Baden-Württemberg

Fortunately for the southern German state of Baden-Württemberg, many such companies have resisted the allure of "easy" money through the public offering of shares and have instead become proponents of innovation and cutting-edge technology.

Visitors to Voith's Heidenheim headquarters succumb instantly to the charms of the sleepy surroundings where manor houses and old stately trees stand alongside state-of-the-art R&D buildings and factories.

These facilities don't tell the whole story. Voith also attaches huge importance to the quality of its employees. Over the years, Voith has worked hard to attract high-caliber talent to its Heidenheim base and this investment in human resources has been richly rewarded.

Today, the company owns more than 7,000 active patents, of which more than 50 percent concern products less than five years old.

"We are proud to be a family-owned company," said Dr. Hermut Kormann, the company president and CEO. "When the financial community asks us if we intend to remain a family-owned company, we tell them that we have no intention of going public. We just don't need to."

"The reasons for this are simple," he continued. "We've experienced very significant growth during the last decade. To clarify: General Electric has multiplied its sales five-fold over the last 20 years. During this same period, we have increased our sales by a factor of six. This proves that family-run companies operating in markets with moderate growth rates can identify and finance growth opportunities, provided of course the families allow them to retain a major portion of the profits."

Voith ranks either number one or two in all its key product markets - a remarkable achievement given that the company's activities are concentrated in capital goods sectors that are known for fierce competition. To achieve this, it has developed a global network with operations in every important market region worldwide.

In 2000, nearly 80 percent of the company's sales were generated outside Germany. And Kormann explained that joint business enterprises have played a key role in this expansion.

"We are very proud, for example, of our venture with Siemens in the hydroelectric power business (a 65-35 percent split favoring Voith). The fact that a company such as Siemens has lent its name to a minority joint venture bears testimony to the value of long-established relations. This was only possible because Siemens and Voith's business affiliation can be traced back over 100 years."

In the paper technology sector, Voith Paper has enjoyed a fruitful cooperation with Ishikawajima-Harima Heavy Industries, better known as IHI, since 1980. Based initially on a license agreement for paper machinery equipment, the collaboration grew closer last April when both partners agreed on common business targets for the entire papermaking business to compete more efficiently. The agreement resulted in the creation of Voith IHI Paper Technology.

The motivations behind the joint venture are clear. Although the Japanese market is not expected to grow by more than 1.5 percent per year, a strong East Asian position is extremely important if Voith is to gain further market share in the second largest paper business region in the world.

According to Hans Müller, president and CEO of Voith Paper, the local knowledge that a company like IHI can provide is in unique markets like Japan.

"Newsprint in Japan, for example, is generally of a much higher quality than in other countries. Indeed, this is true for most grades of paper. Subsequently, Japanese companies have tended to work with domestic suppliers like IHI, Mitsubishi or Sumitomo and this has made them even more demanding in terms of quality guarantees when working with foreign suppliers," he added.

"At Voith, we embrace this kind of challenge, and our joint venture with IHI was undertaken with this in mind," he pointed out, "We are now in a much stronger position than before, and we are better able to meet the demands of our Japanese customers."

If past experiences are anything to go by, there is no reason to doubt the future success of this latest joint venture. Voith has a consistently good track record for making the most of its partnerships.

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