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Zf Friedrichshafen Ag Business Information, Profile, and History

company zeppelin transmissions german

Allmannsweilerstrasse 25
D-88038 Friedrichshafen
Germany

Company Perspectives:

ZF is the world's largest independent specialist for transmission and chassis technology. ZF products contribute worldwide to mobility. ZF develops and produces transmissions, steering systems, and axles and chassis components, as well as complete systems for passenger cars, commercial vehicles, and off-road machinery. ZF is a major transmission specialist also for marine craft, rail-bound vehicles, and helicopters. Technological leadership is ZF's key to a strong market position. Consistent expansion of our technological position is a prerequisite for the development of innovative and successful products. The decentralized company structure of ZF permits a high degree of market and customer proximity. This flexibility and the worldwide cooperation of our development and production locations allow ZF customers to be provided with optimum products and service. ZF intends to further expand its market position. The objective is to continue to win customers on the basis of competence and excellent performance.

History of Zf Friedrichshafen Ag

ZF Friedrichshafen AG--one of the world's largest vendors to the global auto industry--translates power into motion with its transmissions for motor vehicles for road, railroad, air, and water. The company also makes automotive steering and rear-axle systems and chassis components, and industrial drives and transmissions for heavy machinery. Headquartered in Friedrichshafen, Germany, ZF maintains a global presence though 25 production plants and 26 sales and service subsidiaries around the world. Roughly on-quarter of ZF's total sales is generated in the United States. The acquisition of four business divisions of Mannesmann Sachs AG from the German Siemens Group in 2001 made ZF Germany's third-largest vendor. The city of Friedrichshafen controls ZF through Zeppelin Stiftung, a nonprofit foundation that dates back to the early 20th century.

Zeppelin Spurs Company Foundation in 1915

The beginning of the 20th century was a time that belonged to innovators and visionaries who paved the way for a new world driven by new technologies. One of them was Ferdinand Graf von Zeppelin, a 52-year-old retired army general whose passion it was to conquer the airways for human travel and transportation. His vision inspired many gifted inventors and engineers and transformed the small town of Friedrichshafen, located near picturesque Bodensee Lake, into one of the first centers of worldwide air travel.

After many years of pioneering construction work, the first airship "LZ1," launched from a raft, rose into the air over Bodensee Lake on July 2, 1900. One year later, the German-American aviation pioneer Gustave Whitehead undertook the first successful air trip with his motor-powered airplane. After Zeppelin had secured the funding for his second airship, it rose into the air in January 1906. "LZ 2" made 40 kilometers per hour but turned out to be hard to steer. When on August 1908 "LZ 4" burst into flames after gusty winds had pushed the Zeppelin against a tree after a forced landing in Echterdingen near Stuttgart, everyone, including "The Graf," was deeply shocked. The tragedy, however, was immediately followed by an unexpected event that was nothing short of a miracle. Zeppelin was overwhelmed by a spontaneous wave of sympathy by the masses of curious observers which set in motion an unprecedented flow of donations. By the end of the year, the donations for the construction of a new airship exceeded six million German marks.

The funds were used to set up the Zeppelin Foundation in Friedrichshafen, which in turn established a private company for the construction of Zeppelin airships: the Luftschiffbau-Zeppelin Ges.m.b.H.--in short LZ. The company's CEO, Alfred Colsman, gained the interest of a number of municipalities, banks, and private investors in the idea of Zeppelin-based air transportation, resulting in the foundation of Deutsche Luftschiffahrt AG (Delag), a public stock company that funded and promoted further development of the Zeppelin technology. After a series of failures which ended with the destruction of several airships, Delag's "LZ 10 Schwaben" became a success.

While Germany went to war in 1914 and the military reigned over the country, Graf Zeppelin envisioned the first Zeppelin crossing the Atlantic Ocean, and his engineers worked on refining the technology. To improve the transmission of the motor power to the propellers, Zeppelin's airships needed high-precision cog-wheels which were not available at the market. Zeppelin's lead engineers turned for help to Max Maag, a Swiss engineer who had invented a revolutionary technology for the manufacture of cog-wheels and owned a machine tool factory in Zurich.

On August 20, 1915, Zahnradfabrik Friedrichshafen--in short ZF--was founded as a private company, owned by LZ and Max Maag Zahnräderfabrik. The firm's purpose was to build cog-wheels and transmissions for airships, airplanes, automobiles, and motor boats. Zeppelin's research and development director, Alfred von Soden-Fraunhofen, a distinguished engineer who had earned his wings at Germany's automobile manufacturer Daimler, became the company's first CEO thanks to Graf Zeppelin. It was Zeppelin who managed to convince German authorities that the man he had chosen for this position was more seriously needed in the homeland than in the battlefield. Equipped with 40 planing and grinding machines from Max Maag, ZF started making cog-wheels and transmissions for airships and airplanes. The new company's staff was dedicated and prolific: by 1916, ZF had already registered ten patents. The following year brought a great loss for the company when on March 12, 1917, Graf Zeppelin died four days after major surgery.

1918-45: Vendor to the German Auto and War Industry

World War I ended in the fall of 1918, resulting in the abdication of the German Kaiser and the establishment of the Weimar Republic in January 1919 as a result of democratic elections. The defeated Germany was not allowed to rebuild its own air force and ZF was forbidden to make transmissions for air vehicles.

The death of the company's founder and the postwar situation in Germany caused numerous difficulties for ZF. Led by CEO Soden and drawing on his experience in the auto industry, the company started building auto transmissions. The military authorities imposed a production limit of 75 transmissions per day on the company. On top of that, qualified workers, machinery, and raw material were hard to come by.

Despite these challenges, ZF managed to set a foundation for growth. The company's machine stock had grown to 190 grinding and planing machines, drills, and lathes--enough to get started with the serial production of the Soden pre-selector gearbox, a semi-automatic transmission invented by the company's CEO. The postwar economic recession, with its staggering rates of inflation, threatened the company's very existence. To secure a sufficient capital base for the financially struggling company, it was transformed into the joint stock corporation ZF Aktiengesellschaft. LZ owned four out of the company's five million marks of capital. The other 20 percent were owned by Maag Zahnräder- und Maschinen AG.

While the Soden gearbox proved to be a technological revolution, the German market was not ready for it. Automakers and consumers were not willing to pay the higher cost for a transmission that allowed gears to be pre-selected by means of a lever on the dashboard. ZF responded by developing and launching the Einheitsgetriebe, a standardized gearbox that allowed mass production at low cost, in 1925. With over 300,000 units sold, it became the company's hoped-for success. In the following year, ZF established a second production plant in Berlin. Three years later, the company launched its low-noise "Aphon" gearbox, which was first presented in an eight-cylinder sports convertible made by German automaker Autounion Horch.

The 1930s hit the German economy with another serious recession, caused by the onset of the Great Depression in the United States. While a regular Zeppelin service was resumed between Germany and South America, the number of people without a job skyrocketed. National Socialist leader Adolf Hitler came to power in 1933 and funded a highway construction program to create jobs. In a time of advancing motorization, ZF worked on refining its technologies. In 1932, the company ventured into steering systems, starting out with a license production of American "Ross-Steering." Two years later, the company launched its first completely synchronized four-gear transmission for automobiles--a technological milestone which also became an economic success. By 1937, ZF had evolved as one of Europe's leading manufacturers of vehicle transmissions with 3,500 employees. The company was reaching its capacity limits and, consequently, a third production plant was set up in Schwäbisch Gmünd near Stuttgart in June 1937. One year later, the Schwäbische Zahnradwerke GmbH was founded. In the same year, a pension plan was launched for all employees of the Zeppelin Foundation firms.

The tragic explosion of the Zeppelin "LZ 129 Hindenburg," in which 35 of the 96 passengers lost their lives on May 7, 1937 in Lakehurst, New Jersey, brought the "Zeppelin-Era" to a sudden end. Afterwards, ZF's development engineers started working on transmissions for tractors and motor ships. On September 1, 1939, German soldiers marched into Poland, marking the beginning of another devastating world war. Under tight government control, ZF started making transmissions for tanks and military trucks. Due to high demand from the German military, the company established new production facilities for steering mechanisms in Alsace and for tank gearboxes in Passau in 1943 and 1944. However, in 1944 the Allied Forces bombed Friedrichshafen, a center of the German war industry, and took over the Schlettstatt plant. In April 1945, Friedrichshafen was occupied by French troops.

1946-50: Reconstruction and Growth

With the death of CEO Alfred Graf von Soden-Fraunhofen, the company had lost another visionary leader to the war. A legacy from the last year of his life was the prediction of a high demand in agricultural machinery for the postwar market. However, before ZF was able to take on this new direction, it had once more to fight for its existence. The Berlin plant was dismantled as a part of reparation payments, while the French military administration was determined to destroy the industrial power in Friedrichshafen. According to Delag's vice-president, Dr. Eckener, the Zeppelin group of companies was a dead enterprise. At the end of 1946, the French military government decided to shut down LZ, ZF's majority shareholder. The future of the Zeppelin companies was now in doubt.

Nonetheless, failure was not an option for ZF's management. After long and difficult negotiations, the company was granted permission to resume operations. A group of 650 workers began to clear away the rubble and rebuild the company facilities in Friedrichshafen. Soon the machinery was up and running again, making transmissions for tractors and trucks. The plant in Schwäbisch Gmünd recommenced the production of steering mechanisms. The Passau plant began to make engines for tractors.

In 1947, the Zeppelin Foundation as a private entity was dissolved. The founder had determined in the company charter that if the foundations purpose--the promotion of airship transportation--fell through, its assets would have to be turned over to Friedrichshafen's city government, which was obliged to administrate it under the name "Zeppelin Foundation" and to use its revenues for charitable and social purposes. The city of Friedrichshafen became the new majority owner of ZF. In times of food scarcity and a sluggish economy, the company grew vegetables on its grounds and developed and temporarily produced the low-cost, lightweight, one-man car "Champion." In August 1948, the good news reached the company that it was taken off the "to-be-dismantled" list. In 1950, the Berlin plant started operations.

1951-70: Expanding Reach and Range

In the next 20 years, ZF evolved to become Europe's largest manufacturer of transmissions, steerings, and drives. One of the reasons for this successful development was diversification. Besides the auto and truck industry, the company targeted manufacturers of water and--once again--air vehicles, as well as the machine tool makers. In 1958, the company started developing transmissions for helicopters and machine tools. Three years later, ZF launched its first products. The plant in Passau started making axles for trucks and tractors in 1960. By 1966, the company also made motor breaks for trucks, drives for vehicles used in agriculture, transmissions for boats, electrical clutches, oil pumps, steerings and driven axles for machines used in agriculture and construction, and cog-wheels of all kinds. In 1968, the company commenced the production of transmissions for the air industry.

Another reason for the company's success was a constant flow of innovation and high production quality in its core market--the auto industry. In 1954, ZF acquired a production license for steering mechanisms from the U.S. firm Gemmer while its own hydraulic steering gained market acceptance. Soon the company became Europe's number one steering manufacturer. In 1961, ZF introduced a new automatic transmission for mid-sized cars. Four years later, the company started making automatic transmissions for BMW and Peugeot. In 1970, a subsidiary for the manufacturing of automatic transmissions for passenger cars was established in Saarbrücken, together with Chicago-based Borg-Warner Corporation. After the U.S. partner opted out of the business in 1972, the company was renamed ZF-Getriebe GmbH. To keep the stream of refined and new technologies flowing, ZF employed more than 800 engineers and technicians.

A third reason for ZF's success was the company's effort to explore new markets abroad. By 1951, exports accounted for 6.5 percent of total sales. This number was doubled within a year. By 1959, the number had climbed to 17 percent. In that year, the company also established a production subsidiary in São Paulo, Brazil. To get a foot in the door, many foreign automakers worked together with ZF do Brazil since they were required by law to use a high percentage of domestic vendors. The new facility started out with 200 workers, making the whole ZF product range.

Ever-increasing use of motor vehicles contributed to ZF's impressive performance at the end of the 1960s. Between 1967 and 1969 the company's revenues increased by 50 percent. More than every third commercial vehicle in Germany now carried a ZF-transmission or ZF-steering in 1968. In the early 1970s, for the first time, the company's annual sales passed the DM1 billion mark. The number of ZF-employees had almost quadrupled in twenty years.

1973-2002: Partner of the Global Auto Industry

In the 1970s, the company greatly expanded into all parts of the globe. Subsidiaries and sales offices were established in Austria, France, the United Kingdom, Denmark, Norway, Argentina, South Africa, and the United States. In the 1980s, ZF established a presence in Japan, Spain, India, South Korea, Singapore, Australia, Switzerland, and Turkey. The company also grew through acquisitions, including a 50 percent share in Henschel Flugzeug-Werke, a German manufacturer of parts for air vehicles; the share majority of the Lemförder group, based in northern Germany, a producer of parts from metal, plastic, and rubber used in transmissions, axles, and steerings; the Italian firm Pai Demin; and minority shares in a Spanish and a Malaysian company. An attempt in the early 1990s to take over General Motor's transmission manufacturer for buses and trucks, Allison Transmissions, was stopped by the German and U.S. antitrust authorities. Another project with Volkswagen AG to integrate the company's steering production into ZF--the so-called "steering union"--encountered too much resistance and was finally given up. In mid-1995, the company took over a transmissions factory from Mercedes-Benz. In addition, ZF continued to venture into new markets and set up production plants in Russia and China.

Over the years, ZF became an indispensable partner for the global auto industry. Its broadened international reach enabled the company to attract more and more of the global automakers as customers. In 1974, French automaker Peugeot ordered 400,000 automatic 3 HP 22 transmissions over the course of seven years--a milestone that created a basis for further growth. In 1986, ZF founded ZF Transmissions Inc. and ZF Steering Gear Inc. (U.S.) and started making its new "ECOLITE" S 5-42 transmission for Ford Motor Company. In the late 1980s, the company also received orders from Chrysler and American Motors. The company's new electronic transmission 4 HP 24 for the German four-wheel-drive Audi V8 was later also installed in top auto brands, including BMW, Jaguar, Lotus, Maserati, Peugeot, Volvo, Alfa Romeo, Rover, Citroën, Fiat, Lancia, Saab, and Chrysler. In 1988, the company received awards for high product quality from Ford and Jaguar. In 1990, ZF teamed up with two Japanese companies and started making pumps and other components for steering systems in the United States. ZF's new "Ecotronic" transmission, which cut down the fuel used by 15 percent, attracted new big-name customers, including Volkswagen. In the late 1990s, automakers focused more and more on their core competencies and cut the number of vendors down to a few which were confronted with new demands. Instead of certain auto parts, they requested whole components and systems which had to be delivered just-in-time to their assembly lines. For example, for the production of the brand-new "M-Class" from Mercedes Benz, a new production plant was set up at a new location in Tuscaloosa, Alabama. ZF set up its own new factory just 26 miles away, where it started making complete axle-systems. Only the motor and the transmissions for the new "M-Class" were actually made by Daimler-Benz. This new trend also transferred more responsibility for developing new technologies for certain components, as well as the coordination of a bigger number of vendors worldwide, from the automaker to the vendor, or "system partner." In 1998, ZF entered a joint venture with the German auto electronics maker Robert Bosch GmbH to develop and produce new steering systems with advanced electronic components. To help coordinate the new system-partner approach, ZF participated in the establishment of an electronic marketplace, Supplyon AG, together with other leading suppliers of vehicle components, in 2000.

However, despite its strong position as a preferred vendor for many automakers, ZF's success totally depended on ever-changing market conditions--the ups and downs to which automakers were forced to respond and adapt. The two oil crises in the 1970s, when oil prices at times increased 20-fold, set off a wave of research and development activities for automobiles that used significantly less fuel, while the German economy went through a recession. ZF came up with "Ecosplit," a new transmission for heavy trucks, and an electronically controlled "Servo" steering. After a short-lived boom of auto sales due to the reunification of Germany in 1990, another recession caused automakers to drop their output by up to 30 percent. ZF slipped into the red. The company laid off 5,000 employees--one-fifth of its workforce. New regulations in Brazil and a sudden dry-up of demand in Argentina in 1996, the growing value of the German mark, a move to low-price steerings among automakers, and the Asian financial crisis in 1997 made things worse. In 1996, losses amounted to two-digit million figures, and for the first time in 48 years ZF did not pay any dividends to its stockholders. However, after implementing a rigorous cost-cutting program, the company recovered in the late 1990s. In October 2001, in the biggest acquisition of the company's history, ZF bought four business divisions of its second largest supplier, Mannesmann Sachs AG, from the German Siemens group in an estimated EUR 1.3 billion deal. The former Fichtel & Sachs group, founded in 1895, came under the dominance of the German Mannesmann group in 1987 and was sold to Siemens AG in 1999 after Mannesmann's plans to take it public fell through. The Sachs takeover made ZF Germany's third-largest vendor to the automotive industry, behind Robert Bosch GmbH and tire maker Continental AG. In the late 1990s, ZF turned back to its roots and started making airships again--this time for aviation research and tourism.

Principal Subsidiaries: ZF Getriebe GmbH; ZF Lenksysteme GmbH; ZF Achsgetriebe GmbH (Germany); ZF Passau GmbH; Zeppelin Luftschifftechnik GmbH; ZF Bahntechnik GmbH; ZF Gotha GmbH; ZF Lehmförder Metallwaren AG (76%); ZF Maschinenantriebe GmbH; ZF Marine GmbH; ZF Luftfahrttechnik GmbH; ZF AG Holding Inc. (U.S.); ZF Industries Inc. (U.S.); ZF Hurth Marine S.p.A. (Italy); ZF Drivetech Japan Co. Ltd.; ZF Hungaria Kft. (Hungary); ZF Padova S.p.A. (Italy); ZF Argentina S.A.; ZF do Brasil S.A.; ZF Mathers LLC (U.S.); ZF Batavia LLC (U.S.; 51%); Bharat Gears Ltd. (India; 26%); ZF Korea Co. Ltd.; ZF of South Africa (Pty.) Ltd.; ZF Türk Sanayi ve Ticaret A.S. (Turkey); Beijing ZF North Drive Systems Technical Co. Ltd. (China; 70%); ZF Iran S.S.K. (49%); ZF Thailand Co. Ltd. (49%); Supplyon AG (18%).

Principal Competitors: CARRARO S.p.A.; Eaton Corporation; GKN plc; Delphi Corporation; TRW Inc.

Chronology

  • Key Dates:
  • 1915: Zahnradfabrik Friedrichshafen (ZF) is founded to make precision cog-wheels for Zeppelin airships.
  • 1918: The company starts making transmissions for automobiles.
  • 1921: ZF is transformed into a joint stock corporation.
  • 1932: The company commences the licensed production of steering systems.
  • 1944: The company premises in Friedrichshafen are destroyed almost completely during World War II.
  • 1950: The city of Friedrichshafen becomes ZF's majority owner.
  • 1959: A production plant is established in São Paulo, Brazil.
  • 1973: The manufacture of automatic transmissions for passenger cars begins in Saarbrücken.
  • 1979: ZF of North America is founded.
  • 1981: The electronic ZF-Servotronic steering system is launched.
  • 1986: ZF starts making transmissions for pick-up trucks in the United States.
  • 1992: The company is renamed ZF Friedrichshafen AG.
  • 1998: ZF ventures into China.
  • 1999: The Steering Systems Division is integrated into a joint venture with Robert Bosch GmbH.
  • 2001: ZF acquires four business divisions of Mannesmann Sachs AG.
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