, the new business and marriage were not enough to secure a fortune for Buderus. Over the next two decades, Buderus and the foundry were challenged by rising exploration and production costs of ore, rising wages for iron workers, and the bureaucracy involved with out-of-county exports. Plagued by worries about feeding his 13-member family, Buderus continued to negotiate with the county administration to keep the lease price down over the years and concentrated on the production of raw iron since there was not much demand for his cast iron products. On June 23, 1753, Johann Wilhelm Buderus died at age 63, little realizing the enduring success of his business.
After his sudden death, his wife, Elisabeth Magdalena, managed the family business and secured its existence through many challenges, including destructive floods and storms, as well as months of 'daily robbery' during the Seven Years' War. Later, the founder's youngest son Johann Wilhelm Buderus II took over the business. The financial backing Buderus II obtained through his diplomatic talent and a marriage to the daughter of a wealthy iron works owner enabled him to bring the Friedrichshütte though a severe economic downturn in the 1770s.
A Family Dispute in the 19th Century
The three sons of Johann Wilhelm Buderus II--Friedrich Andreas, Christian Wilhelm, and Georg Carl Theodor--reorganized the family business and received equal shares in the Sozietät J.W. Buderus Söhne in the early 1800s. However, the oldest two died as early as 1833 at ages 25 and 26; thus the youngest, Georg Carl Theodor Buderus, together with his three nephews and other family members, managed and expanded the Buderus company during the 19th century, moving its main presence to the area around the river Lahn, which flowed southwest to the Rhine. By 1835 the Buderus company operated five iron works, producing cast-iron furnaces, ovens, cookware, and irons.
It was in that year that a dispute arose among the heirs. The cause was a request by Friedrich Buderus to formally and fairly divide the company's assets between family members. Georg Buderus II, the oldest of the three nephews, vigorously resisted this endeavor to secure the family's unity and was--at first--successful. However, after the company's worth was established in 1838, a new agreement between the three family groups was negotiated, giving each group one-third of the shares. The agreement included a clause stipulating that no shareholder would initiate any adverse acquisitions or leases or run any businesses on the side. After Georg Buderus I death in 1840, Friedrich Buderus again insisted on redistributing the shares in the company according to the assets owned by each heir. His two brothers finally gave in to avoid further disputes.
From 1841 on Friedrich Buderus held
Industrialization and Expansion Begins in 1864
In the middle of the 19th century, with industrialization well underway, a new technology for blast furnaces operated in iron works started replacing the old processes. Traditionally, these furnaces were powered by charcoal, but this was gradually being replaced by coke as the new fuel. In 1864 the first coke-powered blast furnace started operations at the Main-Weser-Hütte iron works.
Six years later, in order to secure supplies of raw material, Buderus moved to the German town of Wetzlar on the river Lahn where the company was also operating ore mines in the surrounding areas. The newly-built iron works and foundry was also close to a railroad connection that made it possible to ship products quickly to such German cities and industrial centers as Cologne, Frankfurt, Koblenz, Giessen, and Kassel. It took two years to build the new facilities on a property near the Wetzlar train station between two railroad lines. Named after the mother of Georg and Richard Buderus, the Sophienhütte started operating its first blast-furnace in 1872. A second one started production in the following year.
In 1878 the Buderus brothers had a breakthrough. For the first time the cast iron made by OHG Gebrüder Buderus, was able to compete with the English and Scottish brands that dominated the German market. The new iron quality made the production of very thin cast iron possible. Buderus also started making modern coal-fueled room furnaces.
Buderus Becomes Public Company in 1884
Financial demands to secure the further dynamic growth of the company and an ever-expanding number of family members called for a new legal entity. On March 13, 1884 Buderus was transformed into a public company--the Aktiengesellschaft Buderus'sche Eisenwerke. All shares and leading positions were held by Buderus family members. At that time the company owned six iron works with five blast furnaces, two foundries, and several other production facilities. However, with its focus narrowed on the production of raw iron, the company slid into a serious crisis in the following years when competition and price pressures for raw iron became tougher, and debt from investments in new iron ore mines and modernization of the blast furnaces weighed heavily on the balance sheets. Buderus decided to sell two of its iron works to get out of debt. The Hirzenhain iron works was sold in 1891 to Hugo Buderus--the second leading figure of the Buderus family after Georg Buderus III. Hugo Buderus took advantage of the crisis situation, acquiring the profitable facility with cash he obtained through an advantageous marriage and leaving the company with other less profitable facilities. In 1895 Georg Buderus III agreed to sell the Main-Weser iron works and died shortly thereafter.
However, Buderus was able to survive only with the financial support of a bank consortium. Within one year, the last Buderus family member left the executive board of directors. In April 1899 the banks placed part of the Buderus shares at the stock exchanges in Frankfurt and Berlin. Only a few days after the company had decided to raise its capital in 1900, construction started for a new foundry for iron pipes in Wetzlar. To further diversify its product range, Buderus also erected a cement production facility in Wetzlar in 1899. In the following decades a strong emphasis was placed on the production of iron cast products and several foundries were acquired and expanded.
Heating technology became one of Buderus hallmarks around the turn of the 19th century. In 1898 the first Buderus patent for a cast-iron furnace was registered. The Main-Weser iron works and foundry became an independent company in 1895; Buderus acquired the renamed Eisenwerke Lollar AG in 1905 and became a major manufacturer of cast-iron heating products. As early as 1908, the company established a testing facility for furnaces and radiators. In 1911 Buderus established its own distribution company for heating products and supplies, the Buderus'sche Handelsgesellschaft m.b.H. By 1912 the distribution network extended throughout all of Germany and some neighboring countries.
World Wars and an Unfriendly Takeover
When World War I broke out, Buderus was integrated into the German war industry. By the end of 1915 two new Siemens-Martin furnaces started producing steel at the Sophienhütte. Two years later Buderus also started making stainless steel. In 1920 the Stahlwerke Buderus-Röchling AG was founded. The joint venture with steel maker Röchlingsche Eisen- und Stahlwerke based in Völklingen leased the Buderus steel works and erected new facilities to further process the steel. In 1924 the company was renamed Röchling-Buderus AG.
Because of its broad product range, government-subsidized job programs in the construction industry, and a sustainable financial strategy, Buderus survived the Great Depression and the economic turmoil in Germany afterwards. In the early 1930s the Hessen-Nassauischer Hüttenverein, a family business and the second largest company in the iron industry in the Lahn-Dill region met with financial trouble and finally merged with Buderus in 1935. This transaction included the takeover of an iron works in Oberscheld, six iron foundries, and extensive properties of iron ore mines. Beginning in the late 1930s, the German government put more and more restrictions on business activities until eventually Buderus was forced to produce war supplies again. In September 1944 the iron works in Wetzlar were bombed, and because of severe damages the blast-furnaces ceased raw-iron production.
After World War II ended, the German state of Hessen took steps to put the raw materials and power generation sectors under government control. In 1947 all Buderus production facilities in these industries in the state were administrated by a state government trustee. An agreement was finally reached in 1954 under which Buderus was given a maximum share of 26 percent in the Berghütte which was organized as the Hessische Berg- und Hüttenwerke AG in 1952.
After World War II the company started making consumer products again, including ovens, furnaces, iron-cast radiators, cookware, sheet metal for roofs, and plows. In 1953 the new Buderus subsidiary Omnical GmbH began making steel furnaces for central heating systems. With the postwar construction boom fading, Buderus decided to focus even more on more refined products. In 1955 the company took over the majority of Munich-based Krauss-Maffei AG. Three years later Buderus acquired a majority share in the Burger Eisenwerke AG, a leading manufacturer of heating systems and ovens with the brand name 'Juno.'
In March 1955 the value of Buderus shares at the Frankfurt stock exchange jumped up 232.5 percent. Insiders and experts speculated that someone was systematically buying Buderus shares, and some suggested German steel magnate Friedrich Flick as a possible driving force. On July 4, 1956, the Friedrich Flick KG in Dusseldorf announced that it had acquired the majority of Buderus shares. Nine years later the company was integrated into the Flick empire when Flick's iron works Metallhüttenwerke Lübeck GmbH merged with Buderus'sche Eisenwerke. In 1965 Buderus took over the 50 percent stake of Röchlingsche Eisen- und Stahlwerke in the Röchling-Buderus AG which was renamed Edelstahlwerke Buderus AG. In the same year Buderus was able to buy back the 74 percent stake of the State of Hessen in the iron works Berghütte.
New Technologies, Markets, and Shareholders in the 1970s and Beyond
After the expansion years of the 1950s and 1960s, the 1970s were a period of technological and organizational restructuring for Buderus. With a process of concentration underway in the German iron and steel industry, the company decided to divest its activities in iron mining and production. Buderus subsidiaries Burger Eisenwerke and Hessische Berg- und Hüttenwerke were merged with the parent company which was renamed Buderus AG in 1977. The company's last blast-furnace ceased production in 1981. At the same time, the oil crisis of the 1970s and the rising concern about environmental pollution accelerated the search for cleaner and more efficient heating technology. In 1977 Buderus introduced a new heating product series under the 'Ecomatic' brand name, based on a new-low temperature technology. Combining the words 'economic' and 'automatic' in its name the new furnace was made from new materials that extended product life. The connected heating systems were equipped with energy saving electronic control systems that reduced the water temperature in the boiler depending on outside temperature or even room temperature. In addition the new technology used cleaner and more efficient burner technology that cut down fuel use and emissions. All together the new designs used 12 to 15 percent less energy.
After Friedrich Flick's son Friedrich Karl Flick publicly announced that he intended to sell his private industrial shareholdings for tax reasons in December 1985, Feldmühle Nobel AG, the successor to the Friedrich Flick Industrieverwaltung KGaA, became Buderus' new parent company. This transaction was followed by a restructuring program, initiated by the company's new CEO Wolfgang Laaf. Buderus AG became the management holding company of five independent operating companies: Buderus Heiztechnik GmbH (heating technology), Buderus Bau- und Abwassertechnik GmbH (construction and waste water technology), Buderus Kundenguá GmbH (customized foundry products), Buderus Küchentechnik GmbH (ovens), and Buderus Sell GmbH (airplane kitchens and supplies).
Still, Buderus continued to struggle until 1988. That year a new executive board of directors was established and a new strategy defined. Beginning in 1989 Buderus sold off its unprofitable subsidiaries and started reorganizing and expanding its distribution network. After the reunification of Germany, the company was extended into the former East Germany. Buderus Handel GmbH, a subsidiary in Berlin, organized sales in eastern Germany and Metallverarbeitung Neukirchen, a traditional metal processing firm in Saxony, was acquired in 1991.
The 1990s brought Buderus back its independence. In January 1992 the German industrial holding concern Metallgesellschaft acquired Buderus. However, the group slid into a financial crisis one year later and decided to sell its Buderus shares. The 79.9 percent of the company's share capital held by Metallgesellschaft was publicly offered in June 1994. German banks Commerzbank and Dresdner Bank, and construction group Bilfinger + Berger based in Mannheim, became new major Buderus shareholders. The rest of the company's shares were widely spread among several thousand shareholders.
During the 1990s Buderus also expanded abroad. The company's first foreign subsidiary was founded in Austria in November 1989. Next, Buderus Italia S.r.l. was founded in March 1992 with the takeover of two Italian wholesale firms. Buderus Chauffage SA, a subsidiary in France, followed in 1993. In the same year the company acquired Nefit Fasto B.V., a leading Dutch manufacturer of wall-mounted heating technology. The year 1999 marked the 100th anniversary year of the first placement of Buderus shares on the Frankfurt and Berlin stock exchanges. In that year the company sold its five millionth cast iron furnace. The fact that Buderus was one of the oldest public stock companies in Germany was honored with a special monograph dedicated to the history of Buderus shares.
Principal Subsidiaries: Buderus Heiztechnik GmbH; Buderus Nefit Holding B.V.(Netherlands); Nefit Fasto B.V.(Netherlands); Sieger Heizsysteme GmbH; Buderus Technika Grzewcza sp.z o.o.(Poland); Ferroknepper Buderus S.A. (Luxembourg); Buderus Austria Heiztechnik Ges.mbh (Austria); Buderus Hydronic Systems Inc. (United States); Buderus Guss GmbH; Tiroler Röhren- und Metallwerke AG (Austria); Guss Komponenten GmbH (Austria); Edelstahlwerke Buderus AG (Germany); Deville Rectification S.A. (France); Buderus Specialty Steel Corp. (United States).
Principal Divisions: Heating Products; Castings; Special Steel Products.
Principal Competitors: Vaillant Corp.; Viessmann Werke GmbH & Co.; Pont-à-Mousson S.A.; Georg Fischer Ltd.; ThyssenKrupp AG; Böhler-Uddeholm AG.
Further Reading:
75 Jahre Edelstahlwerke: Buderus AG, 1920-1995, Wetzlar, Germany: Edelstahlwerke Buderus AG, 1995, 55 p.
'Buderus seit 100 Jahren an der Börse notiert,' Frankfurter Allgemeine Zeitung, April 10, 1999, p. 18.
'Der Baukonzern Bilfinger+Berger engagiert sich bei Buderus,' Frankfurter Allgemeine Zeitung, July 14, 1994, p. 17.
Haus, Rainer, Die Buderus-Aktie--ein Wertpapier im Wandel der Zeit, Wetzlar, Germany: Buderus Aktiengesellschaft, 2000, 98 p.
'Heizungstechnik wird zur tragenden Säule,' Frankfurter Allgemeine Zeitung, October 15, 1993, p. 20.
Vom Ursprung und Werden der Buderus'schen Eisenwerke Wetzlar, Munich, Germany: F. Bruckmann KG, 1938.
Source: International Directory of Company Histories, Vol. 37. St. James Press, 2001.
