• Cornelia Knust

On the road to another league.

Einhell AufmacherExpansion. The Thannhuber family of entrepreneurs from Lower Bavaria manages the production of do-it-yourself appliances with ambitious goals. Not only in terms of the economic perspective of Einhell AG. The sons of founder Josef Thannhuber - Markus (left) and Philipp - are also to be given justice and entrepreneurial scope.

The Hollywood Walk of Fame stretches over 15 blocks on both sides of Hollywood Boulevard in Los Angeles. Against a backdrop of impressive glass fronts, 2690 stars are inset with the names of prominent artists.

A stone access ramp with stars and a glass front ready for the movies can also be found on a commercial site in the deepest part of Lower Bavaria in Landau an der Isar. Behind it, lots of drills, milling machines, scythes, saws, lavishly presented and illuminated. On the first two stars are the names of the retired senior managers of Einhell AG - Josef Thannhuber and his wife Gisela, formerly head of finance, occupy the first two stars. The rest of the long row of stars up to the entrance is still empty.

The new showroom of the listed company Einhell AG is probably to be understood as a statement. Here in Landau, where the company is currently building a gigantic high-bay warehouse, is not just a transshipment point for inexpensive do-it-yourself tools, produced in faraway China and sold in 90 countries around the world. This is an emerging brand in the bosom of a proud family that seems intent on giving many more generations the opportunity to live entrepreneurship.

In order for this to work, the senior did not initially hand over the reins to his descendants in 2003, but to an external person: Andreas Krois, now 52, previously head of the branch in Austria and then of the Tools Division. Since then, he has represented the company to the outside world and for this reason alone, in the family's opinion, it is imperative that he continues to hold the prominent position of Chairman of the Board of Management. His sons Markus and Philipp Thannhuber, currently 49 and 41 years old, first had to find their roles: one as Chief Technology Officer, the other as Deputy Chairman of the Supervisory Board.

Today, they sit down relatively relaxed for the interview between all the red devices. After all, they own a Corona winner in the form of tool manufacturer Einhell (see text "Double Corona experience" at the bottom). And they believe they have found a particularly intelligent way to manage their company - both the value creation process and the interaction of the family.

Einhell 1

"The intelligent Enterprise" - this was already the title of the doctoral thesis on the subject of organizational theory by Markus Thannhuber, who holds a degree in physics. When he published it in book form in 2004, he was in the middle of his journeyman's project for his father's company. He was supposed to restructure the Einhell subsidiary ISC, which provided IT and process services for the entire company. The far-sighted father had already started globalisation in the 1960s, had manufacturing in Asia since the 1970s and founded the first joint venture in Chongqing in China in 1994. But the business with returns and maintenance, which is bundled in ISC, did not run smoothly. Markus Thannhuber seems to have turned it around. In any case, he rose to the board as Chief Technology Officer in 2007.

The younger brother Philipp was more freedom-loving. Even as a schoolboy, he founded a company for air purifiers and humidifiers. As a business administration graduate and trained energy electronics technician, he later founded a manufacturer of pneumatic tools. He turned down his father's plan to have him take over an Einhell subsidiary. But Einhell - 1600 employees, 725 million euros in sales, eight percent pre-tax return - has remained part of his life nonetheless. When his father left the supervisory board in 2015, Philipp took it upon himself to represent the family on that body.

The name Einhell comes from Hans Einhell GmbH, the small electrical installation company in Landau owned by an uncle of Josef Thannhuber, who was supposed to take over the business. In 1964, however, he simply used the name and founded his own company. He started out as a contract manufacturer of transformers and battery chargers, became a supplier of barbecue grills, sauna ovens, greenhouses and garden sheds, and finally mutated into a manufacturer of power tools for home and garden - tools that can be purchased in DIY stores or online and that are also produced by large competitors such as Bosch or Makita.

At that time, however, Thannhuber was not targeting professional customers, but rather pure do-it-yourself, rather in the low-price segment. The company has wanted to get out of this corner for years. The aim is to turn the general store into a focused company, and the niche player into a strong brand.

Similar to the competition, the company has been focusing on cordless devices that are operated with replaceable batteries since 2014. Einhell even sees itself as the first provider of a cross-range battery system in Europe. Under the name Power X-Change, the company now offers as many as 200 cordless tools and gardening equipment. The hope: once you have decided to use the Einhell system with its rechargeable batteries, you will always buy new tools from the series. Quality, long service life, good repairability - that is the currency in the market today, also, or especially, with regard to sustainable business.

"With this platform business model, we create a long-term customer relationship and thus have a good chance of gaining further market share," says Markus Thannhuber. 40 percent of Group sales are to be generated with Power X-Change in the medium term. Compared to the competition, the company can score points with the efficiency of the batteries: Power, runtime, longevity. The sophisticated battery electronics protect against discharge or overload. The price-performance ratio of the devices is first-class.

The prerequisites for this differentiating feature are created in the product and process, i.e. with the aforementioned "Intelligent Enterprise". Because Power X-Change is in a different league. The lithium-ion batteries that once made hedge trimmers or lawn trimmers work well are not enough for powerful drills or saws, which have to withstand completely different loads. Battery, motor and tool must be precisely matched to each other.

For this reason, Einhell maintains a group of 300 technicians and engineers who work around the clock in China and Germany in different time zones. At any given time, controlled by an algorithm, around 1200 to 1400 work packages are on their way, which a process management system sends to the developers. The factories in Asia are partners in this process. Einhell leads the chain. No longer just an "Original Equipment Manufacturer" (OEM), i.e. the one who assembles the supplied parts at the end, but the head of a group of Original Design Manufacturers (ODM) - i.e. the one who creates an innovative product from the various development shares of the partners, and does so in very short cycles as the market requires.

"Markets can only be added with good products and a good product range, and both are very much part of a good organisation," says Markus Thannhuber. "We therefore run a 'project factory'. We can't afford flops." His brother explains in more detail how the company and its people are changing: "We are focusing away from the retail customer more towards the end customer. That requires a very different service orientation. To do this, you need a very good team that constantly keeps the tension within itself."

The most important sales market is the Germany, Austria, Switzerland region. In Germany, Einhell achieved a 23 percent market share for cordless garden tools in 2020, and eleven percent for tools. The second most important region is Australia. China is no longer being worked on as a market, contrary to the senior's plans. The market structure no longer fits the product range, they say. Instead, Einhell is now venturing, later than planned, with a local partner into the very mature and risky market of the USA, the largest DIY market in the world. The goals are also ambitious in other respects: In the 40 countries in which Einhell is represented by its own subsidiaries, the company wants to "become the market leader in cordless freedom."

Einhell 2

Dynamic, cosmopolitan, agile - that's how Einhell wants to be. And is organising its management structure accordingly. Since mid-2019, the four-member board has even included an IT and digitalisation manager. Right at the start, he had to fend off a massive cyber attack that disrupted the company for days. At the same time, the two brothers also emphasize the company culture that has grown up, shaped not only by the founding family. But also by many seasoned Lower Bavarians who have made the company great; hard-working, reliable, hands-on, as they say, and also very conservative, as they admit.

Markus Thannhuber speaks openly about his difficult early years. It is true that his father was very approachable, not a patriarch. But of course the son was under observation by the other employees, he says. "It is certainly not always pleasant to work with an associate," he puts himself in their shoes. "To excel with performance, that's the only way to get recognition," he says, describing his career. Brother Philipp, actually the more reserved type, probably wouldn't have been so sufferable: "I'm not sure I'd fit into a structure where I'm not the boss."

To keep this family together and to avoid quarrels even in the next generation, the Thannhubers have put a lot of effort into it. Even the IPO by their parents in 1987 - at that time, none other than screw entrepreneur Reinhold Würth served as chairman of the supervisory board - was an important step. "The IPO was very far-sighted and certainly not an easy decision for an entrepreneurial couple", Markus Thannhuber says. Stock corporation law, supervisory boards, the greatest possible transparency - family entrepreneurs are not usually so keen on these things. But this not only brings in capital, but also protects against going it alone. "As a family member, you're quite happy that everyone has to submit to it," notes Philipp Thannhuber.

"Never under the same roof," the brothers say with a wink about working with their father, but also with each other. Their division of roles is apparently well-considered. "My little brother is the boss," Markus Thannhuber jokes. But it is more complicated than that. At Einhell AG, Markus is a member of the board of directors and Philipp is a member of the supervisory board. In the family holding company Thannhuber AG, it's the other way around: "That means we always have to agree," the brothers explain.

With the help of a management consultancy, they founded a family association with articles of association and wrote a family constitution on this basis. This lays down rules for passing on AG shares or the qualification of managers, regardless of whether they come from within or outside the family. In this way, the Thannhubers want to lead the group structure into the future according to the performance principle, while at the same time ensuring justice and fairness and giving the next generation as much freedom as possible.

The parents still hold eleven percent of the family holding company, the rest is shared equally by the brothers. 93 percent of the ordinary shares are held by the family, seven percent by other private individuals. Only preferred shares are in free float. Three of Markus' sons and two of Philipp's daughters bring the families of the two brothers into the future. Whether a sales talent or an organizational guru is among them remains to be seen. The stars on the Walk of Fame are already there. They just need to be inscribed. ®

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// Double Corona Experience.

In the spring of 2020, the board of Einhell AG seemed rather worried. The DIY stores were closed because of the Corona pandemic. At the same time, supply chains from China, where the company has concentrated all its production, were threatening to snap. But then the shops reopened and a huge run began on everything that can be used to improve the home and garden, including tools for DIY enthusiasts and hobby gardeners. This "cocooning effect" led to "very intensive months" at Einhell.

In the autumn, the company ran out of stock. At the same time, the global supply chains were finally out of step. Overseas containers were piling up in the ports of the USA and Great Britain, and there were none to be had in Asia. And the shipowners, who had never experienced such a shift in the cycles, were not in a position to solve the problem, according to Markus Thannhuber. Instead, prices exploded, were in some cases ten times as high as before: "We had a huge steering crisis from November 2020."

This has eased somewhat in the meantime. But Einhell still wants to draw consequences from the experience: increase regional diversity in the manufacturing landscape, cooperate even more closely with partners in industry and logistics, plan better and book earlier. But shifting production away from China, to Eastern Europe for example, is hardly possible, he says. The complex networks around the production sites in Asia, as they are needed for the manufacture of more complicated products, cannot be recreated so quickly at a European location, the Thannhubers believe.

The Corona effect on business (in 2020, group sales increased by 20 percent) will continue this year, they say. After that, the company principally expects higher unemployment and lower household incomes as a result of the Corona crisis, which would dampen demand. Philipp Thannhuber: "The economic disaster is yet to come."

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Author: Cornelia Knust

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