ZF celebrates its 100th anniversary in 2015. Today the company is one of the largest and best-known automotive component suppliers in the world. ZF’s interesting history includes being originally founded to fill a specific need in a fledgling industry. Over the years it has had its highs and lows and at one point the company was put on a list to be shut down. But the company survived due in large part to the loyalty of its staff. Here is our attempt to recount the 100-year history and heritage of ZF. Where necessary, we will provide some background information to make it easier to understand some of the decisions in the early days.
Taking to the Air
In 1863, at the age of 25, Count Ferdinand von Zeppelin from the Wurttemberg Army was in the United States to observe the American Civil War. On August 19 of that year he had his first experience in a lighter-than-air balloon. Hot air balloons had been around since the Montgolfiers sent one up in 1783, but they were often tethered because they remained difficult to control. In 1886, Daimler introduced a lightweight gasoline engine that provided some promise in making lighter-than-air craft more controllable.
After retiring from the military, Count Zeppelin began developing his own lighter-than-air craft. The initial test flights took place in 1900. We need to bear in mind that the first flight of Wilber and Orville Wright was still a few years in the future and that lighter-than-air craft had been around for a long time. Unlike most of his predecessors, Zeppelin developed a rigid lightweight frame using a newly available metal called aluminum. One of his first crafts, the LZ 1, was 420 feet long and powered by two 14 –horsepower Daimler engines. In subsequent years, additional airships were built and improved.
When the LZ 4 was destroyed by fire during an emergency landing in 1908, it prompted public support and donations that expanded activities. Zeppelin founded a commercial transport company that carried more than 34,000 passengers between 1911 and 1914, proving the commercial viability of air travel.
However, during this same period it also became obvious that the fledgling aviation and automotive industries were hampered by the lack of component and parts suppliers. In those years there was no such thing as an auto parts store at the local mall. Those building aircraft or automobiles were typically forced to invent, design, patent and manufacture their own parts. This was an obvious and increasing problem in those years.
One of the biggest problems faced by Zeppelin was the transmission of power from the engines on the airships to the big, wooden propellers. Precision cog wheels were needed that were not then currently available. This situation was not helped when a move was made to diesel engines because diesel fuel was less of a fire hazard than gasoline around the hydrogen-filled airships.
The Birth of ZF
Count Zeppelin put Alfred Graf van Soden-Fraunhofen in charge of a new company to accomplish this. A member of the Bavarian nobility, Soden had previously worked for Daimler, had helped develop a diesel engine for M.A.N., and had managed testing for Zeppelin since 1910. It was Soden who pointed out the need for improved gears because of the high levels of noise and vibration in the existing transmission. He worked with Max Maag, a Swiss engineer who owned a machine tool factory in Zurich for the manufacture of cogwheels.
This resulted in the creation of a new company called Zahnradfabrik GmbH in Friedrichshafen, Germany on the north shore of Lake Constance that is also locally known as the Bodensee. It was essentially a subsidiary of Zeppelin’s primary company, Luftschiffbau Zeppelin GmbH with Max Maag also involved. One source gives the founding date as August 20, 1915 while another uses September 9, 1915 when the name was first entered at the local court. Zahnradfabrik, which roughly translates as “Gear Factory,” was the origin of the shorter ZF name. It is usually pronounced the European way as “Zed-Eff.” Soden would run the company as CEO for nearly 30 years.
The Soden Years
Equipped with 40 machines from Max Maag, Soden lost no time in working on gearing for airships and airplanes. By the end of the year, the staff had grown to 62, and by 1916 the company had already registered 10 patents. Count Zeppelin died on March 8, 1917, four days after major surgery. While this was a blow to the company, Soden moved ahead with both expansion and new products. In 1918 the company began making gears and transmissions for automobiles. By this time ZF had 190 machines and a staff of 261.
Essentially moving beyond state-of-the-art in technology, the company introduced the Soden semi-automatic transmission with a pre-selector lever. It was obviously way ahead of its time and did not become popular. Instead, the company found success with a more standard gearbox. Due in part to post-war inflation, Zahnradfabrik became a joint stock company on June 24, 1921 although much of the stock was still owned by Zeppelin interests.
Employment reached 600 in 1928. Still very much involved with airships, the company supplied components for the Graf Zeppelin that went on to transport 13,000 passengers on approximately 800 trips over the next nine years at a time when commercial airplane travel was still very much in its infancy. Europe and South America were now only three days apart by air and the Graf Zeppelin also made a trip around the world and to the Arctic. The Hindenburg disaster at Lakehurst, New Jersey in 1937 ended the era of airships at least temporarily but the company had diversified substantially by that time.
Along with many other industrial companies, production slowed down following the stock market crash of 1929. Soden’s answer was to expand into new technology and new products while also starting to develop production facilities at other locations in Germany. New technology included an automatic transmission with disk synchronizers in 1930. A license from Ross Gear & Tool Company in Indiana in 1932 brought the company into making steering gears. In 1933 the company expanded into truck transmissions and by 1934 the work force had grown to 1,700.
Surviving the War
The war years were the most difficult time for the company and it came perilously close to closing down. Alfred Graf von Soden-Fraunhofen, who had effectively put the company together in 1915, passed away in 1944. On August 3 of that same year most of the main facility at Friedrichshafen was destroyed in an air raid.
French military took over Friedrichshafen in April of 1945 and on June 6 some production resumed with traffic engineering and farm machinery. Field tractor transmissions and commercial vehicle transmissions were produced starting in 1946. ZF also developed a small runabout car known as the Champion in 1946. It became the only vehicle completely built by the company. At the end of 1946 the French military government decided to shut down Luftschiffbau Zeppelin GmbH, the majority shareholder of ZF, thus closing down the Zeppelin companies.
ZF management entered into difficult negotiations that allowed the company to resume operations. A group of 650 people began to clean up the debris and rebuild the factory in Friedrichshafen. It was soon back in operation making transmissions for trucks and tractors. Some of the other ZF facilities were also put back into operation including tractor engines at the Passau plant and steering mechanisms in Gemünd. The company was not removed from the “to be dismantled” list until August of 1948.
Troubles continued when the Zeppelin Foundation was dissolved as a private company in 1947. When Count Zeppelin had originally set up the company’s charter, he stipulated that if the company no longer promoted airship transportation, its assets would have to be turned over to Friedrichshafen’s city government. The city would be obliged to administer operations under the name “Zeppelin Foundation” and the income would be used for social and charitable purposes. Accordingly, the City of Friedrichshafen became the company’s new majority owner.
Technology, Diversification, Expansion and New Markets
Emerging from the problems of war and under new ownership, ZF seemed to take on a whole new personality on several fronts. Engineers worked hard to develop new technology and lead state-of-the-art developments. New product lines were developed and in numerous situations, companies with compatible product lines were acquired and brought into the ZF family. Production was expanded by both acquisition of existing facilities and building new ones. ZF also began to expand beyond Germany with both customers and facilities all over the world. As recently as 1951 only 6.5 percent of ZF’s sales were exported, meaning it was still essentially a local company at that time.
These new policies have served ZF well, expanding it to the world-class company it is today, and they continue with current management. It would be impossible to list all of this briefly but I will try my best to pick out some of the highlights that may be more important to our readers in these following years.
In 1949, ZF started production of disk clutches that were found to transmit high torque level in spite of their smaller size. The new Media transmission for cars, trucks and buses was introduced in 1951. A shift lever was provided for the driver, but a stepping motor was used to activate the steel disk clutches. The ZF work force reached a new high of 5,000 workers in 1952. In 1953, ZF again went beyond state-of-the-art by developing the first fully synchronized CV transmission in the world. Then, the company went on to develop heavy-duty synchronized transmissions for tractor, railcars and railbuses. A new Hydromedia transmission for city buses with a hydraulic torque converter was offered in 1954.
ZF expanded in the area of steering in 1956 with their spindle-type power steering that was well suited to buses. In 1957, ZF entered into an agreement with American Rockwell Standard Corporation for the licensed manufacturing and sale of axles. The late 1950s also saw the first Eagle buses for Continental Trailways built at the Kässbohrer plant in Ulm, Germany. ZF supplied the six-speed ZF-Media transmissions and the ZF-Gemmer steering system for these buses. ZF production started in Brazil in 1958 as the company began its expansion into a world-class operation.
The decade of the 1960s was a milestone for ZF since it celebrated 50 years in mid-decade. In 1963, ZF introduced their first fully automatic transmission for city buses, the “Busmatic” transmission. This was followed in 1965 by a fully automatic transmission for passenger cars with three forward speeds. It was soon offered in both Peugeot and BMW autos. In 1970, ZF provided the transmissions for the new BO 105 helicopter, the first helicopter to be developed in Germany.
Perhaps the most noteworthy events in the transportation industry in the 1970s were the two fuel crisis situations that happened both early and late in the decade. They prompted ZF to put more emphasis on fuel economy in future engineering and technology. Increased attention to the United States included an agreement with Borg-Warner of Illinois to establish a plant for making automobile automatic transmissions at Saarbrücken. Cooperative agreements with Sunstrand Corporation of Illinois followed in 1974. To commemorate its 60th anniversary in 1975, a new company logo was developed with the letters “ZF” in a white circle on a dark square. The new logo was registered in 1976.
The ZF-Ecomat automatic transmission for commercial vehicles entered volume production in 1977. It was a significant milestone because it was the first electronically-controlled transmission. It became popular for use in transit buses.
Expansion in North America and 75th Anniversary
Realizing that North America was accounting for an increasing volume of sales, a wholly-owned subsidiary called ZF of North America, Inc. was founded and opened for business in Northbrook, Illinois near Chicago on May 1, 1979. More and more ZF products were being used by North American bus operators because of increased importation of European buses in the mid-1980s. 1980 saw the opening of a Lemförder chassis components facility in Brewer, Maine.
In 1986, ZF opened its first production location in the United States under its own name. ZF Transmissions, Inc. began production of the Ecolite transmission in Gainesville, Georgia. ZF had previously acquired controlling interest in the Lemförder Group in 1984. In 1986, ZF expanded the facilities of Lemförder Corporation in Brewer, Maine to produce hydraulic pumps for Chrysler. As time went on, ZF components became more popular on American buses.
At the time when a substantial number of European coaches began coming to the United States in 1984, European coaches were still substantially stick shift. A major reason for this was the availability of higher quality ZF synchromesh transmissions including their long-throw six-speed. A synchromesh stick shift was never popular in the United States and Canada. ZF then developed its family of automatic electronic stick shift transmissions that improved fuel efficiency. Included in this family was the AS Tronic coach transmission seen in the United States,
ZF celebrated its 75th anniversary in 1990. Two years later, in 1992, the company name was officially changed to ZF Friedrichshafen AG. The early 1990s witnessed a recession and saw automakers drop production by as much as 30 percent. However, expanding sales in North America prompted the company to unite its various activities into a Regional Division North America. A proposed merger of ZF and U.S.-based Allison transmission at this time fell through with the lack of approval from the German and U.S. antitrust authorities.
Another development in the early 1990s was the introduction of the ZF-intarder, a wear-free transmission brake. This era saw ZF start production in Russia and China as well as take over a transmission factory from Mercedes-Benz. Coming full circle, ZF produced parts for a new airship in 1997. Known as the LZ N 07, it was launched on September 18 and incorporated substantial new technology.
ZF operations in North America continued to increase as more ZF components found their way into American vehicles. 1994 marked the start of production at the Lemförder Corporation in Hebron, Kentucky for rubber, metal and steering components and in Duncan, South Carolina for axle systems. Two years later, in 1996, ZF opened an axle assembly plant in Tuscaloosa, Alabama. In 1997, North American activities were integrated into the newly founded ZF Group North American operations.
The new ZF Technical Center in Northville, Michigan opened in 2000. In 2005 the Northville facility was expanded into a Regional Headquarters and an expanded Technical Center that consolidated all automotive research and development activities in North America. That same year saw ZF Lemförder open a new facility in Newton, North Carolina.
In 1999 the steering systems division was made separate and became the new ZF Lenksysteme GmbH, an independent joint venture between ZF Friedrichshafen AG and Robert Bosch GmbH. This signaled the fact that the new steering components combined both mechanical and electrical systems. By the turn of the century in 2000, ZF was an integral partner in the global auto industry and was rated as the 15th largest auto industry supplier in the world. However, it continued to deal with changing market conditions and the ups and downs of vehicle production from year to year. Additional expansion and acquisitions since then have pushed ZF much further up the ladder.
A New Century and Increasing Electronics
Arrival of the new century in 2000 marked the 85th anniversary of ZF and an increased movement towards electronic technology. ZF started out as a state-of-the art machine shop to produce highly specialized gears. However, as the years went on ZF began incorporating more and more electronic technology into its components. ZF’s first electronically controlled transmission dated back to 1977 and electronics played an increasingly important part in steering and other components. Programs that controlled the electronic stick shift transmissions were an important part in improving fuel economy.
October of 2001 marked the largest acquisition in the company’s history so far when ZF purchased four divisions of its second-largest supplier, Mannesmann Sachs AG, from Siemens Group in Germany. One source estimated the deal at 1.3 billion Euros. This acquisition made ZF the third-largest automotive vender in Germany and moved it higher on an international basis.
Showing an obvious connection between electronics and vehicle components, ZF acquired the Cherry Corporation in 2008. Originally founded by Walter Cherry in Highland Park, Illinois in 1953, the company began manufacturing computer keyboards in 1967 and subsequently developed a wide range of products including sensors, input devices and electronic automobile modules. Company headquarters were moved to Germany in 1979 and additional offices are located at numerous locations around the world. After acquisition, it became known as the ZF Electronics GmbH Corporate Division.
In 2013, ZF operated in 26 countries with 122 production facilities and about 72,600 employees. It had annual sales of about 16.8 billion Euros (about $20 billion).
The latest and largest acquisition to date, and easily one of the most important came in September of 2014 when it was announced that ZF Friedrichshafen AG would acquire TRW Automotive Holdings Corp. of Livonia, Michigan with a stock purchase valued at approximately $13.5 billion.
TRW is best known for its integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems, electronics, engine components, testing systems and aftermarket replacement parts and services. TRW and its subsidiaries operate in 24 countries and employ approximately 65,000 people worldwide.
While there are several places where ZF and TRW technology and components complement each other, the most important may be in the areas of collision-avoidance technology and autonomous driving. This is expected to be a huge business in the future with one source estimating more than 20 million units by 2030. The ZF/TRW merger brings the company into this competitive market that had been dominated by only a very few giant companies able to afford the necessary huge research and engineering costs. Last year ZF and TRW combined spent more than $2 billion on research and development.
Some of this new technology is already being demonstrated. For example, one of the more impressive exhibits at the ZF Global Press Conference in Aachen, Germany in July of 2014 was the ZF Innovation truck. This truck tractor with both a semitrailer and an additional trailer was able to park itself where desired by a driver standing on the ground using an electronic tablet. For details see the October, 2014 issue of National Bus Trader.
What will ZF look like following the absorption of TRW? Here are the best estimates we can find. The new ZF will become the second-largest automotive supplier in the world, behind Bosch. Estimates are that annual sales will reach $40.6 billion with a net income of $1.6 billion and an annual investment in research and development of $2.1 billion.
Primary products will include transmissions, chassis systems including axles, steering, brakes, airbags, sensors and electronics. There will be a total of approximately 138,000 employees following the merger. Production contracts are already in hand to supply basic collision avoidance and driverless technology systems for some 2016 vehicles. After that, the company is already working on technology that would allow a driverless vehicle to change lanes.
We do not have post-TRW estimates for ZF’s North American Region, but we do know that sales have increased substantially recently due to increasing North American sales and ZF’s continued investment in the area. This includes the recent $350 million investment in a new transmission facility in Gray Court, South Carolina that will provide more than 1,200 jobs.
Pre-TRW figures indicate that the North American Region generates 18 percent of ZF’s sales. There are a total of 22 locations with 16 in the United States and six in Mexico. At last count the North American Region had 7,336 employees and annual sales in 2012 of $3.67 billion. All of these North American numbers will obviously increase upward once TRW is merged into ZF.
ZF has an attractive on-line anniversary Web site at http://www.zf.com/100years. In addition to being very nicely done it offers a list of developments, technology, products and innovation on a year-by-year basis.
Various ZF offices and facilities have their own anniversary events scheduled that will vary by location. Expectedly, the main events will take place at the company’s birthplace and corporate offices in Friedrichshafen, Germany.
A huge festival is scheduled for ZF employees and their families on July 4, 2015. It will appropriately take place in front of the Zeppelin hangar in Friedrichshafen to commemorate the origin of the company. Entertainment will include a band and other celebrities. A more formal event is planned for September 9, 2015, to commemorate the entering of the company’s name into the district court records exactly 100 years previously.
Plans also include a company history in the ZF forum. Space for both permanent and changing historical exhibits will be provided at the new corporate headquarters in Friedrichshafen and they will be open to the public.
As ZF completed its first 100 years, we look forward to watching where all of this new technology and engineering will take the company in the years ahead. While collision avoidance systems are already here, we have to wonder how far or even how soon autonomous driving will show up in autos or even in buses.