Andreas Stihl Ag & Co. Kg Business Information, Profile, and History

Company Perspectives:

Progress based on tradition. The basic values of STIHL's company culture have grown historically and evolved over a long period. STIHL has reached its leading position on world markets with a company philosophy formulated for the long term. The continuity in company management and the personal commitment of the owner family are guarantees for the future, too. STIHL is well equipped for future challenges with its strict customer focus, competitive quality products, innovative strength and international positioning.

History of Andreas Stihl Ag & Co. Kg

Based in Waiblingen, Germany, Andreas Stihl AG & Co. KG is one of the world's leading manufacturers of chain saws. The Stihl product line also features a variety of other outdoor power tools, including brushcutters, edgers, trimmers, leaf blowers, earth augers, power washers and sprayers, and wet-and-dry vacuum cleaners. The firm's Viking line of garden equipment encompasses shredders, lawn mowers and tractors, grass and hedge trimmers, blowers, and rototillers. In addition, Stihl offers lines of accessories that include protective workwear, such as hard hats, safety glasses, and safety boots, and the Stihl Timbersports Collection, which includes apparel for such outdoor activities as hiking and other items such as backpacks, knives, and binoculars. Stihl (pronounced precisely like the metal "steel") operates seven manufacturing plants in Germany and five abroad in Switzerland, Brazil, the United States (in Virginia Beach, Virginia), China, and Austria (where the Viking line is produced). The company maintains marketing subsidiaries in 29 countries worldwide, and its products are sold in more than 160 countries through a network of 35,000 dealer-servicers. Foreign sales accounted for more than 87 percent of Stihl's 2002 revenues. The company's largest single market is the United States, where the Stihl Incorporated subsidiary generates about 30 percent of sales. Stihl's history of innovation, which includes numerous advances in the development of the chain saw, is shown by the company having received or applied for more than 1,000 patents worldwide by the early 2000s.

The Invention of the Chain Saw

An engineer, Andreas Stihl nonetheless began his career as a salesman for a German mill and industrial supply house during the 1920s. Stihl's work brought him in contact with loggers in the Black Forest, where the felling and bucking of trees was done with stationary saws or by hand, and the larger pieces of timber needed to be transported to saw mills for cutting. Stihl sought to introduce more modern methods to the logging trade.

In 1925, Stihl opened a small workshop in his home in Stuttgart and began designing a portable "tree-felling machine." The Stihl workshop manufactured a number of other products, including forehearths for steam boilers, in order to support these efforts. But by 1926, Stihl was ready with his first prototype, a 140-pound electric "cross-cutting chain saw." The saw's bulk required it to be operated by two people, and its reliance on an electric motor limited its portability to areas where a power source was available. Stihl set to work creating a lighter, gasoline-driven saw. Nonetheless, the electric saw found its market, with 50 units sold in 1927. In that year, Stihl opened his first factory in Stuttgart. The following year, as sales of the electric saw reached 100, the company opened a sales office for northern Germany.

Stihl's gasoline saw--the first ever--was ready by 1929. This saw achieved a rating of 6 horsepower (hp); its weight of 101 pounds still required two people to operate it. Yet the saw was fully portable and would change the logging trade forever. In 1930, the saw was featured at the Leipzig trade fair, and sales of the saw soon spread beyond Germany into Holland, Belgium, Switzerland, and France. From the start, Stihl emphasized service along with the sale of his saws. Customers were trained in the operation, maintenance, and repair of Stihl's products. As international sales increased, Stihl trained specialists in each country, who provided customer instruction and service, along with sales. As one of Stihl's earliest salesmen wrote: "It won't do to sell saws to people without teaching, assisting and offering good service to users later."

Not everyone welcomed the chain saw. Many loggers resisted the new device, fearing the loss of their jobs, and often attacked Stihl's salesmen. But the rise of the chain saw became inevitable, and sales increased. By 1930, Stihl saws were being shipped to the United States. After a trip to the Soviet Union, Stihl received orders for several hundred saws. The Stihl factory moved to Bad Cannstatt, which later became part of Stuttgart, and during the 1930s the number of the company's employees swelled to 200.

Stihl continued to work on improving the saw's design. In 1931, Stihl introduced his second gas-powered saw, which weighed nearly 105 pounds--with a full gas tank--but achieved 8 hp. Other improvements were made, such as an automatic chain lubrication system introduced in 1934. Two years later, the company opened its first foreign sales and distribution office in Vienna. By 1937, Stihl managed to bring the weight of the chain saw down to 88 pounds. Stihl traveled to North America, broadening the saw's reach through the United States and into the Canadian market. Stihl also introduced courses in power saw technology in an effort to increase the chain saw's acceptance throughout the logging and forestry trades.

The Nazi rise to power encouraged Stihl's domestic growth but hampered its international development. In an effort to standardize production within industries, the Nazis held competitions and Stihl's design became the authorized German chain saw. All other German chain saw manufacturers were required to license the Stihl design. However, the outbreak of World War II ended Stihl's international growth. During the war, the Bad Cannstatt plant was destroyed by bombs, and production was moved to Waiblingen. The German capitulation ending the European war also forced Stihl to a halt.

Postwar Growth

By 1947, Stihl's factory reopened and was soon producing 90 chain saws each month. International sales also resumed; in the United States, Stihl bought out its former U.S. importer, and began assembling saws in the United States for the North American market. In 1948, the first Stihl Service Center was opened, offering a higher degree of customer service. Meanwhile, the company continued to improve the chain saw's design, with weight reduction a primary concern. This led to the development of the one-person chain saw, which would revolutionize the chain saw industry by the end of the decade.

Stihl's first one-person saw was introduced in 1950. This saw was still too heavy for comfortable operation, but it led the way to the introduction of the Stihl BLK saw in 1954. At 31 pounds and 4.5 hp, the BLK was the first truly portable chain saw. Two years later, the BLK was chosen by the German army as its official chain saw; the BLK became the standard saw for many other military services and government organizations as well.

Yet the true revolution in chain saw technology--and the development that led to the worldwide acceptance of the chain saw--was the Stihl Contra, introduced in 1959. The Contra, which featured a direct drive and diaphragm carburetor, weighed only 26.65 pounds, yet achieved 6 hp. Stihl's sales boomed, and production rose from 104 to 500 saws per day by 1964. By then, the company was outgrowing its plant, and a second facility was built in Neustadt. The company's workforce grew to over 1,000. U.S. and Canadian demand surged with the introduction of the Stihl Lightning saw, prompting the company to open its first North American warehouses.

In 1965, Stihl introduced an innovation in chain saw design with its antivibration system, which absorbed the impact of the saw's vibration, allowing steadier and less fatiguing control. This design change was quickly copied by Stihl's competitors. Three years later, Stihl added an electronic ignition system to its saws, improving their reliability. Other design changes included a more efficient chain lubrication system, an inertial chain braking system, which stopped the chain in the event of kickback, and a master control lever, which allowed the user to control the saw's starting and stopping functions without releasing the saw's handle.

By 1971, Stihl's 2,000-strong workforce was producing 340,000 saws annually. In that year, Andreas Stihl's son, Hans Peter, took over as head of the company. Andreas Stihl died two years later. By then the company had added a new plant in Prüm, and a plant in Wiechs am Randen, near the Swiss border. The company's first overseas plant, Andreas Stihl Moto-Serras Ltda. in Sao Leopoldo, Brazil, began chain saw production in 1973. That year, Stihl, with 2,500 employees, saw its revenues top DM 222 million.

The international oil crisis prompted by the Arab Oil Embargo of 1973 sent most industries into a recession. But in response to rising oil prices, the demand for wood as an alternative fuel skyrocketed, and with that demand came an increase in Stihl sales. The company increased its foreign manufacturing base, transferring chain production to a plant in Wil, Switzerland, and opening a U.S. plant in Virginia Beach, Virginia, in 1974. The company also established an assembly plant in Scoresby, Australia. By 1978, Stihl's revenues had more than doubled, to approximately DM 500 million ($245 million). By the mid-1980s, about 50 percent of the company's production took place outside of Germany.

Diversifying Products in the 1980s and 1990s

In 1980, worldwide chain saw sales reached a peak of 5.8 million units, with Stihl holding a commanding share of the market. But as oil prices leveled, and as the world entered the recession of the 1980s, sales slumped in the following years, dropping to 3.4 million units by 1984. Stihl's revenues continued to rise, from $355 million in 1981 to $489 million in 1986, increasing its share to 25 percent of the chain saw market; however, much of this revenue growth could be attributed to the falling value of the dollar against the German mark.

In response to the pressures on chain saw sales, the company began to diversify its product line in the 1980s. In 1986, the company began producing protective apparel and accessories, such as safety glasses, helmets, gloves, boots, and hearing protectors. Two years later, the company introduced specialized clearing saws for professional use, and in 1989 began production of trimmers and blowers.

Further diversification was derived through the Viking line of products. Viking GmbH was founded in Kufstein, Austria, in 1981 as a manufacturer of garden shredders. Three years later, lawn mowers were added to the Viking line, which later expanded to include riding mowers, grass and hedge trimmers, blowers, and rototillers. Eventually the Austria-made Viking line was being marketed throughout Europe. In 1992 Viking became 100 percent owned by Stihl.

Until the 1990s, most Stihl saws were designed exclusively for professional uses. Further improvements in design had decreased the weight of even the company's most powerful model to 20 pounds. Toward the middle of the decade, however, Stihl moved to tap into the small saw market--which represented about half of all chain saw sales--hitting below the $200 price point. Because the United States was the biggest market for small and nonprofessional chain saw purchases, the company moved production of all small saws to its Virginia Beach plant in 1994. By the following year, Stihl's U.S. facilities were producing more machines than its German plants for the first time in the company's history. Also in 1995, Stihl established a manufacturing, marketing, and distribution subsidiary in China, Taicang Andreas Stihl Powertools Co., Ltd. The diversification of the Stihl's product line, meanwhile, helped drive the company's growth. Sales in 1995 topped $1 billion, with foreign sales accounting for roughly 80 percent.

During the late 1990s Andreas Stihl continued to expand its network of marketing subsidiaries around the world. A Mexican subsidiary commenced operation at the beginning of 1996, a South African subsidiary was formed in October 1996 to serve the southern African region, and in May 1997 a further expansion in Eastern Europe resulted in the formation of a subsidiary in Romania. Stihl had already established subsidiaries in the Czech Republic, Hungary, and Poland, and by 1997 operated three representative offices in the former Soviet Union, in St. Petersburg, Russia; Ternopol, Ukraine; and Minsk, Belarus. During 1998 three more marketing subsidiaries were formed in Greece, Portugal, and Argentina.

Shifting to Nonfamily Management: Early 2000s

By 2002 sales outside of Germany were accounting for 87 percent of overall revenues. Despite the rough economic waters of the new decade, revenues maintained their steady rise, reaching EUR 1.54 billion ($1.61 billion), nearly three times the level of 1990. This was the 11th straight year of record revenues. Stihl continued to pump out new products, with an increased emphasis on their environmental impacts. Tougher antipollution laws in the United States, the company's largest market, forced Stihl to develop new technologies to meet the new standards. For example, in 2002 the company unveiled its 4-Mix engine, which reduced emissions of pollutants by combining characteristics of both two-stroke and four-stroke engines. The new engine was initially featured on brushcutters and edgers. Another important development in the early 2000s was the company's increased emphasis on power tools; on a worldwide basis, in terms of units, more power tools than chain saws were being sold. The year 2002 also saw the launch of the Stihl Timbersports Collection, which grew out of the company's long established line of protective clothing for loggers. The new line was more fashion-oriented and was aimed at hikers, campers, and other outdoors enthusiasts; it featured not only clothing but also such accessories as backpacks, knives, and compasses. Meanwhile, Stihl established a new Eastern European marketing subsidiary based in Kiev, Ukraine.

Although Stihl remained a family-owned business in the early 2000s, there were important developments in the management structure and makeup that gave more power to people outside the Stihl family. The company had created a sister company called Stihl AG in 1998 that was placed in charge of managing the entire Stihl group. Hans Peter Stihl was chairman of the board of management of Stihl AG--essentially serving as chief executive--until June 2002, when he stepped down from that post as part of a thorough overhaul of the board's composition. All other Stihl family members on this board stepped down as well, with Stihl and some of the others taking positions on the supervisory board. Harald J. Joos, who had been the head of the German operations of Schindler Holding AG, a Swiss maker of elevators and escalators, was named chairman of the board of management, but he resigned from this position in February 2003. One month later, Bertram Kandziora was named spokesperson of the board of management. Kandziora had been brought onboard in February 2002 as senior vice-president of manufacturing and materials, having previously served as an executive at BSH Bosch und Siemens Hausgeräte GmbH, a major European appliance manufacturer. Despite these changes, which created a completely nonfamily management board for the first time, the Stihl family continued to wield considerable power through its dominance of the company's advisory board, of which Hans Peter Stihl remained chairman, and which was the company's highest decision-making body. Nevertheless, it seemed likely that these fundamental changes marked the beginning of a new era at Andreas Stihl.

Principal Subsidiaries: Stihl International GmbH; Stihl Vertriebszentrale AG & Co. KG; Andreas Stihl Verwaltungs-GmbH; Stihl Verwaltungsgesellschaft mbH; Stihl Vertriebszentrale Verwaltungs-GmbH; Stihl & Co. (Switzerland); Stihl Incorporated (U.S.A.); Andreas Stihl Moto-Serras Ltda. (Brazil); Viking GmbH (Austria); Stihl Ges.m.b.H. (Austria); Stihl Vertriebs AG (Switzerland); Andreas Stihl Ltd. (U.K.); Andreas Stihl N.V. (Belgium); Andreas Stihl S.A.R.L. (France); Andreas Stihl S.A. (Spain); Andreas Stihl S.A. (Portugal); Andreas Stihl S.p.A. (Italy); Andreas Stihl S.A. (Greece); Andreas Stihl A/S (Norway); Andreas Stihl Norden AB (Sweden); Andreas Stihl Sp. z.o.o. (Poland); Andreas Stihl spol. s.r.o. (Czech Republic); Andreas Stihl Kereskedelmi Kft. (Hungary); Stihl Limited (Canada); Andreas Stihl S.A. de C.V. (Mexico); Andreas Stihl (Pty.) Ltd. (South Africa); Kabushiki Kaisha Stihl (Japan); Stihl Pty. Ltd. (Australia); Stihl Limited (New Zealand); Stihl Motoimplementos S.A. (Argentina).

Principal Competitors: AB Electrolux; The Black & Decker Corporation; Makita Corporation; The Toro Company.

Chronology

• Key Dates:
• 1926: German engineer Andreas Stihl designs a prototype of an electric "cross-cutting chain saw," marking the founding of the company that would bear his name.
• 1927: Stihl opens his first factory in Stuttgart.
• 1929: Stihl begins selling the first gasoline chain saw, called the "Stihl tree-felling machine."
• 1934: Automatic chain lubrication system is introduced into the Stihl chain saw.
• 1936: First foreign sales and distribution center is opened in Vienna.
• World War II Years:Stihl plant is destroyed by bombs; production is moved to Waiblingen; German surrender brings halt to Stihl production.
• 1947: Factory in Waiblingen resumes production.
• 1948: First Stihl Service Center is opened.
• 1950: Stihl's first one-person saw is introduced.
• 1959: Revolutionary Stihl Contra chain saw debuts.
• 1965: Company adds an antivibration system to its chain saws.
• 1971: Andreas Stihl's son, Hans Peter, takes over as head of the company.
• 1973: Production begins at Stihl's first overseas plant in Brazil.
• 1974: Chain production is shifted to plant in Wil, Switzerland, and a U.S. plant is opened in Virginia Beach, Virginia.
• 1980s:Diversification of product line begins.
• 1986: Company begins producing protection apparel and accessories.
• 1989: Production of trimmers and blowers begins.
• 1992: Stihl gains 100 percent ownership of Viking GmbH, an Austrian maker of lawn and garden power equipment.
• 2002: Hans Peter Stihl steps down as chairman of the management board, although he continues to head the advisory board; Harald J. Joos becomes the first nonfamily member to head the company.
• 2003: Joos resigns; Bertram Kandziora is named spokesperson of the management board.