Norbert Reithofer: “My family has always been my counterbalance.”
How does a student of Mechanical Engineering with a degree from a university of applied sciences become one of Germany’s most important and respected managers? Straight after his doctorate, Alumni Norbert Reithofer entered BMW in a management position and learnt leadership virtually ‘on the job’. As the Chairman of the Executive Board he survived the effects of the global economic crisis and advocated for more sustainability in the globally operating car manufacturer. Today, as the Chairman of the Supervisory Board, he still has strong visions for the corporation and the mobility of the future. The manager on his education at TUM; his career at one of the most important car manufacturers worldwide and on dealing with large responsibility.
Dr. Reithofer, how do you become Chairman of the Executive Board?
One does not simply become Chairman of the Executive Board, one gets appointed.
What do you mean?
The Supervisory Board decides on who should be made Chairman of the Board. The position is being offered to you. Then you can accept or reject it.
In 2009, have you considered saying no?
That did not cross my mind. At that point I had already worked successfully for BMW for 19 years, on three different continents. Without that experience, the chairman position had not been offered to me at all.
When you walked out of the University of Applied Sciences in Munich with your engineering diploma in 1978 you probably did not expect to be reaching the top level one day. How come you did not start working straight away but instead added another diploma program at TUM?
I was 22 years old, so rather young for entering professional life. Also, it was four of us studying, three classmates of mine and me, and we decided together to go to TUM. For us it was a gleaming ideal. And I am not just saying that because I am doing an interview with its alumni magazine. TUM stood for quality scientific education and extremely strong theoretical foundations. We had calculated to be around 26 or 27 by the time we were done with our studies, and it seemed alright to wait with work till then.
At TUM you have specialised in Production Engineering and Industrial Management.
The main institute behind this specialisation was the Institute for Machine Tools and Industrial Management, the prestigious iwb. The iwb had published a job offer for a junior research assistant.
By the way, the institute’s professor was Joachim Milberg, who later became BMW’s Chairman of the Supervisory Board. Like that I got into iwb as a student already and kept working there as an assistant until my diploma.
After your diploma you stayed at the iwb as a research assistant and worked on your doctorate.
Yes, it dealt with reliability of complex production facilities. What was extremely interesting at the iwb was that we really had a lot of colleagues with very diverse skills. One of my colleagues, for example, was brilliant in programming process computers. Then I had other colleagues who dealt with linking CAD (computer-aided design) to CAM systems (computer- aided manufacturing) for the first time. As a result many of us learnt to program the machine tools ourselves. And on the side, in addition to our research assignments, we worked on industry projects, which allowed us to gain a lot of further experience. This turned out to be an advantage when I joined BMW. My first position was in the maintenance department and the people were gobsmacked when I walked over to a Max Müller Machine and ran my fingers over it and the machine did what I wanted.
Did the connection to BMW result from the industry projects at iwb?
Because we wanted to find out how frequently complex systems fail and for which reasons, we intensively collected data in a variety of companies. In the course of that I had met a BMW division manager during my doctorate. One day he said to me: “If you ever want a job, give me a call.” In fact he got in touch first and told me he would also take me without a doctorate, almost right away and straight as a graduate engineer.
Did you accept the offer?
Fortunately this was only six months before submitting my doctoral thesis. The topic of my dissertation topic was so topical that I had the chance to become Head of Department straight after finishing uni. It was the Maintenance Planning Department, which dealt with availability. In this respect the knowledge gained at TUM accompanied me for a long time.
So already in your first job you had a lot of responsibility. Were you prepared for that?
None of us had any management experience. We had to learn it. My advantage was: I came from the university with the latest knowledge. But first I had to assert myself and learn how to lead. Already back then BMW had a very good management training program. It taught us which different roles we had to take on, in order to be good leaders. You have to be an expert and key player at the same time.
And that was helpful?
It made the start easier but there was another crucial thing: two years later, so still fairly soon after my doctorate, I had taken over the Control Technologies and Process Data Management Department. I told my boss back then that I had no idea about Data Processing, that I was a mechanical engineer. He was very calm and told me: “Well Mr Reithofer, then management is your only option. You might not know anything about the subject, but you have highly qualified people.” My department was full of excellent computer scientists and electrical engineers and from now on I was able to rely on the technical expertise of these people. This worked wonderfully. And that is how I learnt leadership.
Have you ever thought about staying at the university after your doctorate?
No, not after my dissertation. There may have been one or two moments in my life in which I have toyed with the idea of becoming a professor. But not right after earning my doctorate. I was one of the few doctorates who came to BMW and started to work in a production plant. Almost all the others joined the Research and Innovation Centre. I have been asked a lot why I opted for production, even though I had worked in research for three years. But it always felt right to me.
If you want to get to know a business, the best way to do it is in production. Here, you fairly quickly get to the point to being allowed to manage large numbers of people. In 1991, I had just turned 35, I was managing the Body-in-White Division with 2,300 people. Here people determined: “Ok, apparently this one is able to manage a lot of people.” And suddenly the CEO approaches you and says: “I realised you are able to do this. We are sending you to South Africa now.” And this is how such things happen. Not with a plan, like many people think.
You have managed two international plants. You have been the Technical Director of BMW South Africa and President of BMW Manufacturing Corporation in the USA.
South Africa has left a big mark on me. It was the first time that I really got out of Germany. I was born and raised in Penzberg, went to university in Munich and suddenly I was thousands of kilometres away. Being so far away, you are forced to make decisions by yourself. You can’t call Germany all the time and ask for advice. Otherwise your supervisors might think they have sent down the wrong guy.
What kind of decisions were these?
I went to South Africa in 1994. That was the year Nelson Mandela became President and South Africa opened up politically. BMW wanted to export cars from South Africa to Australia, New Zealand, Japan and the US. As the Technical Director it was my job to prepare the plant for these exports. Previously the cars were only produced for the local market, and suddenly an export-oriented plant was supposed to be developed. The factory had to be modified drastically and led into the modern age. We successfully managed to do that.
Was there something or someone encouraging you along the way?
You should know, I have always been a rather stubborn person. My stubbornness has probably often helped me to assert myself. What is more is that we were all impressed with Nelson Mandela, he was a huge role model for us. We admired this man’s courage and wanted to contribute to this country’s development in a reasonable direction. Furthermore, BMW as an employer served as an example in South Africa.
You moved straight to the USA from South Africa. Did you bring your family along everywhere?
Yes, my daughter was even born in South Africa. My wife and I had made the decision to go abroad, to seize this opportunity, together very rationally. For us, it was what made most sense economically. Even though it meant that my wife unfortunately was not able to work because she did not have a work permit.
In 2000 you returned to Munich and became a member of the Board of Management of BMW AG Production, from 2006 onwards you were the Chairman of the Board of Management. Two years later was the year of the global economic crisis, which hit the automotive industry hard. How was that for you?
Nobody had experienced this before. We had to completely readjust to the situation that, within three months, our profits were gone. And this is how it was for two years. Imagine you have never been faced with such a scenario and then have to go to the staff meeting, for example in Dingolfing. 6,000 people look at you and expect a plan. Three months later you go to the annual general meeting. All the shareholders are there and look at you in the same way and wonder: “Is he going to get the company through that?”
How did you deal with this situation privately?
Honestly: in a situation like 2008/2009, also 2010, you live almost entirely for the company. You barely exist as a private person anymore.
Was there anything that nonetheless served as a counterbalance?
I passionately ski, enjoy going to the mountains in summer. Meditation is a hobby of mine. And my family has always been a counterbalance for me. Thankfully, I have a wife who has always understood that.
You have been working for BMW for more than 30 years: how dear has the company grown to you by now?
BMW has enabled me to have an outstanding career, I have learnt more than I had ever imagined. But as CEO and Chairman of the Supervisory Board alike, one has to always be able to look at the company strategically, not emotionally.
What do you mean?
Instead of letting present-day market successes influence me, I have to develop a strategy which will allow the company to prevail in the future. An example: in 1974 the young Kodak engineer Steve Sasson built the world’s first digital camera. But the camera did not go into production yet because Kodak preferred to keep selling its valuable Kodak film for another couple of years. We all know the end of the story. In 2012 the corporation had to file for insolvency.
How is that related to the automotive industry?
In the role of Chairman of the Supervisory Board I have initiated a strategic process in 2007. I wanted to open the question on how the environment is going to change for car manufacturers in the future. 70 to 80 percent of the people are going to live in urban centres, in the greater areas around London, Paris and New York or in the Asian mega cities. The average speed on the roads will be around 15 kilometres per hour.
Today, BMW is famous for building dynamic sports sedans.
And we are at the top of this market segment. Yet, looking into the future has shown us that it makes sense to invest into the development of electric cars. It is pointless to narrow-mindedly hold on to past successes just as a matter of principle. Hence, we have launched our electro mobility project and developed the models ‘i3’ and ‘i8’. The necessary decision was made well before there was any public discussion on electric cars – driven by aforementioned strategic process.
So BMW will soon not build combustion engine cars anymore?
No, that is not how it works. If you want to move a company to a new technology – here I mention the buzzwords electrification, networking, digitalisation – this is going to cost copious amounts of money. And first of all this money has to be generated. Accordingly, if we set goals today regarding the development of electric cars until 2025 or 2030, we have to keep building diesel vehicles and cars with petrol engines until then, in order to get there at all. I was taught at TUM to be reasonable and rational, so I can’t just ignore this point.
You are a very strategically and economically thinking person.
Yes, I have to be. During my studies at TUM I had a lecture called ‘Management for Engineers’. It was given by an external lecturer. He was Chairman of the Supervisory Board of a medium-sized company. He said an incredibly important sentence, which is still with me today: “The more a business is growing, the broader it must view its stakeholders.”
What does that mean?
Everyone who has an interest in the company is a stakeholder: the state, to which the company is paying taxes, the employees, who work for the company and of course, the customers. If you act with gross negligence towards one of the stakeholders, it can have a major impact on the business’ profits.
So have you already learnt to think economically at TUM?
Yes, even today I am still looking things up in my lecture notes occasionally.
Really? They still exist?
Yes, they are marked all over with a highlighter (laughs). It really was a very good lecture. I personally owe a lot to TUM and tell all the students: “You have made the right choice. Use it.”
Dr. Norbert Reithofer
Diploma Mechanical Engineering 1984, Doctorate 1987
Norbert Reithofer grew up in Penzberg in Upper Bavaria. Following his subject-specific university entrance qualification, he enrolled in Mechanical Engineering at the University of Applied Sciences in Munich. Subsequently he studied Mechanical Engineering at TUM with a specialisation in Production Engineering and Industrial Management. Until 1987 he was a research assistant at the prestigious Institute for Machine Tools and Industrial Management (iwb) at TUM, where he also did his doctorate. Afterwards Norbert Reithofer joined BMW as Head of Maintenance Planning and immediately took on management responsibilities. Following further positions of responsibility at the branch in Munich, he became the Technical Director of the BMW plant in South Africa in 1994, whose business concept he successfully realigned. Between 1997 and 2000, Norbert Reithofer has been President of the BMW Manufacturing Corporation in South Carolina, USA. The TUM Alumni returned to Munich as a Member of the Board of Management of BMW AG Production in 2000 and was appointed Chairman of the Board of Management of BMW AG in 2006. Since May 2015 he is keeping a watchful eye on the corporation, which has been his professional home for more that 30 years, as Chairman of the Supervisory Board. Norbert Reithofer has been awarded the Bavarian Order of Merit and was a member of the TUM Board of Trustees from 2007 until 2015. He is married and has an adult daughter.