Leica CEO Steven Lee

Lee’s career includes an MBA, technical and financial roles at IBM and finally building a whole PC unit from scratch for Best Buy, the US consumer electronics e-tailer, making him something of a supply chain expert. He is a long-standing Leica collector and photographer and exudes an infectious sense of humour and ability. Kaufmann, on the other hand, is innately acquainted with the German-speaking world and its ways, especially in the highly specialised world of optics.

But for Kaufmann, and before him Hermès International, Leica would surely have gone into liquidation in 2004-5. Instead, Kaufmann recapitalised the company and kept up the R&D budget.

This brings Kaufmann straight to the value of family-controlled, private businesses. “In a private company I can decide to have two years of no earnings because I am doing the right thing for the future,” he says. Clearly, Leica’s days as a public company are numbered.

Kaufmann also rejects the description of him as a private equity specialist, at least of the “locust” variety. He reminds me that Leica, formerly Leitz Camera, was a private, family concern from its 1849 origin to its flotation in 1996. Meanwhile, his ancestors built up the Frantschach fortune through more than a century of family control and private ownership.

Outlining his immediate priorities for Leica, Kaufmann says: “Great products, a safe working environment – meaning that employees should not fear for their job security – and growth, all made in Germany. We are at the top of the market, but only as long as the customer pays for our product. If they don’t pay for it, we’ll need to start doing something differently.”

Lee lists what he calls the five vectors: “Products, customers, markets, brands, channels.” He says: “The priority is to deliver results for the current year and to reinforce our heritage – get Leica back on its feet, maybe something retro. Then we’ll use the proceeds to go into the five vectors.

“We have a lot to do,” Lee continues. “We have a full schedule – wait two or three years and you’ll see.” Kaufmann interjects with a chuckle: “The short term is terrible, with the EBITDA and all that!”

Kaufmann is referring to the €4.5m loss Leica made in the 2005-6 financial year that ended last March, and the similar loss the company will likely incur this year.

Hermès sold its stake to Kaufmann last September, raising the difficult question of whether Leica is a luxury goods company or an engineering company with a highly desirable product.

The answer is both, of course – a bit like Porsche, with the Leica M camera being its 911 and digital technology the equivalent of Porsche’s decision to ditch air cooling for water cooling in the mid-1990s.

The car talk expands to fill the air, and Kaufmann notes that the decision to shorten the company name from Leitz Camera to Leica in 1924 was the equivalent of Porsche deciding to call itself the 911. Afterwards, I realise what he means: there is a strong chance that the investment park that will house Leica in Wetzlar, to be called Leitz-Park, will lead to a formal re-adoption of the Leitz name, of which Leica will merely be its most famous brand.

The restoration of the Leitz name will allow Kaufmann to launch further products, probably at the high end of the price spectrum.

This is consistent with the hints and nods given away in the room in Solms in which we sip our tea. Kaufmann encourages me to think of Leica in terms of the Volkswagen group, whose brands start with Lamborghini at one end and finish with Bentley at the other, reflecting the direction of his own strategic thinking.

If so, Leica is a company to watch, especially for photography lovers and business strategists.

THE LEICA M-SERIES

The M-series of Leica compact cameras is at the heart of the brand’s philosophy. Technically introduced in 1954 as the Leica M3, it drew on the era-defining success of the Leica I (1925) and Oskar Barnack’s 1914 prototype.

The Leica’s reputation was cemented by the famous French photographer Henri Cartier-Bresson, who said it was “simply the only camera that comes into the equation. It is, and I mean this literally, the optical extension of my eye.” Later, the legend would be sustained by several generations of Magnum photographers such as Larry Towell, who liked the discretion and durability of a small camera in war zones.

The M8 is the first digital expression of this heritage, yet is still wrapped in a brass and magnesium alloy housing built to last decades. Its digital sensor was developed by Kodak, a major technological headache because of the unique requirements of the rangefinder camera.