DHR Ceo Larry Culp Discusses European Opportunities with FAZ, a Leading German Financial Newspaper

da. FRANKFURT, May 7. Not only the Anglo-American financial investors, denounced as a “plague of locusts” in Germany, have fallen in swarms over German companies in recent years: unnoticed by and large, the publicity-shy American industrial company Danaher has picked up a collection of some 20 Mit-telstand companies in Germany which together realize more than a billion in sales. Although virtually un-known under the name Danaher in this country, the group calls names known to industrial customers such as the environmental technology manufacturer Hach Lange or the optics manufacturer Leica Microsys-tems its own. And if Lawrence Culp, CEO of the company located in Washington, has his way, that will continue. “There are a number of companies we’d love to acquire here,” says the former corporate con-sultant.

Culp is currently conducting negotiations with a number of family operations. Among them are possible enhancements for the German companies which already belong to Danaher as well as new branches of business. “We won’t be making any announcements tomorrow. But we hope we will be able to do so later on this year.”

The group, almost unknown except to a few fund managers and industry insiders even in its homeland of America, much less in Germany, is frequently put in the same pigeon hole as investment funds. But the comparison rings true only to the extent that Danaher is an “acquisition machine”: over the last three years, the company, according to Culp, has purchased a billion dollars’ of revenues every year. Much as is the case for an investment company, a very small staff at headquarters has control over the operation. Fewer than 50 employees sitting in a rented office on the twelfth floor of a nondescript Washington glass office building control a corporate empire with a workforce of 40,000.

However, the assiduous acquisitions and the lean headquarters are just about all the company has in common with a financial investor. Above all, Danaher is an industrial outfitter listed in the Standard & Poor’s 500 and can point to annual turnover of almost $8 billion and a market capitalization of almost €20 billion. If to anyone at all, the industrial company is more similar to the conglomerate General Electric or the company belonging to the investment guru Warren Buffett, Berkshire Hathaway – with the difference that the shareholders of those companies have not enjoyed as good a return as the holders of the Danaher securities.

However, Culp, otherwise a quite affable fellow, reacts rather piqued to the word conglomerate. “We are not a conglomerate; we have a core business in three sectors and a clearly formulated strategy.” These three business fields are measurement and industrial technology, drive technology, and tools. In recent years, the company has achieved a breathtaking annual return of 31% in these three business fields, mak-ing Danaher one of the most successful American corporate groups.

The company was founded 22 years ago by the brothers Steve and Mitchell Rales. The avid fishermen, who named their company for a river in western Montana, still hold approximately 20% of the stock. They have refused to give any more interviews since an American finance magazine referred to them as “raid-ers in short pants” in the middle of the 1980s.

According to Culp, Danaher now owns more than 200 facilities in Europe, with 14,000 associates and sales of $2.5 billion. Culp invests in German companies because they are the market leaders in many sectors, have outstanding technologies and brand names, and their value can be increased further by additional acquisitions. Generally German Mittelstand companies shy away from acquisitions. For exam-ple, Danaher was able to strengthen the medical technology company KaVo Dental in Biberach within only one and a half years by adding three acquisitions.

Danaher’s largest new acquisition in Germany so far, the traditional Leica Microsystems in Wetzlar, and its 3300 employees are currently being trimmed into a highly efficient organization. The company is applying its own management method oriented to the Japanese model of “continuous improvement” (kaizen): the Danaher Business System (DBS). The Americans adapted this almost mystic method originally from the founder of the car manufacturer Toyota and other Japanese enterprises. “I myself spent a week at To-shiba assembling air conditioners.,” says Culp.

The objective of this method is permanent improvement of the company’s productivity. Instead of hiding away in a closet and planning improvements in efficiency, possible improvements are probed in a kind of “trial and error” method right in production – in material flow, for example, or for the routes between the assembly points. That is exactly what is going on now at Leica Microsystems, purchased from the British financial investor Permira, in both the headquarters in Wetzlar in the middle of Hesse with its staff of 520 and at the sites abroad. Danaher wants to help Leica achieve greater growth in the long term, which will also benefit the German headquarters, assures Culp. “In my opinion, the Leica headquarters will always remain in Wetzlar.”