The company was founded in 1849 by Carl Johann Freudenberg, the son of a wine merchant, and his partner, Heinrich Christoph Heintze; the two took over a tannery at Weinheim. For the next 80 years, the company produced leather products exclusively. Hurt by the worldwide economic depression that began in 1929, and by shortages during World War II, it diversified into seals for motors made first of leather and later of artificial rubber, which led to fabrics and to cleaning fabrics and tools when it was noted that the company's cleaning ladies were using discarded scraps of the experimental fabrics. Vileda window-cleaning cloths were first marketed in 1948. In the mid-1990s the company reorganized with a "highly decentralized organizational structure": it has 16 divisions or areas of business incorporating 430 independent units. Three-quarters of its business is as a supplier to other companies. In 2004 Freudenberg had employees in 43 countries. Recently it has focused attention on markets in China and Japan; for example, it provided the floor coverings for the Shanghai Metro stations. In 2002 the company closed its last leather tannery, marking the effective end of the leather industry in Germany. However, today Vileda is a market leader in Europe. All German cars contain parts made by another Freudenberg subsidiary, and German-made outdoor clothing contains fibers made by yet another. Almost all major airports have flooring made by another Freudenberg subsidiary. In 2004, Freudenberg Group made an initial entry into the global medical market with the creation of Freudenberg Medical EN. In 2015 the group was a 7,5 billion euro business with more than 40,000 employees, approximately 11,000 in Germany. Revenues rose from 7 billion euros in 2014 to 7.572 billion in 2015.
Ownership and philosophy
Freudenberg remains a family-owned private company, structured as a Kommanditgesellschaft jointly held by descendants of the founder. Stock cannot be sold to non-family members and must be surrendered by in-laws upon divorce. No stockholder holds more than 2% ownership. An annual three-day General Meeting elects the Board of Partners, which consists of 7 to 13 members of whom the majority must be Freudenberg family members. The divisions are managed by a Management Board, who need not be family members. Stockholders receive a semi-annual family newsletter and have access to an owners' intranet. A select few are on the Wine Commission, which oversees the private Freudenberg vineyards. These vineyards are the largest in the Bergstraße region, producing 60,000 bottles of wine annually. Wolfram Freudenberg, a fifth-generation family member who formerly headed the Stuttgart Stock Exchange, was Chairman of the Board of Partners from 2005 to 2014, succeeding Reinhart Freudenberg, who stepped down for reasons of age. In 2014 he was succeeded by Martin Wentzler, also a fifth-generation family member. The spokesperson of the Management Board is Mohsen Sohi; his predecessor, Peter Bettermann, formerly head of German BP, in 1997 became the first non-family member to run the company. In the late 1930s, the company developed operating principles that include broad diversification in both products and markets, spreading of risk, long-term thinking and the maintenance of an equity ratio of at least 40%, and avoidance of large acquisitions while favoring small ones. The company would rather acquire "a handful of interesting smaller enterprises" every year than a large company that might endanger the company philosophy. In each area of activity, the company operates only where it can be first or second in the market; for example, it sells motor seals worldwide but Vileda mops mostly in Europe.
