Brighter future Shedding Light at Osram

The lighting manufacturer has appointed a new boss to finalize its restructuring plans and make a profitable switch to new lower-energy bulbs.
Is Osram having a light-bulb moment?

Olaf Berlien is familiar with the old and new worlds of lighting. The 52-year-old once installed wiring and incandescent bulbs at his parents’ small business. Later he worked in the microchip industry. Now, as he starts work as chief executive of the Munich-based lighting manufacturer Osram, he will occupy both worlds.

At Osram just as elsewhere in the industry, the sale of traditional incandescent bulbs is dwindling and will have to be wound down in coming years, in part because of a European Union-wide phaseout of the old bulbs. Mr. Berlien’s great challenge will be to transform Osram into a modern company focusing on low-energy, long-life LEDs.

Proof that change needs to happen soon comes from very close to home: Osram have just lost the contract to light the stadium of local soccer giant Bayern Munich to rival Philips.

The new boss doesn’t have much time, and he knows it. In his first few days on the new job, Mr. Berlien intends to visit three factories in Germany and four major customers. Then he will travel abroad.

As well as making the switch from incandescent bulbs to lower-energy bulbs, Mr. Berlien is also facing the problem of restructuring his business.

“He looks forward to the task,” said one inside source. “He isn’t afraid at all.”

Mr. Berlien's predecessor, Wolfgang Dehen, left prematurely in order to open the way for him. Mr. Dehen had a reputation as a tough negotiator and had some success in restructuring Osram, a former subsidiary of the engineering giant Siemens. But staff said that he lacked empathy and a strategic vision.

Mr. Berlien, on the other hand, always had good relations with labor representatives during his time at Carl Zeiss, ThyssenKrupp and most recently M+W, the German engineering and technology firm.

He left ThyssenKrupp after a radical makeover at the steel company where, among other things, he turned the technology division into the firm’s most successful branch.

The engineer had previously earned a doctorate at Berlin’s Technical University and started his career at IBM Germany.

As well as making the switch from incandescent bulbs to lower-energy bulbs, Mr. Berlien is also facing the problem of restructuring his business.

Last summer, Mr. Dehen announced new cost-cutting measures. About 7,800 jobs will be eliminated worldwide, and ultimately more than a third of all positions will be cut.

“Even Mr. Berlien won’t be able to avoid this bitter pill,” noted an inside source. The labor union IG Metall also understands this.

The LED-chip business of Osram Opto Semiconductors is currently doing well, despite tough competition from Asian electronics specialists

A further challenge is the fact that Osram currently covers almost the entire manufacturing process, from chip to light. He will have to decide which segments are most attractive over the long term.

But management sources are confident that in three years' time, the company will have changed for the better.

By concentrating on individual niches, Osram could focus its business along the same lines as chip manufacturer Infineon, another Siemens offshoot. For that reason, the former head of Infineon, Peter Bauer, serves as head of the supervisory board at Osram. It was Mr. Bauer who chose Mr. Berlien for the position after an intensive search.

As with Infineon, Osram does a lot of business with automotive customers, where the company makes big profits with LED products. Also, the LED-chip business of Osram Opto Semiconductors is currently doing well, despite tough competition from Asian electronics specialists. It is slated for further expansion.

Mr. Berlien is also taking on the position of head of technology, which has been vacant since Peter Laier parted ways with Mr. Dehen. Mr. Laier was a leading candidate to become Osram’s next CEO, but left under a cloud. Mr. Berlien is said to have faith in the technological competence in individual sectors and hopes to rely on minimal management.

 

Axel Höpner is the head of Handelsblatt’s Munich office. To contact the author: [email protected]