Deep in the heart of alpine Switzerland, a family-owned engineering company makes small electric motors which are renowned all over the world for their technological innovation, quality and durability in even the most extreme conditions.
Despite being a small country, Switzerland has long been noted for the excellence of its engineering manufacturers, which include global powerhouses such as ABB, Schindler and Georg Fischer. Less well-known outside their industries are a host of small and medium-sized Swiss companies, many of which are world-leaders in their sectors. Typical of these smaller engineering businesses is Maxon Motor, whose high precision drive systems power appliances such as medical prostheses, robot vacuum cleaners and NASA’s rovers exploring the surface of Mars.
The company was created in 1961 by Braun, the German consumer electrical company, to produce the shaving foils for its famous electric razors. Soon after, a separate development department was set up to make niche electromechanical devices which became its main focus after the sale of Braun to Gillette of the US in 1967. It launched a series of innovative products, including much more efficient motors, smaller motors for pocket calculators, video and cassette devices, and miniature devices— including the smallest and strongest positioning motor in the world with a diameter of just 4mm.
Since its foundation, Maxon Motor has been headquartered in Sachseln, a village of around 5,000 inhabitants in the picturesque canton of Obwalden—one of the forest cantons behind the founding of the Swiss Confederation in 1291. Today it employs more than 2,000 people; half in Sachseln and the remainder at German, Hungarian and Korean plants. Its revenue in 2012 was CHF360 million and it invests around 10 per cent of its total revenue in research and development. It exports 80 per cent of its products, with sales in every relevant market in the world.
The company is 100 per cent owned by the family of Dr Karl-Walter Braun, grandson of Max Braun, who founded Braun in 1921. Karl-Walter represents the family on the Maxon Motor board, whose membership also includes Dr Bianca Braun, Karl-Walter’s daughter and Max Braun’s great granddaughter. Currently Maxon’s Head of Internal Audit (and nine months pregnant), she wrote her doctoral thesis on what makes leading family businesses more successful than companies listed on stock exchanges. Understandably, therefore, she attributes her own company’s success to its family ownership.
‘We are prudent and long-term in our approach, and we do not spend more than we have—our growth is completely financed in-house. Since my father and I come from the commercial side of the business, we employ non-family members in management and engineering roles, with long-term profit-sharing schemes. And although we have a long-term strategy, we can take decisions very quickly, sometimes in our headquarters but also on occasions, over a good dinner or a weekend.’
Maxon’s capabilities were amply demonstrated in 1997, when NASA sent the Pathfinder probe to Mars. It carried the Sojourner robotic vehicle to explore the surface—driven by eleven of the company’s motors. Two further rovers landed on the red planet in 2004, each with 39 Maxon drives powering the robot arms, control mechanism, camera, stone-borer and wheels. The devices had to cope with temperatures that fluctuated from –120oC to +25oC, as well as tremors and the unique atmosphere.
Today, motors for medical technology appliances account for half the business, with the other half in industrial automation, consumer applications and—increasingly—aerospace. The company’s medical division was launched in 2007, and produces high-precision drives for appliances such as insulin pumps, prosthetic limbs and surgical robots. Its motors power a hospital bed transfer device that helps even the smallest nurse to move a heavy patient from one bed to another, as well as respiration therapy equipment for patients with sleep disorders.
The industrial automation and robotics division powers underwater robots and robotic rescue equipment which operates in disasters that are too dangerous for humans. Products for consumer appliances include model airplanes and trains, motorised golf caddies and electronic power shifts for sports bicycles. And in aerospace, the company supplies the new Boeing Dreamliner with equipment powering everything from the air-conditioning and toilet flushes to new seats in First and Business classes which tailor themselves to the passengers’ shape.
‘We produce about 5 million motors a year in 14,000 different models,’ says Bianca Braun. ‘Many of our competitors mass-produce millions of motors a day for a couple of cents each. But we are really in the high-quality business, producing tailor-made motors for applications that can be up to six years in development—particularly in aerospace. The clients often require very small batches, so we need to be adaptable and flexible to supply them.
‘Our motors are used in all sorts of fancy products, many with a science fiction feel: humanoid robots, where we have 80 per cent of the market; Formula 1 racing cars; rotary tattoo machines; and devices digging on the seabed. New requests come in all the time and we produce new models almost every week. When NASA selected us, we didn’t know where the request had come from—we were just intrigued by the specifications which were very specific and looked interesting!’
Bianca Braun’s decision to join the company seemed the natural thing to do, she says—her father had always told her interesting stories about it. During her studies at the prestigious University of St Gallen, she had done lots of internships at Maxon, including at many of its sister companies in the US. And now she works closely with her father who travels a lot, spending more than half the year abroad meeting clients, and visiting the company’s production sites and trade fairs.
She describes Maxon is a ‘true Swiss company’, which benefits from the country’s reservoir of skilled engineers. The Swiss Federal Institute of Technology (ETH) in Zürich and the École Polytechnique Fédérale de Lausanne are in the premier league of the world’s universities for engineering and technology, but there are many other contenders behind them. Switzerland’s dual education system also turns out skilled workers as well as graduates. But the company’s growth has been such it could not recruit enough—despite being number six in the top 100 Swiss engineering companies in 2012.
‘We have 200 engineers in Sachseln where the beautiful mountains and lakes and the high quality of life give us a distinct advantage. But it is not to everyone’s taste: many people prefer to live in a city, and our plants in countries such as Hungary and Korea can recruit the staff we need to fill the gap. And that creates internal competition between our plants, which is positive for performance.’
Producing abroad also helps in coping with the high exchange rate of the Swiss franc, an issue for many of the country’s manufacturers. ‘Our main competitor from Germany has the advantage of the euro, and is much less expensive for similar quality products. But our production sites in Germany, Hungary and Korea have helped reduce costs and, although further afield, we can reach them easily and manage them much better than if we moved production to China.’
There are, of course, many challenges, including the increasingly complex nature of the sector, shorter technology cycles and the decreasing visibility of future orders as companies give shorter notice than before. Raw materials such as the rare earths needed for the company’s magnets have risen sharply in price in recent years. Regulation is also an issue in sectors such as medical technology where there are more and more fences to jump in order to demonstrate that the company is compliant with the latest standards—some projects may never take off if approval is denied.
And like many companies, Maxon Motor was hit by the 2009 global recession following the financial crisis. However, the fall in revenue at 16 per cent was less than feared because of the company’s diversification and the importance of the projects it was supplying. And while sales in Europe continue to stagnate outside Germany where half the company’s sales go, Asian markets such as Korea and Japan have been growing again.
‘When the recession hit, we helped ourselves with shorter working times,’ says Bianca Braun. ‘Now I am glad to say that we have a full pipeline of orders. And it is great to see how our people can always use their expertise to launch new products and processes at any time. It’s almost like building a new company within the company—we are always reinventing ourselves.’