Rieter Holding AG

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Rieter Holding AG

Schlosstalstrasse 43
CH-8406 Winterthur
Telephone: (+ 41) 52-208-71-71
Fax: ( + 41) 52-208-70-60
Web site: http://www.rieter.com

Public Company
1985 as Rieter Holding Ltd
Employees: 12,232
Sales: CHF 2.93 billion ($1.82 billion) (2000)
Stock Exchanges: Swiss
NAIC: 333292 Textile Machinery Manufacturing

Switzerlands Rieter Holding AG is the worlds second largest manufacturer of textile machinery, behind fellow Swiss company Sulzer AG. Rieter Holding has also extended its expertise into the automotive market, manufacturing noise control, interior, and insulation systems for the automobile industry. These two operations make up the companys two primary divisions, Rieter Textile Systems and Rieter Automotive Systems. While textile machinery represents the companys historical base, automotive systems have quickly gained the strongest share of the companys sales, at more than 65 percent of Rieters 2000 sales of CHF 2.9 billion ($1.8 billion). Under CEO Kurt Feller, the company has expanded aggressively in the late 1990s and early 2000s, helping to lead a consolidation of the worldwide textile machinery manufacturing industry.

Swiss Industrial Pioneer in the 18th Century

Johann Jacob Rieter was 20 years old when he began trading spices in his Winterthur, Switzerland home, joining a partnership in the 1780s. By 1795, Rieter had set up his own full-fledged business, extending his trading activities beyond spices into cotton and other products. Cotton soon became one of Rieters most important products, and particularly English cottonwhich, produced by the new mechanical methods that were to spark the Industrial Revolutionhad become coveted throughout the European continent. Toward the turn of the century, Rieter was joined by son Heinrich, who took over as head of the family business in 1810.

In the early decades of the 19th century the cotton supplies were cut short by the political turmoil of the time. Rieter and other Swiss traders turned toward spinning their own cotton, importing English-made machinery and setting up their own spinning mills. Rieter went into the spinning business in 1812, setting up its first mill in Winterthur. By then, Rieter had ended its trading business to concentrate wholly on building and operating spinning mills. The company established its most important mill in 1825, in Niedertöss. That mill also included a mechanical workshop for maintaining the companys English-made machinery. From there, Rieter was to grow into one of the world leaders in textile machinery manufacture.

Typical mills of the day used waterpower to drive the machinery. Rieter was among the first to adapt the new steam engines as a power source. In 1833, the company bought the former convent at Töss and soon transferred its mechanical workshops there. As its various workshops grew, Rieters mechanical production shifted from the forging of replacement parts to the manufacture of entire mills. Rieter also began to produce spinning mills for other textile factories. Soon Rieters machinery itself became as well-known as the companys yarnsif not more so. The quality of the Rieter mills had the paradoxical effect of creating rivals from Rieters customers.

By mid-century, as the next generation of Rietersin the form of Heinrich Rieter, Jr.took the helm of the family company, the company decided to transform itself from a textile manufacturer to an industrial machinery manufacturer. Between 1835 and 1925, the Rieter company produced a large variety of goods, ranging from spinning machinery to turbines, machine tools, generators and transmissions, as well as railways, trams, motors, bridges, and even rifles. This diversification was necessary because of extreme fluctuations in demand for the companys spinning machines. The company also developed a broad range of textile-related machinery, such as embroidery machines and doubling and winding machines. As early as 1854, the company was quoted as claiming, We have equipped ourselves to build steam engines, water wheels, drives, etc.; in short, everything coming under the heading of heavy engineering.

Indeed, the company scored a number of industrial successes, such as the construction of Switzerlands first passenger aerial cableway, completed in Schaffhausen in 1866. Turbines were another important product for the company in the second half of the century, as well as locomotive construction. By the end of the 19th century, Rieter was also building electric power stations. In 1905, the company won the contract to build the Vesuvius Railway. By then, the firm had reorganized as a public limited company and was under the direction of the last Rieter family member to head the company, Benno Rieter, who remained as chairman until 1925.

Focus on Spinning Machines in the 20th Century

Rieter shed its diversified manufacturing operations during a reorganization in 1914. At the same time, the company spun off its profitable spinning mill operations into a new independent company, Spinnerei und Zwirneri Niedertöss AG. From 1915 on Rieters focus returned to the manufacture of spinning machine systems. The new concentration on a single product line enabled Rieter to invest in developing its designs, introducing better spinning frames, and building the Rieter name as among the most prominent of European spinning machinery manufacturers. Another triumph came in 1931, when the company introduced its first machines capable of spinning from man-made fibers.

At the end of World War II, Rieter and the Swiss spinning machine manufacturing industry as a whole were among the few in Europe left undamaged by the war. The company now engaged in a modernization of its facilities and technologies, taking a leading position in the introduction of new processes and designs. In 1949, the company began producing machinery for the production of continuous man-made fibers and filament processing. Rieter also began to introduce automated systems, beginning in 1947.

Rieter had remained linked to its Switzerland base, expanding in 1947 with the acquisition of Gebrüder Mägerle GmbH. In the 1950s, the company began to expand internationally, buying Famatex in Italy in 1948, and then opening a subsidiary in Arlington, Virginia, in 1951. That subsidiary moved its headquarters to Spartanburg, South Carolina, in 1963. By then, the company had also turned to India, granting a license to that countrys Lakshmi to produce Rieter machines in 1962 and helping that company build its works in Coimbatore in 1966.

In 1967, the company entered a joint venture with Geilinger Stahlbau. The company next turned to South America, investing in Buenos Aires Coghlan SA as a way to get past Argentinean import restrictions. Closer to home, the company acquired Schaltag AG of Effretikon, Switzerland, and in 1973 added Maschinenfabrik Remlingen of Germany.

The acquisition of Ernest Scragg & Sons Ltd. in the United Kingdom marked the beginning of a new phase in Rieters growth. Renamed Rieter-Scragg Ltd., the subsidiary reinforced Rieters expertise in the production of machinery for man-made textiles with Scraggs expertise in fine texturing machines for man-made filaments. The Scragg acquisition marked the first of many for Rieter. In 1984, the company acquired fellow Swiss company Unikeller AG, which specialized in noise control and thermal installation systems for the automotive marketmarking Rieters entry into this field. The company brought this acquisition under its newly formed Unikeller division, later to be regrouped as Rieter Automobile Systems.

By 1985, Rieter reorganized its textile operations into its two primary areasstaple and continuous fibers. These divisions were soon replaced by the dual textile divisions of spinning systems (staple fibers) and chemical fibers, a structure that remained in place into the mid-1990s, when the companys textile activities were brought under the Rieter Textile Systems division. In 1985, the company adopted the new name of Rieter Holding Ltd., with a listing on the Zurich stock exchange.

External Expansion in the 1990s

A major acquisition came in 1987 when the company acquired rival Germany-based textile machinery manufacturer Schubert & Salzer GmbH, which had been hard hit by a slump in the staple fiber market during that decade. The companys next major acquisition came in 1992, when it picked up Automatik-Apparate-Maschinenbau, based in Grossostheim, Germany, which was then renamed Rieter-Automatik. This acquisition reinforced the companys synthetic fiber operations.

In 1994, Rieter acquired Firth Furnishing Ltd., based in the United Kingdom, a maker of carpeting for automobiles, which, added to the Unikeller division, formed the basis of the companys Rieter Automotive Systems division, inaugurated in 1995. The company, seeking to even out its textile machine systems cyclical exposure, stepped up the development of its Automotive Systems division in the second half of the decade, building those sales to equal its textile machinery sales.

Company Perspectives:

Comfort thanks to Rieter is the core statement of Rieters vision. Rieter aims with its products and services to contribute to peoples well-being. Product development therefore focuses on the preferences of the end-users. The yarn produced on Rieter machines is intended to provide clothing, home textiles, sportswear and industrial fabrics with outstanding properties. Car drivers and passengers should feel comfortable, in a pleasant interior and shielded against noise. Rieter also aims to provide comfort for its immediate customers through products which are easy to handle, maintain and install. Rieter believes in development through partnership in order to be able to satisfy these needs. Communication takes high priority.

Rieters vision is based on three objectives: delight your customers; enjoy your work; fight for joint profits. This means: Rieter can only be successful as a company if it exceeds its customers expectations, if it creates long-term added value for its shareholders, and if its employees derive satisfaction from their work .

In 1995 the company made an important acquisition in the United States, that of Globe Industries, Inc., a company with a complementary array of products located close to the heart of the American automotive industry. This acquisition, made for $160 million, was boosted with another U.S. expansion two years later, through a joint venture with Pennsylvanias Magee to manufacture car carpets.

Closer to home, Rieter acquired the Czech Republics Elitex, adding that companys rotor spinning machines, in 1994, then strengthened its European automotive textiles operations with the purchase of Fimit SpA in Italy, in 1996. In South America, the company acquired Brazils Ello Ltda., leader in Brazils automotive acoustic, interior trim, and thermal insulation systems markets. A year later, the company entered a joint venture with longtime associate Lakshmi, creating Rieter-LMW Machinery Ltd. in India.

The company pursued further international growth, now with the opening of new manufacturing facilities in Poland, Turkey, and South Africa in 1998. Yet in that year a downturn in worldwide demand for the companys core textile machinery products placed Rieter under pressure. While the company weathered the drop in orders, which picked up only toward the end of 1999, it began to formulate plans to protect itself further from such industrial cycles by extending its textile machinery expertise into the market for spare parts and service and at the same time broadening its range of textile systems to include nonwovens machinery manufacture and glass fiber twisting machinery. This latter goal was partly achieved in 2000 with the acquisition of Frances ICBT Group, the leader in its domestic market.

Rieters move into the spare parts market came in March 2001 when the company announced its agreement to acquire Germanys Suessen Groups textile machinery operations. That purchase, to be made in stages, transformed Rieter into the worlds leading supplier of spare parts and other components to the textile machinery market. By then, too, Rieter had boosted itself to the number two position in the global market for textile machinery, behind fellow Swiss firm Sulzer. At the same time, the company had staked out a prime position in its automotive components niche.

Principal Subsidiaries

Magee Rieter Automotive Systems (U.S.A.) ; Maschinenfabrik Rieter AG; Rieter Asia (Hong Kong) Ltd.; Rieter Asia (Taiwan) Ltd.; Rieter Automatik GmbH (Germany) ; Rieter Automotive Argentina SA (95%) ; Rieter Automotive Belgium NV; Rieter Automotive France SA; Rieter Automotive Germany GmbH; Rieter Automotive Great Britain Ltd.; Rieter Automotive Heatshields AG; Rieter Automotive North America, Inc. (U.S.A.) ; Rieter Automotive Systems AG; Rieter Componentes para Veiculos Lda. (Portugal; 87%) ; Rieter Corporation; Rieter Elitex a.s. (Czech Republic) ; Rieter ICBT; (U.S.A.) ; Rieter India Pvt. Ltd.; Rieter Italiana Sri; Rieter Management AG; Rieter-Ello Artefatos de Fibras Textis Ltda. (Brazil) ; Saifa-Keller SA (Spain; 49%) ; Rieter-Scragg Ltd (U.K.) .; Rieter Textile Systems; Schaltag AG; Temkom AG; UGN, Inc.

Principal Divisions

Rieter Textile Systems; Rieter Automotive Systems.

Principal Competitors

AGIV-AG für Industrie und Verkehrswesen; Collins & Aikman Corporation; Foamex International Inc.; Johnson Controls, Inc.; Lear Corporation; Saurer AG; Scholler Textil; Somet Weave Tech SpA; Speizman Industries, Inc.; Sulzer Ltd; Textron Inc.

Key Dates:

Johann Jacob Rieter begins trading business, with an emphasis on cotton.
Company begins production of textile machinery.
Company diversifies into industrial manufacturing.
Rieter returns to a focus on textile machinery.
Company introduces man-made fiber machinery.
Company reorganizes as Rieter Holding Ltd.
U.S.-based Globe Industries, an important supplier to the American automotive industry, is acquired for $160 million.
Rieter acquires the textile machinery operations of Germanys Suessen Group, and thereby becomes the worlds leading supplier of spare parts and other components to the textile machinery market.

Further Reading

Furrer, Alfred J., Rieters 200 Years: 17951995, Meilen: Association for Historical Research in Economics, 1995.

Isaacs, McAllister, III, Swiss Textile Suppliers Build on Tradition, Textile World, August 1, 1994, p. 36.

Rieter Buys Textile Machinery Activities from Suessen, Reuters, March 29, 2001.

Rieter Sees Tough 2001, Shares Steady, Reuters, April 11, 2001.

M. L. Cohen