[Leica] The Economics of Leica

[msmall at infionline.net (Marc James Small)]

At 08:26 AM 4/25/05 -0700, Stephen Gandy wrote:

>I believe Leica's real troubled started when the Leitz family sold Leica
>decades ago, giving control of the company to bean counters who never
>completely understood Leica's products or Leica's devoted customers.


Well, the problem here is that the Leitz family HAD to sell the Leitz
Wetzlar concern.  They had taken profits from the company for eighty years
but had lost money from 1940 to the early 1970's and the family money was
gone.  That is, they subsidized the firm as long as they were able but, in
the end, broke was broke.

We will never know the details as the Leitz family never released the
information, but it seems certain that, despite some profitable years
during the immediate Post-war years due to the USAAFES (US military PX
system) contract, they reinvested any profit so made for the retooling
necessary for the transition to the M cameras, originally planned for 1940
but postponed due to the War.  And the M, successful as it was, was simply
battered by superior marketing and customer sensitivity by the Japanese
camera companies in its primary markets.  The US had been compromised by
the early 1960's and sales in Germany itself, the prime Leitz market, were
slipping badly to the Japanese by the late 1960's.  

The Leitz family floundered badly through that decade, as did the Franke
and Heidecke families, the Zeiss Foundation, and so many other German
concerns.  In the end, all decided to cut their losses in one way or the
other:  after all, loyalty to workers and customers is one thing, but
loyalty to a small remaining family endowment is another.  (Those
interested might want to study the family-owned British car firms of that
same era, several of which were forced into near-liquidation by misplaced
loyalties to aging workers and padded payrolls:  think of the first Baron
Rootes wandering through the Sunbeam plant and thanking these
septuagenerians for staying with him so long, while his finances collapsed
around him.  Fortunately for the family fortune, he died and his younger
brother and son conspired to dump the concern on to a true patsy, Chrysler,
but that is a tale for a different day.)

The Leitz family went the extra mile for their people and deserve huge
credit for this but the sale was in response to simple economic realities,
caused in part by incompetent Teutonic marketing and in part by an
inability to judge a world market from Germany.  Had the family walked out
in, say, 1948, they would be far wealthier today.

Marc

msmall@aya.yale.edu 
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