Aristocratic firms

A Prince Among Businessmen

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Just call me Ernie. Source: Getty

Count von Oeynhausen-Sierstorpff breezes through the entrance to his mineral water bottling plant. “Stop,” a voice shouts from the background, “you can’t go in there.” Marcus, as he’s known, comes to a sudden stop. A worker hurries toward the seventh-generation von Oeynhausen-Sierstorpff and hands him a high-visibility vest. “No one gets in here without this,” he says. The count looks irritated, but he complies and puts on the vest. Worker one, aristocratic boss nil.

The incident is a reminder to both classes that they are now dependent on each other, whether they like it or not. The members of Germany’s aristocracy were long viewed as decadent heirs, with income from forestry and agricultural paying for their lifestyle. But that business model isn’t working anymore. The cost of living has exploded, timber and milk prices are stagnating, and meager interest rates are doing the rest. While the classic approach is often sufficient to survive, it certainly isn’t enough to support a more lavish lifestyle.

As a result, many blue-bloods are trying their hand at business, usually based on their landed family’s assets. Count von Oeynhausen-Sierstorpff, for example, was asked more than 20 years ago by his father to give up a career at electronics giant Philips and take on the family businesses. Today, and €20 million of investment later, he runs a hotel and spa as well as the mineral water plant on his 60-hectare (148-acre) estate in Bad Driburg in the Westfalia region. His group of companies has 1,500 employees and is the largest employer in the region, with annual revenues of €81 million.

“In the best case, there is no difference between a family company and a noble house”

Michael, Prince of Saxe-Weimar

“We are the seventh generation of our family, which demonstrates the sustainability of what we do,” he says. “But you also have to be careful not to be overwhelmed by it all, and not to let too much rest on your own shoulders.”

Ernst August, Prince of Hanover, provides a good example of these potential difficulties. He recently married Russian designer Ekaterina Malysheva, but the marriage escalated a dispute with his father, primarily over business matters. The head of Germany’s fourth-largest noble family is afraid of losing his influence over the foundations and fund structures of the ancient House of Welph. While the father sees the old structures being threatened, the son has little time for such views.

Many other aristocratic families are in a similar position, unsure of the right way to approach economic modernity. Not all are as savvy as the Oeynhausen-Sierstorpffs, and as they struggle with their new reality, several are finding role models for structural change among bourgeois industrialists, the commoners who once built large industrial empires in Germany.

Their recipe for success is as old as some of the ancient houses of Germany: Keep the number of decision-makers small; keep out banks and external investors; find a niche and develop it to perfection; don’t think in terms of quarters but generations; and, finally, competency trumps family affiliation.

Michael, Prince of Saxe-Weimar, is one convert, and has looked closely at family-owned firms that have made it big, such as cosmetics giant Henkel and food producer Oetker. “In the best case, there is no difference between a family company and a noble house,” he says.

The Saxe-Weimars own 2,100 hectares of forest and 300 hectares of agricultural land. That amounts to €1.2 million in annual revenue, if the land is managed conservatively. And then there are stocks, bonds, properties and a small used-vehicle business  – the sort of things one collects over the years, the prince says.

Speaking at his holiday home on the North Sea resort island of Sylt, the 70 year old says he is thinking about handing over the family firm to his daughter. She is a single child and a fast learner, and she has everything it takes for the job. “I’m in the woods, for both economic and emotional reasons,” he  says. The family has been running the business for several centuries. It isn’t the sort of thing you discard lightly, even if it means refraining from taking any big steps.

Such thinking marks out Prince Michael as the opposite of the more economically modern aristocrats, like the von Oeynhausens or the Welphs. He doesn’t think much of portfolio management, except for those who truly understand the business. Many aristocrats, he says, have diversified in recent years, but what good has it done them? Wasn’t the Von Ysenburg and Büdingen family once the second-largest forest owner in Germany? “Hardly any of it is left today,” says the prince.

The Saxe-Weimars, of course, have no such problems: The prince’s fortune is estimated at €50 million. And for the time being at least, he’s not going anywhere.

 

Deutsche Dynasties: Germany’s five most important noble houses

The House of Hohenzollern: When the German Empire was established in 1871, these Prussian royals were promoted to German emperors. Today, the house is managed and headed by Georg Friedrich, Prince of Prussia.

The House of Bavaria: The Wittelsbach family is one of the oldest German noble houses. Its members were the rulers of Bavaria for centuries, as well as the Counts Palatine of the Rhine. As one of Europe’s most important dynasties, the house has included kings of Hungary, Sweden, Denmark, Norway, Greece and the Holy Roman Empire.

The House of Fugger: The Fuggers remain synonymous with money and influence to this day. The mercantile family from the southern Swabia region was established in Augsburg in 1367, and divided into two branches after a partition of its assets in 1455. The Fugger of the Lily branch built a mercantile empire, while the Babenhausen branch entered the high nobility in 1803.

The House of Hanover: The Welphs, originally from Franconia, are the source of the British royal family through Prince-Elector George Louis, who became George I of Great Britain in 1714.

The House of Hesse: The Hessians have their roots in the ancient House of Brabant, and acquired their central German lands through marriage in 1264. After that, the family was divided into many lines and branches, with the last ruling Duke being overthrown after the First World War in 1918.

 

A longer version of this article originally appeared in the business magazine WirtschaftsWoche. To contact the authors: online@wiwo.de

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