Huck Finn
Well-known
This column is from one of Germany's leading news magazines, "Der Spiegel." I have followed it with a commentary on the situation by marc James Small of the Zeiss Historical Society.
25. April 2005
"Blende Zu" ("Stopped Down")
by Klaus-Peter Kerbusk
The traditional brand Leica is about to end soon. The German camera manufacturer has much too long underestimated the trend to digital technology.
Hans-Peter Cohn was optimistic that digital photography is just "a short intermezzo, like e-mail is an expression of our present." In "Spigel" in 2004 he said: "Photographing will always be something different, something contemplative, that will always exist."
This becomes very uncertain for the traditional photocamera company. A few weeks after this full-bodied forecast, Cohn left Leica. Now, in April 2005, his successor had to go too. Since then the interim CEO Josef Spichtig tries to save the company from financial collapse - with an insecure end.
Sales are going down drastically, resulting in a loss of 15.5 million Euros, the largest loss in ten years. If the company cannot recapitalize by the end of May, the end is near, although not inescapable, for the company that built the first small format camera 80 years ago.
For insiders it is a wonder that the last significant exponent of the once mighty and legendary German photography industry could survive so long. others like Rollei, Voigtlander, or Zeiss Ikon could not resist the Japanese rush(?) and had to surrender. But Leica is still manufactured by hand - a big part of these pricey cameras (up to 10,000 Euros) - and it seemed they could resist all changes in the camera market.
But it is not their first crisis. In the early 1970s, as companies like Nikon, Canon, Minolta, and others begain the "Japanese invasion," the company was close to the end the first time. The fact that Swiss industrial(?) Schmidheiny bought the company, helped Leica mange their financial troubles. The company kept to its path and focused strictly on mechanical precision and longevity, and not on technological gimmicks and gadgets like the Japanese competitors.
This strategy and its cult image helped Leica have a veritable renaissance in the early '90s; in a few years, sales double to over 100 mio.(?) Euros per year. The Swiss owners then saw a good opportunity to sell the company for a profit after it had been in crisis management for two decades.
The IPO in 1996 was a foreshadowing of the subsequent new economic era. The shares, cosing 24 Euros, were oversubscibed by a factor of 20.
But then and now, the business model was based only on hope and unrealistic optimism. It worked until 1998/99 when management's forecast of 170 mio.(?) Euros in annual sales could not be reached. Soon the promised profits turned into heavy losses. In 1999, Cohn came as a reorganizer, but he continued the company's tradition of spreading hope and optimism. "Leica is restructured, and now we will attack the market," he said in 2000 - right after he was able to avert another loss.
A year later, he even said: "Open aperture for black digits." (meaning "profit" in German.) but by 2002/03, the company was incurring significant losses again. For the second time the end of the company appeared to be imminent. Now things turned on Leica for having missed the digital path. The company had some digital cameras in the market, but these were mainly produced in Japan and did not bring much profit to the company.
They still do not produce a high-end DSLR like their competitors , Canon, Nikon, Minolta et al have been offering for years. A hybrid solution - a digital back that transforms the analog SLR (R model) into a DSLR - is still on its way even though it was first scheduled for October, 2004. According to the latest forecasts, it should appear in May, 2005.
However, it might already be too late. Leica must raise at least 22 mio.(?) Euros in order to continue its activities. And neither the French Hermes Group nor the Austrian Kaufmann family, both the main shareholders of leica, have announced or even promised that they will stock up.
Meanwhile, Edgar Zimmerman, chief of the workers council, is still an optimist. In his office there is a cartoon showing a frog stuck in the middle of a stork's bill. With his last strength the frog holds the stork's neck, preventing the stork from swallowing him. Zimmerman interprets it this way: "Just never give up."
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Commentary from Marc James Small:
". . . the Leitz family had to sell the Leitz Wetzlar concern. They had taken profits from the company for eighty years but had lost money from 1940 to the early 1970's and the family money was gone. That is, they subsidized the firm as long as they were able but, in the end, broke was broke.
"We will never know the details as the Leitz family never released the information, but it seems certain that, despite some profitable years during the immediate Post-war years due to the USAAFES (US military PX system) contract, they reinvested any profit so made for the retooling necessary for the transition to the M cameras, originally planned for 1940 but postponed due to the War. And the M, successful as it was, was simply battered by superior marketing and customer sensitivity by the japanese camera companies in its primary markets. The US had been compromised by the early 1960's and sales in Germany itself, the prime Leitz market, were slipping badly to the Japanese by the late 1960's.
"The Leitz family floundered badly through that decade, as did the Franke and Heidecke families, the Zeiss Foundation, and so many other German concerns. In the end, all decided to cut their losses in one way or the other: after all, loyalty to workers and customers is one thing, but loyalty to a small remaining family endowment is another. (Those interested might want to study the family-owned British car firms of that era, several of which were forced into near liquidation by misplaced loyalties to aging workers and padded payrolls: think of the first Baron Rootes wandering through the Sunbeam plant and thanking those septuagenerians for staying with him so long, while his finances collapsed around him. Fortunately for the family fortune, he died and his younger brother and son conspired to dump the concern onto a true patsy, Chrysler, but that is a tale for a different day.)
"The Leitz family went the extra mile for their people and deserve huge credit for this but the sale was in response to simple economic realities, caused in part by incompetent Teutonic marketing and in part by an inability to judge a world market from Germany. Had the family walked out in, say, 1948, they would be far wealthier today."
25. April 2005
"Blende Zu" ("Stopped Down")
by Klaus-Peter Kerbusk
The traditional brand Leica is about to end soon. The German camera manufacturer has much too long underestimated the trend to digital technology.
Hans-Peter Cohn was optimistic that digital photography is just "a short intermezzo, like e-mail is an expression of our present." In "Spigel" in 2004 he said: "Photographing will always be something different, something contemplative, that will always exist."
This becomes very uncertain for the traditional photocamera company. A few weeks after this full-bodied forecast, Cohn left Leica. Now, in April 2005, his successor had to go too. Since then the interim CEO Josef Spichtig tries to save the company from financial collapse - with an insecure end.
Sales are going down drastically, resulting in a loss of 15.5 million Euros, the largest loss in ten years. If the company cannot recapitalize by the end of May, the end is near, although not inescapable, for the company that built the first small format camera 80 years ago.
For insiders it is a wonder that the last significant exponent of the once mighty and legendary German photography industry could survive so long. others like Rollei, Voigtlander, or Zeiss Ikon could not resist the Japanese rush(?) and had to surrender. But Leica is still manufactured by hand - a big part of these pricey cameras (up to 10,000 Euros) - and it seemed they could resist all changes in the camera market.
But it is not their first crisis. In the early 1970s, as companies like Nikon, Canon, Minolta, and others begain the "Japanese invasion," the company was close to the end the first time. The fact that Swiss industrial(?) Schmidheiny bought the company, helped Leica mange their financial troubles. The company kept to its path and focused strictly on mechanical precision and longevity, and not on technological gimmicks and gadgets like the Japanese competitors.
This strategy and its cult image helped Leica have a veritable renaissance in the early '90s; in a few years, sales double to over 100 mio.(?) Euros per year. The Swiss owners then saw a good opportunity to sell the company for a profit after it had been in crisis management for two decades.
The IPO in 1996 was a foreshadowing of the subsequent new economic era. The shares, cosing 24 Euros, were oversubscibed by a factor of 20.
But then and now, the business model was based only on hope and unrealistic optimism. It worked until 1998/99 when management's forecast of 170 mio.(?) Euros in annual sales could not be reached. Soon the promised profits turned into heavy losses. In 1999, Cohn came as a reorganizer, but he continued the company's tradition of spreading hope and optimism. "Leica is restructured, and now we will attack the market," he said in 2000 - right after he was able to avert another loss.
A year later, he even said: "Open aperture for black digits." (meaning "profit" in German.) but by 2002/03, the company was incurring significant losses again. For the second time the end of the company appeared to be imminent. Now things turned on Leica for having missed the digital path. The company had some digital cameras in the market, but these were mainly produced in Japan and did not bring much profit to the company.
They still do not produce a high-end DSLR like their competitors , Canon, Nikon, Minolta et al have been offering for years. A hybrid solution - a digital back that transforms the analog SLR (R model) into a DSLR - is still on its way even though it was first scheduled for October, 2004. According to the latest forecasts, it should appear in May, 2005.
However, it might already be too late. Leica must raise at least 22 mio.(?) Euros in order to continue its activities. And neither the French Hermes Group nor the Austrian Kaufmann family, both the main shareholders of leica, have announced or even promised that they will stock up.
Meanwhile, Edgar Zimmerman, chief of the workers council, is still an optimist. In his office there is a cartoon showing a frog stuck in the middle of a stork's bill. With his last strength the frog holds the stork's neck, preventing the stork from swallowing him. Zimmerman interprets it this way: "Just never give up."
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Commentary from Marc James Small:
". . . the Leitz family had to sell the Leitz Wetzlar concern. They had taken profits from the company for eighty years but had lost money from 1940 to the early 1970's and the family money was gone. That is, they subsidized the firm as long as they were able but, in the end, broke was broke.
"We will never know the details as the Leitz family never released the information, but it seems certain that, despite some profitable years during the immediate Post-war years due to the USAAFES (US military PX system) contract, they reinvested any profit so made for the retooling necessary for the transition to the M cameras, originally planned for 1940 but postponed due to the War. And the M, successful as it was, was simply battered by superior marketing and customer sensitivity by the japanese camera companies in its primary markets. The US had been compromised by the early 1960's and sales in Germany itself, the prime Leitz market, were slipping badly to the Japanese by the late 1960's.
"The Leitz family floundered badly through that decade, as did the Franke and Heidecke families, the Zeiss Foundation, and so many other German concerns. In the end, all decided to cut their losses in one way or the other: after all, loyalty to workers and customers is one thing, but loyalty to a small remaining family endowment is another. (Those interested might want to study the family-owned British car firms of that era, several of which were forced into near liquidation by misplaced loyalties to aging workers and padded payrolls: think of the first Baron Rootes wandering through the Sunbeam plant and thanking those septuagenerians for staying with him so long, while his finances collapsed around him. Fortunately for the family fortune, he died and his younger brother and son conspired to dump the concern onto a true patsy, Chrysler, but that is a tale for a different day.)
"The Leitz family went the extra mile for their people and deserve huge credit for this but the sale was in response to simple economic realities, caused in part by incompetent Teutonic marketing and in part by an inability to judge a world market from Germany. Had the family walked out in, say, 1948, they would be far wealthier today."
