Saw sales A Cutting Edge

Hans Peter Stihl, the former boss of the world's leading maker of chainsaws, turned his family's firm into a multi-billion euro company while reshaping the German business landscape.
Stihl runs the annual Timbersports World Championships.

Hans Peter Stihl doesn’t get excited easily, even when he is zooming around on his BMW motorcycle or watching lumberjacks compete in the Stihl Timbersports championships. Awards, even the Diesel Medal for innovation, don't do much for him either.

And when a crew shot a film for the Handelsblatt Hall of Fame of family-owned businesses, the 82-year-old chainsaw tycoon positively relaxed in front of the camera. He’s been there before.

Mr. Stihl is not only a successful businessman who turned his chainsaws into a global brand and near €3 billion ($3.5 billion) business. He has also been a scourge of the unions and has fought many public battles on behalf of German industry.

As the lead negotiator of the state of Baden-Württemberg's Employers' Association of the Metal and Electrical Industry, he had a bust-up with unions during wage disputes. “When IG Metall (the metalworkers’ union) wanted to expand the workers’ share of the profits, it became chaotic,” he said as he described his motivation to intervene.

“I am not a friend of the unions,” he explained, but adds that he is a “supporter of free collective bargaining."

Retirement at 63 and state prescribed minimum wages are absolutely wrong developments. Hans Peter Stihl

Today, it makes him mad when politics intervenes in business. “Retirement at 63 and state prescribed minimum wages are absolutely wrong developments,” Mr. Stihl said, referring to recent legislation introduced in Germany. He remains active, passionate and steadfast about such issues.

As president of the Association of German Chambers of Commerce and Industry (DIHK), he was among the leading figures of German economic politics in the 1990s.

Franz Fehrenbach, the chairman of the supervisory (non-executive) board at German engineering and electronics giant Bosch, praised Mr. Stihl. “He is one who acts with conviction and does not shy away from conflict, neither with other businessmen nor with politicians,” he said. “I wish we had more of these pugnacious spirits.”

WTB Stihl

Environmentalists have been hostile to Mr. Stihl. As a maker of tree-felling machinery, he contributed to the clearing of rainforests, opponents said. The criticism leveled off over time, especially when he became DIHK president in 1988.

And he displayed a deft touch on sensitive issues. In 1999, he was among the founders of the Remembrance, Responsibility and Future foundation (EVZ), which sought compensation for people who were forced laborers during World War II.

He signed the call for 200,000 companies to participate in the initiative. The foundation said that industry should raise half of the requested 10 billion deutsche marks. Mr. Stihl convinced many business leaders to contribute. Some grudgingly agreed, but some did not.

Hans Peter Stihl.

 

The saw maker from Swabia, a region in the state of Baden-Wüerttemberg, showed little sign of becoming such an influential figure when he started out in the family firm in 1960. Andreas Stihl, his father and the man who founded the company in 1926, soon piled on the pressure.

When Mr. Stihl joined, the company had 640 employees and chainsaw and tractor sales of about 18 million deutsche marks. In time, Mr. Stihl took over the manufacturing and production department, and, with his sister Eva running the advertising and market research and later finance sections, the company grew.

In the early 1960s, the company's tractor arm became a big problem. Mr. Stihl worked out that the business lost money on every tractor sold, but his father wanted to maintain production of his favorite product.

Andreas Stihl finally agreed to stop production in 1963. After that, his son concentrated on chainsaws and modernized the plants and started production abroad. The business grew in value.

Employees have had profit sharing for 30 years - Mr. Stihl was a trailblazer among family businesses in offering it.

By this time, Andreas Stihl had turned the company he solely owned into a limited partnership, giving his four children equal shares. In 1971, two years before his father died, Hans Peter Stihl became the liable partner. His brother Rüdiger entered the business in 1978 and built up the legal department, later becoming a supervisory board member.

In the early 1970s, Stihl became a market leader in chainsaws and introduced safety innovations such as anti-vibration handles and throttle locks. It now also makes efficient battery-operated machines, as well as other handheld power equipment such as blowers and trimmers. Many of the components are produced in-house. In 2013, the business achieved a turnover of €2.8 billion, and continues to grow.

As a reward for their hard work, employees have enjoyed a share of the profits for 30 years. Mr. Stihl was a trailblazer among family businesses in offering it.

But his succession has been a more challenging proposition. A company agreement says only direct descendants can inherit the firm, not spouses. Partners who want to leave must first offer their shares to the family.

Video: A look inside Stihl's Timbersports World Championships.

 

When Mr. Stihl stepped down from day-to-day management in 2002, the transition to a non-family management did not function well at first. “Back then we had the wrong advisors,” he said.

After less than a year, Harald Joos, who had previously worked at the elevator manufacturer Schindler, departed. But his successor, former Bosch executive Bertram Kandziora, has had things humming at Stihl for more than 10 years.

In 2012, Mr. Stihl handed over the chair on the advisory board to his son Nikolas, but he remains a businessman for life. He comes into the office almost daily, but he and his sister Eva want to let the board work in peace.

But that doesn't stop them continuing their longtime custom of eating in the cafeteria with their employees. The only privilege they enjoy is that the table is set. Much like the succession of the firm.

 

The author is Handelsblatt's correspondent in Baden-Württemberg. To contact the author: [email protected]