A passion for politics and a head for business

17 Jun 2002

Lothar Späth is a politician, author and television talk-show host. He is also chairman of Jenoptik, one of Germany's largest optics firms. He talks to Nadya Anscombe about how he saved the company from certain ruin and what his plans are for its future.

From Opto & Laser Europe January 2002

Lothar Späth

When Lothar Späth became chairman at east German firm Jenoptik 10 years ago, his first decision was to make 16 000 people redundant. This was shortly after German reunification and the optics company had hit hard times. Every household in the small town of Jena was affected. "We had to demolish half the town," said Späth. "The company had to sell off its land to survive, and most of its factories were in Jena."No-one thought that the firm could be rebuilt from the rubble. However, today Jenoptik employs more than 6500 people in 20 countries. It is the only company from the former East Germany to be listed on the DAX - the German stock exchange. It has a turnover of EURO 1.6 billion and its photonics unit is its fastest growing business, with an annual growth rate of 20%.

Späth is now rebuilding what he once had to knock down. One of Jenoptik's subsidiaries, Jenoptik Laserdiode, last month opened a new production facility in Jena after investing EURO 11 million to increase its production capacity five-fold. The company, which has doubled its workforce in three years, has increased its turnover by as much as five times in the same period.

Jenoptik Laserdiode is a perfect example of how Späth has grown Jenoptik. Späth's strategy is to invest in small firms - usually in western Germany - that can be integrated into Jenoptik. Späth built up the laser-diodes business after buying Heimann Optoelectronics, which is based in Wiesbaden, in 1993. Jenoptik's venture capital arm, DEWB, has also invested in the Jena-based start-up Unique Mode, and more recently, Jenoptik bought Idar Laser, in Idar-Oberstein, to form Jenoptik Solid Laser.

"Normally, German businesses have their production sites in the east and their headquarters and research sites in the west. For us it is the other way round. We bought western companies to get closer to the market," said Späth. "Today only about 25% of our employees work in and around Jena."

This growth strategy is definitely working. Jenoptik continues to grow, but the redundancies that Späth made 10 years ago have left him with a unique problem.

"We now have a disproportionate number of older staff. A high-technology company should have a young workforce and we must, as a priority, recruit young people to bring new experiences of science and technology into the business," said Späth.

"This is a phenomenon we will be fighting for a long time. The young and qualified people that were in the area about 14 years ago have either moved away or they have got a job with another local business.

"The people that I need today have a different profile to those that I made redundant 10 years ago. For example, with the amount of automation that is used today, people need to know more about software and programming than optical technology."

However, Späth is having difficulty finding these skilled employees. "Now that the company is growing again, we cannot find the right staff," said Späth. " Jena has 12% unemployment, but getting the specialists we need in Jena is almost impossible."

Späth believes that the falling number of engineering students is not the only reason for this recruitment problem, which is worse in Germany than in any other European country. "Our industrial law is far too strict. In Germany, you are either paid a wage agreed by a union or you are unemployed. We do not have the flexible working practices that are standard in the UK and the Netherlands, for example," he said.To tackle the shortfall of engineering students, Späth has set up the Jenoptik Academy. This is a virtual organization that has three aims: to train students in the specific skills that the company needs; to train its existing staff; and to identify potential spin-off firms within Jenoptik. "Germany needs courses that react faster to the needs of the industry. We can learn from countries such as the UK, where universities compete to attract students, and students complete their studies more quickly," he said.

When the information-technology sector needed new staff, universities reacted and started offering degrees in the subject. Now the photonics industry needs students to study photonics, says Späth, but Germany is reacting too slowly: "We need a more flexible legislation system in higher education. We need professors and students to collaborate more in starting up new companies. The strong division between business and science is wrong."

While Späth hopes that the Jenoptik Academy will go some way to solving the skills shortage, he believes that the only way for businesses to really make a difference is to become more politically active. "Businesses are always moaning about politics, but no-one wants to get involved. And then they wonder why politicians do not understand what firms want."

Späth certainly cannot be accused of not getting involved. He has for the past four years hosted a weekly talk-show on German national television where he discusses political and economic issues with Germany's business leaders and politicians. He also writes regular newspaper columns and has written several books on the state of Europe's economy and politics.

He strongly believes in a united Europe and that individual countries need to start thinking of Europe as one entity that can then compete in the global market-place. "The French prime minister recently said: 'We need Europe to be a bastion against globalization.' I have never heard anything so ridiculous in all my life," commented Späth. "To develop further, Europe needs to become a federation of states. We need to accept the fact that immigration is going to happen whether we like it or not. Either the Poles come to Germany or the Germans build factories in Poland."

However, while Späth has a passion for politics, he enjoys the freedom of the business world. To take on the challenge of saving Jenoptik, Späth turned down an offer from a large Asian company. And does he regret the decision? "No," he said. "It is the best decision I've ever made." Jenoptik was originally part of Carl Zeiss, which 10 years ago was one of the largest businesses in Germany. Carl Zeiss was then, and remains, a not-for-profit organization.

At the end of the Second World War, Jena was initially under US occupation, but then it became part of East Germany and it was handed over to the Russians. The US, not wanting the Russians to get hold of Carl Zeiss's technology, smuggled out all of the firm's best people and equipment, brought them to the south-west German state of Baden-Württemberg and created Zeiss West. The Russians formed a new firm in St Petersburg with what remained, and another, under the original name of Carl Zeiss, was started in Jena.

In 1990, Carl Zeiss Jena, which traded under the name Jenoptik in the west, changed its name to Jenoptik Carl Zeiss Jena.

The road to success

After German reunification in 1991, many firms were interested in buying Jenoptik Carl Zeiss Jena. However, Zeiss West owned most of the firm's intellectual property and refused to let it go. The East German Treuhand - a trust set up to look after business interests that had previously been under the control of the former East German government - stepped in.

It asked Lothar Späth, who at the time was state president of Baden-Württemberg, to head up the new company and Jenoptik Carl Zeiss Jena split into two. Jenoptik took over the business areas of optoelectronics, systems technology and precision manufacturing, and Carl Zeiss Jena, the foundation, started again in Oberkochen and specialized in precision optics.

Under Späth's leadership, Jenoptik has become a highly successful business. It looks set to leave its past behind and continues to grow, especially in the photonics market.