Leadership Transition

Diehl or No Diehl

diehl
Diehl has moved away from its defense business.
  • Why it matters

    Why it matters

    The Diehl firm is one of Germany’s most unusual corporate entities: Few family-run companies are so globalized.

  • Facts

    Facts

    • The Diehl Group has 16,175 employees and generates sales of  €3.1 billion ($3.4 billion).
    • The conglomerate has bases from Mexico to China.
    • Thomas Diehl has been leading the family business he inherited from his father since 1998.
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    Audio

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Thomas Diehl, the patriarch of the family-run Diehl Group, sometimes waxes sentimental about seemingly ordinary things like an old tube press.

“I put that into service when I was still a student,” said Mr. Diehl, 65, who’s now giving the machine a well-deserved retirement.

It will be replaced by a new press costing tens of millions of euros that spits out pipes that will be made into synchronizer rings for car clutches.

“I hope that the new press also lasts 40 years,” he said.

“This jumping in and out businesses isn’t for us.”

Thomas Diehl, Boss, Diehl Group

Mr. Diehl wants to stay in charge of the company, but he won’t say for how long. He’s been leading the Nuremberg-based family business since 1998.

“Actually, my time could be about up as well,” Mr. Diehl said at the company’s annual news conference, his comment raising the eyebrows of the company’s works-council leader.

“As long as the others want me to stay, I’ll stay,” Mr. Diehl said as way of clarification.

The Diehl Group has 16,175 employees, and the family conglomerate generates sales of  €3.1 billion ($3.4 billion). The Diehl firm is one of Germany’s most unique corporate entities. Few companies are so globalized but are run in such a familial and patriarchal way.

The company produces guided missiles, water meters, brass rings and airplane toilets, and the firm is a market leader. Customers include Airbus, Volkswagen and the German military.

As other companies frantically search for synergies and optimization, the Diehl Group continues to maintain and cultivate its niche markets. Were the family concern to be floated on the market, it would be a virtual feast for investors. But such a move isn’t how Mr. Diehl operates. He commits to things and then holds on to them.

The defense business, for example. Mr. Diehl is now making only €400 million through his company’s guided missiles and other equipment for the Eurofighter. He has come to feel like the industry’s last-remaining fossil, and he likes to air his opinions about military spending.

One is about the fact that all of the German governments for the last two decades have cut such spending. Another is that the then-government coalition of Social Democrats and Greens green-lighted his arms shipments to the Arab region, but the current government won’t even process his applications. As a result, he says, almost all German defense companies are now in the hands of investors or foreigners.

“That isn’t the way to increase our clout in the world,” Mr. Diehl said in a comment directed at Berlin.

diehl2
Thomas Diehl inherited the family firm from his father. Source: DPA

 

Mr. Diehl and his company is no longer as heavily dependant on the weapons sector. Franz Josef Strauss, Bavaria’s long-time minister-president, once urged Mr. Diehl’s father, Karl, to invest in the Airbus project, in airplane cabin furnishings and electronics. Thomas Diehl expanded that business and bought up small aircraft-parts makers.

Diehl has now become a “systems supplier” for Airbus and Boeing. The family concern supplies cooking galleys, cabin lighting systems and electronics, and more recently toilet and sanitary units. Explaining the acquisition of toilet specialist AOA Apparatebau Gautin, Mr. Diehl said: “When the galley breaks down on a flight over the Pacific, then you have cold food. But when a toilet breaks down, then you have an emergency.”

In conversations, Mr. Diehl likes such excursions into details, lengthening the asides with deep, satisfied draws on his cigarette. Until a few years ago, he offered journalists cigarettes, but no longer. Otherwise, nothing appears to be changing in the family’s maze-like company headquarters with its dark wood paneling and lovingly cared for potted plants.

Mr. Diehl remains ambitious, and his latest pet project focuses on so-called smart meters, high-tech devices for monitoring water and natural gas consumption and performing other tasks.

“Romping about in this field are little companies like Google and Apple,” said Mr. Diehl, who has allied himself with IBM. The Americans are providing the data cloud for Mr. Diehl.

It rankles him that in Germany, of all places, his smart gas meter business is just dragging along. The country, after all, is supposed to be the land of the energy transition. But he is going to persevere.

“This jumping in and out businesses isn’t for us,” he said.

Mr. Diehl has invested a lot of energy in the company he inherited from his father. He allows himself €15,000 a month in salary. The money stays in the company, to serve the family.

Mr. Diehl will make the call if and when the company says goodbye to businesses or tube presses or even its own patriarch. His company made a 5.6 percent return before interest and taxes in 2016. He knows there is hardly any margin for investments in the future. It will be interesting to see how he passes on his inheritance.

 

Markus Fasse covers the aviation and automobile industry. To contact the author: fasse@handelsblatt.com

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