Kurtz Ersa celebrates 235 year milestone
The early days
It is a tradition to celebrate the anniversaries of many of the well-established companies in our January issue. However, many of these anniversaries are for 10, 15 or even 20 year old companies, somewhat reflecting the rather young age of electronics. However, one company featured this month, Kurtz Ersa, began its journey long before electronics came into existence – 235 years ago to be exact in the village of Hasloch, near Wertheim in the Main Spessart region of Germany, where the Wenzel brothers built a hammer mill on the banks of the Haselbach stream. The lease was signed on March 24th, 1779, but the Wenzel brothers struggled to keep up with the water taxes in the early years and sold the business to Friedrich Greineisen who committed to producing good iron at affordable prices. It was 1800 when the business was finally to land in the hands of the Kurtz brothers, Johann Georg and Johann Friedrich from Michelstadt. Johann Philipp Kurtz joined his father’s company in 1830 and in 1850 he purchased additional property to introduce a foundry and workshop for metal working to the business. The combination of the foundry, metal working and mechanical engineering has always been central to the corporate strategy at Kurtz Ersa and remain at the heart of the business today. The early 19th century was a period of stagnation in lower Germany, in part due to more competitive steel arriving from England and Belgium. In 1857, Johann Philipp Kurtz transferred one half of the company to his son Friedrich Jakob and in 1868 he gave the other half to his son Karl, thus passing the company to the third generation of Kurtz’s. Accurate records for the company date back to 1892 when a raft of employment regulations came into force. As the company entered the era of the German Reich, it was producing a wide range of products from axles to ploughs and equipment for breweries and asbestos manufacturing. In 1900, Ph. Kurtz Ironworks was one of the first businesses to build its own electricity generating system which was hugely expensive to operate and barely met all of the company’s power requirements.
The War Years
Friedrich Kurtz died in 1897 without a successor, leaving his brother Karl to appoint two of his sons, Ludwig and Hugo to carry forward the family dynasty. Hugo presided through a period of major change in Germany. He was born in 1876 during the German Empire, lived through the Weimar Republic and National Socialism, including serving as a soldier in the First World War and witnessed the years of economic miracles until his eventual demise in 1972 at almost 100 years old. During his tenure he introduced hydraulic engineering utilizing a littleknown new material, called concrete. The end of the First World War left the
Kurtz company unencumbered by feudal mortgages, but crippled by hyperinflation which lasted till 1923. There was a period of relative stability till 1929 when the effects of the Great Depression started to take its toll. In 1931, at the height of the Great Depression, one of the casualties was a long established engineering company called Joachim & Sohn. The wife of Carl Joachim and Hermann Kurtz, son of Ludwig purchased the equipment
Kurtz Ersa celebrates 235 year milestone from the insolvency auction and started a new sales company called Joachim & Kurtz. More importantly, this new company purchased all the drawings, plans and models of the former engineering stalwart. The combined expertise grew into an engineering giant, manufacturing machines that made paper and cardboard and other equipment such as steam engines, locomotives and brewing equipment. The connections of the former Joachim & Sohns were extensive, both in expertise and sales. They had overseas representation in most major markets around the world. The election of the National Socialist party (NSDAP or Nazi party as they are more commonly known) in 1933 had a rapid effect on the German economy. They started printing money, which trickled down to all levels of society. The Kurtz company by this time was now being run by the fifth generation, Hermann and Otto Kurtz. During the war years, the foundry produced armaments and the brothers were members of the NSDAP, a position which was unavoidable for any successful business owner at the time. The Second World War was a tremendous drain on the resources of Ph. Kurtz as most of the able-bodied workers were drafted into the German army. Conversely, the demand for armaments increased during the course of the war and like many German companies, Kurtz eventually had to apply to the employment office in Wurzburg for forced laborers from Russia and Poland to make up the shortfall in staff. According to records at the time in 1944, it was equivalent to 25% of the workforce. On April 1st, 1945 Hasloch and the surrounding area was occupied by the US 42nd infantry division. This was a stroke of luck for the region as it fell within the Americanoccupied zone and they were generally more tolerant than other allied forces.
Germany’s E conomic miracle
Following the war Ph. Kurtz endured two lean years as Germany suffered from the financial effects of losing the war, but by 1947 sales figures were back on the rise as the company fell back on its previous industry of supplying agricultural spare parts, machines for manufacturing cardboard and asbestos sheets. Housing became a major issue in Germany as the population increased sharply and the Kurtz family was forced to build company flats on their land to house workers. Otto Kurtz was constantly looking for new technologies to expand into and
“Otto Kurtz was constantly looking for new technologies to expand into and in the early 50’s the company registered patents for weaving looms with an innovative brake system.”
in the early 50’s the company registered patents for weaving looms with an innovative brake system. Ultimately, the weaving loom business was not successful, but the company was relatively unharmed as the foundry was becoming increasingly profitable. The 50’s and 60’s were a period of prosperity and growth for the Kurtz organization and the construction of the A3 freeway connecting Wertheim to Frankfurt and the main German airport boosted their connectivity to the rest of the world. This period was accompanied by a significant improvement in the life of Kurtz employees. Many day trips were organized, wages increased and in the late 50’s, health care and pensions were introduced. In 1966, Otto Kurtz bought out the shares of his cousin Hermann and became the sole controlling director in the family company. The following years into the early 70’s brought a number of challenges as Germanys economic miracle came to an end. The foundry business, which till this point had been the company’s ‘cash cow’ declined, partly through cheaper imports, but also suffered due to new environmental legislation and the trend for welded parts. Even the electronics industry in Germany, which Kurtz was “Otto Kurtz was constantly looking for new technologies to expand into and in the early 50’s the company registered patents for weaving looms with an innovative brake system.”
Kurtz Ersa celebrates 235 year milestone not yet part of, migrated high-volume manufacturing to Japan. In the early 70’s, Otto Kurtz took another ‘leap of faith’, this time into producing machines for processing expanded polystyrene (EPS). The EPS business got off to a slow start, but eventually became successful due to a new patent which offered significant energy savings. The rise of the EPS business was fortuitous because it coincided with the demise of the asbestos business. Walter Kurtz, who joined his father’s business in 1974 predicted that asbestos would one day be outlawed and it came to pass in 1993. The cardboard manufacturing business came under increasing pressure from other competitors and the board also decided to withdraw from that business and focus all their efforts on EPS. Walter Kurtz was later joined by his brothers Bernhard and Rainer, who both graduated from Technical University Berlin. Under the stewardship of their father Otto the company Ph. Kurtz was restructured into a holding company, Ph. Kurtz Eisenhammer KG and the operating company Kurtz GmbH. This was necessary to protect the family against product liability laws in the USA, where they were selling a lot of their EPS machines and for tax reasons. The transition was successful because each brother had clear responsibilities. Walter ran the EPS machine division; Bernhard ran the foundry and Rainer as the primary driver behind the acquisition of Ersa in 1993. Otto remained at the company in an advisory role until 2001 and died two years later in 2003. The success of the EPS business drove the need for expansion, but there was no room to grow on the existing site. Luckily, the local Hoffmann aluminum foundry filed for insolvency and Kurtz bought the 35,000M2 site and took over their entire workforce and client list. With their many years of experience in steel foundries, the new aluminum foundry acquisition was a natural diversification, but like the steel industry, it depended on a relatively small number of customers. In 1982, Germany once again was ravaged with recession, resulting in 12,000 bankruptcies and 2,000,000 unemployed. Workers were put on short time as foundry volumes dropped 50 percent. But despite this, the Kurtz brothers saw an opportunity to acquire Metallwerke Weiland GmbH with its 120 workforce. They renamed it Metall Giesserei Mannheim (MGM) rounding out the company casting portfolio in non-ferrous metals. By 1980, the EPS market had become saturated in Germany and a strategic decision was taken to expand overseas through the granting of a license to build machines in Japan and to expand sales through reps and distributors around the rest of the world. The United States was a significant market for Kurtz GmbH and in 1985 the decision was taken to found Kurtz North America in Plymouth WI, close to Lake Michigan. The global EPS business became saturated by the end of the decade and the growth of the EPS business changed from one of winning new markets, to that of beating competitors and growth through acquisitions. At home this was made even more difficult by the rise of the Green Party with their environmental objectives.
Small, polystyrene balls became a target as they were viewed as a waste product that was difficult to recycle. The Ersa acquisition 1993 marked another major departure for Kurtz GmbH with the acquisition of Ersa. Ersa had been founded in 1921 by Ernst Sachs in Berlin to manufacture soldering irons. Soldering was a long established business that had been used by the ancient Egyptians and Trojans to manufacture jewelry and weapons and the Romans used the lead for their water pipes. Ersa was a regular exhibitor at the Leipzig Fair and the Berlin Electronics Fair, where it attracted a lot of attention. The firm grew rapidly and internationally through a network of representatives. Like the Kurtz brothers, Ernst Sachs joined the NSDAP, but was not apparently politically motivated and refused to turn his firm into a National Socialist model company. During the war years, domestic turnover grew with German rearmament, but exports fell off. In 1943, Sachs started looking for a new manufacturing location to avoid the increasing number of bombs dropping on Berlin. He eventually chose Teuplitz in Lusatia and on September 11th, 1943, he obtained the license to relocate the business. Company records from the time repeatedly refer to Ersa’s participation in war critical programs such as radar and fighter systems. This was helpful in obtaining resources during the wartime rationing. In February 1945, the Red Army marched into Teuplitz and Ernst Sachs and his family fled to his home town of Hohenloe. In July of that year, he applied to the district council for a permit to manufacture soldering irons, cookers and electric heating stoves in Wertheim. It was eventually granted and manufacturing resumed in April 1946, in a shed at the Wertheim railway station. The 1950’s and 1960’s witnessed an exponential growth in consumer products and Ersa soldering technology was in great demand.
By the 1970’s, they were manufacturing between 400,000 and 500,000 soldering irons per year with 27 percent of its production being exported to 127 different countries. In 1980, foreign competition from Asia forced a streamlining of the company’s product line, but demand continued to grow and in 1985, manufacturing was moved to a new 10,000 M2 production hall with space for 200 employees. From 1985 to 1988, a raft of new products were introduced including the first computer controlled IR reflow ovenat Productronica 1987, in Munich. The expansion continued in 1988 with the opening of the Ersa Training Centre. The workforce swelled to 220, but not all of the new product introductions were a success; an innovative soldering station flopped and the introduction of the reflow systems to the USA was a failure. 1988 ended with the company plunging into debt with a loss of 641,000 D-Marks on a turnover of 28.9 million D-Marks. In 1990, a family member once again returned to the helm of the company. Harald Sachs inherited a company in free fall, struggling to meet delivery times, exports collapsing and a high turnover of staff. By the end of the year, the company registered a small profit, but the writing was on the wall; if the company was going to have a long term future in Wertheim, it would need to be sold. Rainer Kurtz was on the Advisory Committee for Ersa and when he learned of the family’s intention to sell he discussed the and Versaflow 4 multichannel soldering station 16 Kurtz Ersa celebrates 235 year milestone matter with his brothers and other board members and an official offer was made. It was finalized in a purchase contract, notarized onDecember 16th, 1992. It was not an easy decision because Kurtz was going through a difficult period too and the entire acquisition had to be bank-financed, butultimately it turned out to be one of the best decisions Kurtz ever made. In 1996, Ersa’s pre-production metal working department was spun off into a separate company called Metallbearbeitung Wertheim (MBW) and headed up by Ewald Garrecht, who began his journey with Ersa in 1976. The Kurtz Group now had a total of six factories; two in Wertheim and other factories in Hasloch, Wiebelbach, Mannheim and one in Austria. In the late 90’s, Ersa launched the innovate Ersascope, a system that enabled visual inspection under low-standoff components such as BGAs. The product frame was manufactured by MBW and the Kurtz aluminium foundry, while the electronics and final assembly were performed by Ersa. This was a perfect example of the synergy between the companies within the Kurtz Group. The Ersascope won awards in the USA and Sweden and contributed towards a doubling of the company’s turnover in the late 90’s. The next evolutionary step was to introduce a rework and repair station. Ersa had begun manufacturing rework systems in 1998, with revolutionary infrared heaters to heat the underside of the board. After a slow start they went on to sell 5,000 of these systems over the next ten years. In 2008, Ersa made another departure, this time into stencil printing with the introduction of the Versaprint printer. This was followed in 2008 by the Versaflow selective soldering system, which won a Global Technology Award for its innovative design. By this time Ersa had grown enormously to become the most profitable division of the Kurtz Group.
Large company growth and infrastructure needed reliable and professional systems and in 2001, a SAP system was installed throughout the company. Likewise, certification became increasingly important and Kurtz obtained ISO 9001 in 2000 and ISO 14001 in 2009. The continued expansion of the Kurtz Group led to the decision to build a factory in Zhuhai, South China. Sales and service offices were also opened to support local customers in Korea and Russia. Fifteen years after the founding of Kurtz North America, the Kurtz Group had 16 locations worldwide and the vision by Otto Kurtz of keeping the company a “small- to medium-sized business” was a thing of the past. In 1998, a new office building with conference rooms was built in Wiebelbach and the organization was restructured under the name Kurtz Holding GmbH & Co. Beteiligungs KG and one by one, each of the operating companies was made a subsidiary of the holding company. But there were still challenges ahead. September 11th, 2001, reverberated around the world and the company suffered two year of reduced order volumes as a result of the global downturn. However, this paled against the recession of 2008/9 where Kurtz experienced a 45% drop in turnover in the first half of 2009, threatening its very existence and causing a raft of extreme measure to ensure survival. Working hours were reduced, all the top management took salary cuts, MGM Mannheim was sold in a management buyout and 300 jobs were lost in other parts of the business. By 2010, Kurtz Holdings was coming out of the woods as order levels returned at the same pace they disappeared, but the company learned a salutary lesson and now takes a more conservative view to all parts of the business. Conclusion Kurtz Ersa is a remarkable story in German manufacturing history. It has survived two World Wars and prospered due to its diversity of products, unique approach to involving at least two family members per generation and its continued drive towards innovation. Today, the Kurtz Ersa Group has eleven operating companies, with nine production sites and 13 foreign branch offices. In 2014, it had a turnover of 200 million Euro and a workforce of 1,100. The company exports 57% of everything it makes and under the Chairmanship of Rainer Kurtz and his board it is well placed to continue its meteoric growth well into the future. –TREVOR GALBRAITH