De Dietrich & Cie. Business Information, Profile, and History

Company Perspectives:

Since De Dietrich was founded in 1684 in a valley north of Strasbourg in the northeast of France, the Group has remained closely devoted to its region of origin which lies, today, at the geographic and economic heart of Europe.

History of De Dietrich & Cie.

After more than 300 years in operation in France's Alsace region, on the German border, De Dietrich & Cie. qualifies as one of Europe's oldest firms. One secret to the company's survival has been the De Dietrich family's devotion to location, rather than to any one single product line. After producing railroads, home appliances, and even automobiles, the De Dietrich of the turn of the century operates in three major areas. The company's De Dietrich Thermique division produces a range of standing cast iron boilers and furnaces, as well as hot-water tanks, wall-mounted boilers, burners, radiators, and control equipment. De Dietrich Thermique is Europe's second largest producer of cast iron boilers and furnaces and contributed 43 percent of the company's total sales in 1998. Cogifer, the company's railroads subsidiary, is Europe's leading provider of fixed railroad and other rail-guided installations, offering turnkey new railroad design and installation, as well as signaling, switching, safety, and other equipment and maintenance services for rail-guided systems ranging from tramways to high-speed train lines. Representing 44 percent of De Dietrich's total sales, Cogifer provides equipment and services throughout Europe, with subsidiary operations in eight countries. The third segment of De Dietrich's operations is De Dietrich Chemical, the world's second largest manufacturer of glass-lined steel equipment for the pharmaceuticals and chemicals industries. Operating on a global scale, with subsidiary operations in Brazil, China, Japan, Spain, South Africa, and the United States, De Dietrich Glass-Lined Equipment produces a range of reactors, columns, agitators, and storage tanks, providing 13 percent of the company's annual sales. This division was boosted with the January 1999 acquisition of Switzerland's Rosenmund-Guèdu, a world-leading provider of downstream filtration and separation equipment. In 1998, De Dietrich's annual sales reached FFr 3.96 billion (approximately US $660 million). In that year, the company sold off its remaining shares in its former De Dietrich Ferroviaire holding; the company also sold off its forestry division, including one of the Alsace region's largest forestry holdings. De Dietrich remains controlled by the founding De Dietrich family, who hold 35 percent of the company's shares.

The Founding of a Dynasty in the 17th Century

The De Dietrich family's involvement with the political and economic life of Strasbourg and the Alsace region began in the 16th century when Demange Didier, 12 years old and from a well-to-do Protestant family near Nancy in the Lorraine, fled the persecution against the Protestants led by the Duke of Lorraine. Didier arrived in Strasbourg in 1561, where he gained a position in the commercial business of Nicolas de Turckheim. Didier changed his name to the more Germanic form Dietrich and soon became a leading figure of Strasbourg society. Dietrich's son Jean went into business for himself; Jean Dietrich's son Dominique became mayor of Strasbourg in 1660. When the Alsace region was annexed to France by King Louis XIV in 1681, Dominique Dietrich led negotiations to guarantee the region's Protestants freedom to practice their religion. Four years later, however, Louis XIV sought to break the influence of Protestantism on the region, calling upon a number of notable Protestants, including Dominique Dietrich, to renounce their faith. Dietrich's refusal led to his forced exile.

The Dietrich family, however, remained in the region, continuing their merchant activities. At the same time the family sought a means to preserve their social and economic standing, while also searching for a means to gain the return of Dominique Dietrich. In 1684, Dominique Dietrich's son Jean Dietrich II purchased a 20 percent share of an iron works in Jaegerthal, itself built in 1602. Although mostly in ruins, the iron works would provide the basis of the family's future fortune and remain in operation for more than 200 years. In 1685, Jean II decided to buy up the remaining 80 percent of the iron works and invested in restoring and refitting its forge and other equipment, including the addition of a high furnace. Jean II quickly turned his iron works toward service of the king and began supplying weapons for the French army on the eastern front. In this way, Jean II hoped to gain favor for his exiled father and to improve the condition of Strasbourg's Protestant community in general. Serving the monarchy provided a way for the Dietrich family to avoid persecution in the Catholic-dominated France.

In addition to manufacturing arms and equipment for the French army, the Dietrichs turned their commercial experience to the royal benefit. The family also branched out into banking. When Jean II died in 1740, the industrial side of the family business was taken over by his son, Jean-Daniel. The family's banking arm was placed under the guidance of grandson Jean III, whose marriage into the Hermanny banking family gave the family a prominent position in the French financial world. In this way, the Dietrich family became indispensable for financing the War of Austrian Succession from 1741 to 1748 and the Seven Years' War, which began in 1756.

Such service to the king was not without its rewards. In 1761 the Dietrich family was granted noble standing, both by the French king and by the German emperor. As such, the Dietrichs were given the right to add 'de' (of) to the family name. Nobility had two immediate effects on the family business. First, the De Dietrichs were obliged to exit from banking, as this profession was considered unseemly for a member of the nobility. Second, the family was granted the right to own land--a right given only to the nobility. As such, the De Dietrich family acquired vast sections of Alsatian forest land and, therefore, a ready supply of the lumber fuel necessary for the Jaegerthal iron works.

Assuring lumber supply became a driving force behind the De Dietrichs' business growth. Unable to purchase the land surrounding the Jaegerthal works because of a dispute with another family, the De Dietrichs established four new smithies, at Niederbronn, Reichshoffen, Rothau, and Rauschendwasswer, after purchasing the land. Before long, the De Dietrichs had become the single largest landowners in the Alsace region. By then, Jean III, departing from the typical role of noble landholders and iron works owners, had taken an active role in the company's forge operations. By the dawn of the French Revolution, the De Dietrich works employed more than 1,000 workers.

19th Century Industrialist

The De Dietrichs did not have long to enjoy the privileges of nobility. The Revolution threatened the family with ruin. Philippe-Frédéric Dietrich, son of Jean III and mayor of Strasbourg, was guillotined by Robespierre in 1793. Broken, Jean III died a year later. Leadership of the family's iron works was taken over by Jean-Albert-Frédéric, the 20-year-old son of Philippe-Frédéric. Jean-Albert Dietrich fought to maintain the company's operations, succeeding in keeping the family's control over the iron works. Yet Jean-Albert died in 1806, at the age of 33. After more than 100 years as an important influence in French society, the De Dietrich family appeared set to fade into obscurity.

Jean-Albert left behind a widow, four children, and an iron works in debt. But Amélie de Dietrich was determined to keep the family's business in operation. Her first move was to sell off the business's money-losing units, including the Rothau forges, returning the focus of operations to the Jaegerthal works. There, she pointed the company toward its future direction, extending beyond the manufacture of weapons to the production of the industrial machinery necessary for the dawning Industrial Age. Before long, the company's name had changed, to Veuve (widow) de Dietrich & Fils. Aided by Napoleon Bonaparte, who restored much of the family's landholdings, the family rebuilt itself into one of the region's most prominent independent businesses.

The De Dietrich forges were transformed into true factories; by the time of Amélie de Dietrich's death in 1855, the company operated six factories and were award-winning producers of wrought iron and steel products ranging from ornamental railings to bridges. In 1850, the company produced its first wood-burning stove, launching the company into a product range that remained a company hallmark for nearly 150 years. Nevertheless, cast iron and forged iron became less important to the company as it increased its participation in mechanical products and, especially, took a leading role in building the country's railroad system. After the death of Amélie de Dietrich, her sons took over operations and continued building the company, focusing its manufacturing arm more and more on the manufacture of railroad and railroad equipment.

The German annexation of Alsace-Lorraine in 1870 once again threatened the company's existence. Whereas most of the region's industrialists chose to abandon the region to rebuild their businesses within the newly declared French borders, De Dietrich decided to remain. Its determination to remain loyal to its Alsatian origins came to mark the company more than any single product line. In Germany, the company was all but excluded from its chief product line, that of manufacturing for railroads. To succeed in the German marketplace, the company quickly adapted its product offerings, developing an extensive line of consumer goods, including heating stoves and equipment, cooking stoves, wood furniture, enameled cast iron and other cast iron products, such as bathtubs. An early interest in chemical equipment brought the company to begin production of distilling equipment as well. This period marked the beginning of De Dietrich as a diversified group with a geographic focus--that of its Alsace base. While continuing to exploit its forest lands, De Dietrich also branched out into a more unlikely area--trout farming.

Into the 21st Century

The company continued to expand on its diversified product range in the 1880s when a new form of transportation began to attract the attention of the public. De Dietrich was one of the first manufacturers of the new motor vehicles, and one of the few industrialists to turn production to the new product line. Led by Eugène de Dietrich, the company's automobile division picked up speed toward the turn of the century, after the company acquired a patent from Amédé Bollée. The company's Bollée-based automobile won the first international automobile race, the Paris-Amsterdam race of 1898. The boost in reputation brought orders from throughout Europe, and the company soon found itself with a waiting list of some 20 months. At the same time, the company opened a Berlin office, its first move beyond the Alsace region. De Dietrich's automobiles continued to win races and to prove remarkably hardy, crossing some 3,000 kilometers from Paris to St. Petersburg in just a matter of weeks.

De Dietrich's automobile adventure was to be short-lived, however. In 1902, De Dietrich hired a young engineer from Italy, who had already built his first car. Ettore Bugatti began designing for De Dietrich, producing the first De Dietrich-Bugatti the following year. But manufacturing automobiles--and keeping up with the steadily increasing pace of technical innovations--required too much capital for the De Dietrich company and, in 1904, the company produced its last automobile. Instead, De Dietrich entered the new century focused on mechanical construction and engineering, farm equipment, urban railway equipment and systems, and household appliances. The company also entered the young chemicals industry, supplying equipment to chemical and pharmaceutical laboratories.

The diversity of De Dietrich's product offerings enabled it to survive the most turbulent periods of the new century. By the end of the First World War, De Dietrich found itself once again on French soil, as the defeated Germans were forced to cede the Alsace-Lorraine region to France. In the Depression years, De Dietrich's diversified products helped buffer it against the collapse of many of its markets. During this time, the company's operations were taken over by five De Dietrich cousins, each of whom took an interest in a particular product area. In this way, De Dietrich's product divisions developed into de facto subsidiary operations.

De Dietrich's Electromenager (household appliance) division achieved great popularity with the French consumer in the second half of the century as the company continued producing heaters and heating equipment as well as ovens and ranges for the kitchen, including the first French-branded built-in stove in the late 1960s. During this time, Gilbert de Dietrich, who had joined the company in 1957, took over as head of the company, helping to unify the company's product strategy.

De Dietrich continued to build in four primary areas: home appliances; equipment for the chemicals industry, with a growing focus on glass-lined steel and iron tanks; railroad and railway equipment; and boiler tanks and other industrial heating equipment. The company also continued its activities in the forestry and lumber markets, because of its extensive landholdings. To fund growth, particularly beyond France and across most of Europe, De Dietrich went public in 1974. Nevertheless, the De Dietrich family remained the company's primary shareholder.

By the end of the 1980s, however, De Dietrich faced into the beginning of a new economic recession, which would last through the first half of the 1990s throughout most of Europe. Fearing hostile takeover attempts, the company reduced its market capitalization, buying back shares, while transferring other shares to a 'friendly' shareholder group led by the Duval-Fleury family; together the two families controlled more than 55 percent of the company's shares and voting rights. Meanwhile, De Dietrich's appliance sales had stagnated. Despite contributing nearly FFr 1 billion to the company's annual sales, the division was judged too small to compete against the international giants, such as Whirlpool or Bosch. In 1991, therefore, De Dietrich announced that it had formed a joint venture with France's Thomson Electronics to form the Thomson Electromenager partnership. De Dietrich tranferred its home appliance operations to the joint venture, in exchange for 51 percent control of the partnership.

The deepening recession, however, forced De Dietrich to exit the home appliance market altogether in 1992. Instead, De Dietrich now sought to concentrate its activities where it had achieved market leadership. As such, its Cogifer railway systems division, its De Dietrich Thermique division, and its De Dietrich Chemical Equipment division became the company's three-pronged strategy for continued growth into the new century. After helping define the new strategy, Gilbert de Dietrich stepped down from the company's leadership in 1996, replaced by new CEO Regis Bello. At the end of 1998, the company sold its remaining shares of its De Dietrich Ferroviaire railroad construction subsidiary to France's Alstom Transports. At the same time, De Dietrich exited the forestry business, selling off its vast forest lands. Meanwhile, the company began boosting its three core divisions. In January 1999, the company extended its Chemical Equipment Division with the purchase of Switzerland's Rosenmund, whose leading position in the filters and filter-dryers market provided a means for the company to extend its sales downstream in the chemical and pharmaceuticals equipment market. In July 1999, the company boosted its Thermal division with the acquisition of the boiler-manufacturing operations of Schäfer, of Germany.

Principal Subsidiaries: De Dietrich Thermique; De Dietrich Equipment Chimique; Cogifer S.A.; De Dietrich Heiztechnik (Germany); De Dietrich Heiztechnik (Austria); De Dietrich Technika Grzewcza (Poland; 85%); Serv'Elite; Oertli Thermique; Pacific S.A.; De Dietrich USA; De Dietrich Singapore; De Dietrich do Brasil; Nihon Dietrich (Japan); DDG Glasslining (South Africa; 40%); Rosenmund VTA (Switzerland); Cogifer T.F.; Cogifer Americas (USA); Teijo (Finland); Redelokken (Norway); Kihn (Luxembourg; 89.2%); Futrifer (Portugal; 61%); Amurrio (Spain; 50%).

Principal Competitors: Robbins & Myers.

Chronology

• Key Dates:

• 1561: Demange Didier arrives in Strasbourg.
• 1684: Jean Dietrich II purchases Jaegerthal iron works.
• 1761: Dietrich family receives noble status.
• 1806: Amélie de Dietrich takes over operations.
• 1850: First wood-burning stove produced by De Dietrich.
• 1898: Production of Dietrich-Bollee automobile.
• 1902: Production of De Dietrich-Bugatti automobile.
• 1904: De Dietrch exits from automobile manufacturing.
• 1974: Company is listed on the Paris Stock Exchange.
• 1992: Exit from home appliance manufacturing.
• 1999: Company acquires Rosenmund, a filters and filter-dryer manufacturer, and the boiler manufacturing operations of Schäfer of Germany.