Germany has found a new way to celebrate its "Mittelstand" – its tradition of largely family-owned, not-so-small companies – and take a swipe at "casino capitalism" at the same time.
Handelsblatt, the flagship newspaper of the family-owned Holtzbrinck publishing group, last week celebrated its second annual induction into the family business Hall of Fame, naming banker Friedrich von Metzler and industrialist Heinrich Weiss to a virtual pantheon of German family entrepreneurs.
Von Metzler, 66, is the 11th generation to run the family bank (contrast with the current Rothschild generation involved in banking, which is "only" the 7th). The Metzler bank is small, but has the distinction of being the oldest private bank in Germany having been in continuous family ownership since it was founded in 1674.
Its influence outstrips its size because much of its activity – underwriting and asset management – is not reflected in the balance sheet. Von Metzler previously served as chairman of the Frankfurt Stock Exchange in the 1980s and 1990s, when floor trading still flourished.
After training in a number of foreign financial institutions, Von Metzler and his cousin, Christoph von Metzler, who died prematurely in 1993 at age 52, designed a strategy for the Frankfurt-based bank to remain lean and nimble, forging partnerships in Europe and the US.
Von Metzler eventually decided to get out of the loan business altogether because the private bank could not compete with commercial banks and their cheap funding from retail deposits. "My father always told me: you have to reflect every day whether business is going in the right direction," Von Metzler said in an interview with Handelsblatt,
The family met with tragedy when Von Metzler's 11-year-old son Jakob was kidnapped and later killed in 2002. It is now his nephew, Leonhardt, who is first in line to carry on the family tradition at the bank while his younger children pursue their education.
The other family business tycoon to be admitted into the Hall of Fame was Heinrich Weiss. He served as head of the family-owned machine-maker and plant contractor SMS Group, an archetypal German manufacturer. The fourth generation to run the Duesseldorf-based company, Weiss took over at the tender age of 29 and grew the group from just 120 million marks (about €60 million) to a €3.6 billion business.
Clearly a new generation, the young Weiss put a fire-engine red sofa in his office and drove his Porsche fast on the weekend. He was adept at running a company and later at doing deals to make it bigger. "I wanted to build something up and not just manage what I inherited," Weiss told the Handelsblatt newspaper.
Weiss became one of the country's most prominent industrialists and eventually reached the influential post of chairman of the Federal Association of German Industry (BDI), the main industry lobby.
The two family leaders were honoured earlier this month at a dinner in Munich's Charles Hotel. The ceremony also saw some deceased titans of German industry designated as "Icons". The honourees this year, represented by family members, were Melita Benz, Carl Zeiss, Carl von Linde and Albert Boehringer – whose names speak largely for themselves.
Berthold Leibinger, also in the machinery industry, and Martin Herrenknecht, head of a family firm specialised in tunnel construction, were the first two family leaders to be inducted into the Hall of Fame last year.
The newspaper endowed the award with semi-official status by getting Economics Minister Rainer Bruederle to serve as honorary chairman. For this year's induction ceremony, Bruederle said family-owned companies were important to Germany not only because they employ two-thirds of the workforce but because of the values they represent in the country's economic life.
"They think generations ahead," Bruederle said. "Sustainable business practices mark their operations. In this way, they maintain a great trust with respect to their workers and with respect to their location."
Holzbrinck is not a disinterested observer. The second-generation, family-owned publishing company, which began in 1948 as a book club and has made billionaires of the founder's heirs, has expanded abroad with significant book publishing operations in the UK and US.
Part of the success of the families inducted into the Hall of Fame is their unwavering commitment to growing the business, not simply growing their own personal wealth. Von Metzler says he takes out enough money to have a comfortable and secure life for his family, but nothing extravagant. Weiss says SMS pays a 10% dividend and leaves the rest of the profit in the firm as equity.
In the wake of the greed exposed by the financial crisis, both Bruederle and Handelsblatt applaud the Hall of Fame laureates and the family business model for its longevity and value focus that always puts wealth preservation and the future of the firm ahead of personal gain.
Picture copyright Andy Goral