Henkel Kgaa

Henkelstrasse 67
4000 Dösseldorf 1
Federal Republic of Germany
(211)7971
Fax: (211) 798 4008

Public Company
Incorporated: 1876 as Henkel & Cie
Employees: 38,145
Sales: DM11.64 billion (US$6.89 billion)
Stock Exchanges: Düsseldorf Frankfurt Zürich Vienna

In terms of technology, marketing, and staff management, Henkel’s first century was characterized by adaptability and opportunism. This has led to the rise of a company which, though still recognizable as the Henkel family business, is one of Germany’s largest chemical concern. The Henkel Group does more than two-thirds of its trade outside its home country, and operates not only throughout Europe but also in Africa, India, the Far East, Australasia, North America, and South America. Its best-known products, detergents and household cleansers, accounted for 31% of 1989 sales, but it also produces chemicals, which were 31% of sales; institutional hygiene and industrial cleaning products, which were 15% of sales; adhesives and related products, which were 15% of sales; and cosmetics and toiletries, which were 7% of sales.

Henkel’s roots go back to September 26, 1876, when Fritz Henkel founded Henkel & Cie, a three-man company based in Aachen and making a “Universal Detergent.” Henkel was from the Hesse region, and was then aged 28. Two years later, the company launched one of the first German consumer products to bear a brand name. This was Henkel’s Bleaching Soda. The packet bore the company’s early trademark, a benevolent-looking lion in front of a halo of sunbeams. The same year, 1878, saw the young firm’s move to a new factory in Düsseldorf, where the company still has its headquarters. The actual site changed in 1899, when Henkel transferred production to a much larger plant at Düsseldorf-Holthausen. Convenient for transporting goods either by railway or on the Rhine, this was to be Henkel’s permanent home. Over the years, however, it has grown from 600,000 square feet to 14 million square feet. In 1877 and 1879 Fritz Henkel bought out his two co-founders, and from then on control was kept firmly in the family.

From the start Henkel appreciated the power that the control of raw materials confers. Not only does such control insulate the manufacturer from the vagaries of third-party suppliers; it also puts control of ingredient quality into its hands. Sodium silicate, or water glass, was one of the main ingredients of Henkel’s detergents; accordingly in 1884 Henkel acquired the Rheinische Wasserglasfabrik and started to make its own water glass. Already the importance of research and development was appreciated; the process for making water glass was improved upon to the point where, in 1898, Henkel was to patent its own process. Today Henkel owns the largest water glass production operation in Europe.

The drive to control as much of the production process as possible continued to be apparent. In 1908 and 1909 Henkel opened soap factories for detergent production and a fat-splitting plant for fatty acid production, which in turn went into the soap. In 1910 came a plant to process glycerol, a by-product of the manufacture of fatty acids.

In 1893 Fritz Henkel had welcomed his elder son, 18-year-old Fritz Henkel Jr., into the firm as an apprentice. In due course, Fritz was to play a key role in developing the company’s innovative policy of marketing under brand names. Fritz Henkel Jr.’s brother, Hugo Henkel—a trained chemist— joined the family firm 12 years later. While contributing to the company’s technological side in particular, he helped Henkel to diversify into the well-rounded chemical business we know today.

At the turn of the century, Henkel was already demonstrating a forward-looking concern for the welfare of its 80 employees: it provided free staff lunches from 1900. A few years later Henkel became involved in a building cooperative providing rental housing for workers’ families and low-cost mortgages for executives. Recreation facilities such as gyms were supplied by the firm, as were the washrooms, which factory workers needed in order to comply with the company stipulation that they bathe at least once a week. Some early staff benefits may strike the modern reader as overly paternalistic: for example, female workers who announced their intention of getting married were offered a trousseau and a cookery and domestic-science course to be taken at the firm’s expense.

The year 1907 was exceptionally important for product development. It marked the launch of Henkel’s arguably most famous brand, the revolutionary detergent Persil. The name came from two of its most important ingredients, a perborate and a silicate. The product, Henkel’s own invention was almost simultaneously invented by two Stuttgart chemists. To be on the safe side, Henkel acquired the chemists’ patent but never used it. Three years later, after further intensive research on Henkel’s part, the product was registered as Persil. The product was a breakthrough in labor-saving since no rubbing or bleaching was required to clean clothes.

Since those early days, the brand name Persil has caused some confusion. In 1909, the English firm of Joseph Crosfield acquired the patent rights and trademarks of Persil for the United Kingdom and various British, Dutch, and Danish colonies. Crosfield was later absorbed by Lever Brothers, which in turn became part of Unilever. Today both Henkel and Unilever continue to market a product named Persil. In Western Europe, for example, Unilever owns the trademark Persil in Britain and France, while Henkel has Germany, Belgium, Luxembourg, the Netherlands, Italy, and Denmark. Some brushes with the EEC authorities over the market-sharing aspects of this arrangement were resolved in 1978. Different logos are used and there are no restrictive practices. Henkel anticipates no problems over continuing the arrangement in the unified markets of 1992.

In the early 1900s, Henkel’s use of brand names was innovative. Its products were easy to spot by their packaging and were widely distributed. Henkel felt that there was more to be gained by informative advertising than from what would now be called hype. The objectives were to make the Henkel name synonymous with quality and reliability, and to keep reminding the public of Henkel’s presence by having its goods and name on display everywhere. As early as 1911, motorized delivery vans bearing the Henkel livery were to be seen in Düsseldorf. There was a famous slogan, “Persil bleibt Persil” — “Persil remains Persil.” By 1914, Henkel had 120 salesmen out in the field.

Henkel had been quick to set up marketing operations in Germany’s neighbor countries. In 1913 Henkel opened a subsidiary, the first of many, at Basel-Pratteln in Switzerland, a country whose appetite for Persil and bleaching soda had already proved particularly healthy. Four years later it was to acquire another subsidiary, this time German, when it bought Matthes & Weber of Duisburg.

Henkel played a patriotic part in World War I. Jobs of workers who went to the defence of their country were kept open for their return—though 71 never returned. A hospital was set up for the employees who were wounded. Henkel employees fighting in the German trenches continued to receive not only food parcels but also copies of the company newspaper, which had begun to be published in 1914.

Rationing of oils and fats made it necessary in 1916 to bring in a low-soap version of Persil. In general, the war had less effect on Henkel’s business than did the Allied occupation of the Rhineland from 1919 onwards. Some of the effects of the occupation were positive. The danger that the Holthausen plant would be cut off from its customer base led to the construction of a new factory at Genthin in central Germany, which opened in 1921. The extra capacity would be valuable later on.

The war was followed in Germany by a period of hyperinflation. At its peak, in November 1923, a packet of Persil cost 1.25 billion marks. Once this situation was brought under control, Henkel’s expansion continued apace, in line with a general western European trend towards higher standards of living, and in particular of personal and domestic hygiene. In Germany, soap products were becoming affordable, and thanks in part to Henkel’s advertisements, their virtues were well known. For most of its first half-century the company had focused on the manufacture of detergent and cleaning products. A period of vigorous diversification began in the 1920s under the guidance of Hugo Henkel, now supported not only by his sons but by a board of eight directors. This activity continued throughout the interwar period, but the stimulus to diversify again came from the occupation of the Rhineland. In 1923, fearing that the occupying forces would restrict the supply of the adhesives it needed for detergent packaging, Henkel started to manufacture its own glues. With characteristic opportunism, it was soon putting the glue department’s products on the market. Today, Henkel can claim the most comprehensive range of adhesives in the world.

Henkel’s next move, in 1924, was to start marketing cleaning products aimed at institutional and industrial markets. In 1929 the P3 phosphate-based cleaning agents were added to Henkel’s product lines for industrial machinery and food production. By buying Thompson-Werke in 1930 and Deutsche Hydrierwerke in 1932, it acquired an interest in the market for home-care products, such as polishes and scouring powders, and increased its capacity to manufacture the fatty alcohols needed for its detergents.

Henkel’s acquisition of Böhme-Fettchemie, Chemnitz, in 1935, followed the latter’s launch of a new type of detergent named Fewa. This synthetic product, designed to wash delicate fabrics, was the first of its kind. The same year saw the foundation by Henkel of a German whaling association which sent a fleet to the Antarctic Ocean three times in the prewar years. The fleet’s catches were of relevance to oleochemical production. By 1939 Henkel could boast of 15 European plants in addition to the main factory in Düsseldorf.

Henkel’s expansion of its product range between the wars meant more research and development. A laboratory had existed since the early 1900s, but in 1920 a test department for new products was set up. At first the focus was inorganic chemistry, but later on other branches of chemistry were included. Further new laboratories were built and equipped during the 1930s, culminating in a major laboratory which opened on the Deutsche Hydrierwerke site at Rodleben, shortly before the outbreak of World War II, designed to support all of Henkel’s products. Cash-starved Germany could ill afford to import natural fats and so one important object of research was the development of soapless washing powders. By 1936 Henkel was producing powders using fatty acids derived from coal. Meanwhile, improvements had been made in the manufacturing process: packaging of detergents became fully automatic in 1926.

Always keen to take advantage of new technology in management as well as production, Henkel installed an automatic telephone exchange in 1928, and in 1935 became the first subscriber to the Düsseldorf teleprinter service.

Alongside its policy of expansion and diversification in the interwar period, Henkel maintained an imaginative approach to advertising. Skywriting planes emblazoned the name of Persil far above the heads of astonished German spectators, and in an interesting variation on the sandwich board, six men carried through the streets snow-white umbrellas bearing the name “Persil.” Henkel continued to forge ahead in the field of staff management and welfare. First-aid facilities, the precursor of today’s Henkel staff medical centers, had arrived in 1912. A pension scheme began three years later. In 1925 a training structure for specialist staff was established, and two years later Henkel became the first member of the German chemical industry to appoint a safety engineer to reduce the risk of accidents.

Jost Henkel, son of Hugo Henkel, had joined the company in 1933, and it was under his leadership that Henkel weathered World War II. The war itself had relatively little impact on the Düsseldorf works, although 259 employees were lost in action, prison camps, and air raids. Henkel had to abandon Persil in favor of basic, state-approved products during wartime. Once again the aftermath of war was more serious. The occupying British forces removed the Henkel family from the head of the firm, and did not allow it to return until 1947. In line with the German economy, which began to recover at that time, Henkel was able to get back on a level footing in time for its 75th anniversary in 1951.

After World War II, Henkel, under first lost Henkel and then his brother Konrad Henkel, did not simply set about rebuilding what it had before, but entered one new market after another, diversifying its products through innovation and acquisition, and gaining representation in parts of the world not previously penetrated. In 1946, the Düsseldorf factory started to manufacture chemical products for use in the textile and leather industries, and the Poly hair-care brand was launched. A couple of years later, personal hygiene and cosmetic products were added to the range. During this period, Henkel’s production facilities for oil-related chemicals were brought together at the Düsseldorf-Holthausen plant, giving a greatly increased capacity for the manufacture of ingredients for soaps, detergents, cosmetics, and pharmaceutical products. In 1951 Pril dishwashing liquid was introduced. During the 1950s, the company set up manufacturing plants in Japan and Brazil, gaining its first footholds in the East Asian and South American marketplaces.

The acquisition of a U.S. company, Standard Chemical Products, in 1960, heralded the two decades of Henkel’s most dramatic expansion. To give a solid foundation to its growth program, the Henkel Group opened a state-of-the-art research center in 1962 at the main Düsseldorf plant. This laboratory complex had been in phased construction since 1959 and was not completed until 1967.

Pritt, the solid glue in a cylindrical tube, was launched in 1969, contributing to Henkel’s current lead in the European adhesive market.

By the 1970s, there was mounting concern about the environmental impact of the chemical industry in general, and specifically about the use of phosphates in detergents. As early as 1973, Henkel was taking the first steps toward patenting a compound known as Sasil, which was to prove a good substitute for the offending phosphates. Now there could be a phosphate-free Persil. This discovery has helped Henkel to win its present position in the European detergent market. Henkel can also collect license fees from other users of Sasil or related products.

A biological institute was added to Henkel’s group of laboratories in 1974. The scientists and technologists who work there concentrate on the protection of the consumer and the environment.

When the founder, Fritz Henkel, died in 1930, ownership of the company had been divided between the families of his three children. By 1985, control was held by 66 family members who in that year decided, together with president Helmut Sihler, that it was time to go public. So Henkel shares were issued at last to an eager market. At the same time steps were taken to guard against excessive outside interference: the issue was of non-voting preferred shares, and all ordinary shares were to belong to the family at least until the year 2000.

Expansion continued apace through the 1980s, most notably with the acquisition of Union Générale de Savonnerie in France, and of Parker, maker of metal surface treatment; Oxy Process Chemicals; and Emery Group, a base-materials and chemicals company, in the United States. An important new production plant opened in Malaysia in 1984.

Henkel has succeeded in maintaining a sound balance sheet throughout all its acquisition activities. Although outsiders sometimes regard the group as over-diversified, its management is satisfied with the mix. It has clear rules for acquisition: not to diversify through acquisition, to retain acquired companies’ existing management, and to purchase companies that comply with their profit requirements. Unprofitable companies, or those which do not fit in, are rejected. Strategic relationships are formed, and minority shareholdings bought as the least risky and cheapest way of getting a foothold in a new market. The Wall Street Journal, November 25, 1988, has described Henkel’s business approach as “a blend of America’s short-term emphasis on profit and West Germany’s long-term emphasis on the future.” Certainly, Henkel’s consistently healthy results give credibility to its strategies.

In its research and development, Henkel continues to target environmental and consumer protection issues. DM282 million was spent on this area in 1989 alone, while DM30 million was earmarked for related capital expenditure. In addition to measures to develop safer and more environmentally sound products in all ranges, there are programs to minimize the pollution generated by the manufacturing plants. Henkel claims that environmental damage caused by its parent plant has been decreased by between 50% and 75% between 1984 and 1990.

On the marketing and production front Henkel says it is preparing intensively for the single European market. It is designing its branding concepts with Europe in mind and is reviewing its distribution and production facilities. Management development programs too are being specifically targeted at international business. Language classes are offered to staff throughout the group.

Konrad Henkel, the grandson of founder Fritz Henkel, continues as chairman of the supervisory board and shareholders’ committee until the end of 1990, working alongside Sihler to ensure that Henkel, though a global company operating in more than 150 locations, upholds its family traditions of technical advance, active marketing, and looking after its staff.

Principal Subsidiaries

Chemische Fabrik Grünau GmbH; Matthes & Weber GmbH; Henkel Austria Gesellschaft mbH; S.A. Henkel Belgium N.V.; Henkel France S.A.; Société des Produits Chimiques du Sidobre-Sinnova S.A. (France); Henkel Chemicals Limited (U.K.); Henkel Italiana S.p.A. (Italy); Henkel Sud S.p.A. (Italy); Henkel Chimica S.p.A. (Italy); Henkel Nederland BV (Netherlands); Henkel Ibérica S.A. (Spain); Henkel & Cie AG (Switzerland); Turyag A.S. (Turkey); Turk Henkel A.S. (Turkey); Henkel S.A. Industrias Quimicas (Brazil); Henkel Hakusui Corp. (Japan); Mexico Group (Mexico); Henkel of America, Inc. (U.S.A.); GFC Gesellschaft für Chemiewerte mbH (46%); The Clorox Company (U.S.A., 27.3%); Loctite Corporation (U.S.A., 26.7%).

Furthur Reading

1876-1976 Hundert Jahre Henkel, Düsseldorf, Henkel, [1976]; Schöne, Manfred, Stammwerk Henkel 80 Jahre in Düsseldorf-Holthausen, Düsseldorf, Henkel, 1981; O’Boyle, Thomas F., “Henkel Makes Mark with Acquisitions,” The Wall Street Journal/Europe, November 25, 1988; Marsh, Peter, “The Secret is in the Mix for Germany’s Brightest,” Financial Times, December 7, 1988; Henkel— Specialist in Applied Chemistry, Düsseldorf, Henkel, 1989; Henkel Past and Present, Düsseldorf, Henkel, [n.d.].

—Alison Classe and Olive Classe