Vereinigte Glanzstoff-Fabriken (VGF, United Rayon Factories) was a German manufacturer of artificial fiber founded in 1899 that became one of the leading European producers of rayon.
During the first thirty years VGF cooperated closely with the British manufacturer Courtaulds and other companies to share technology and maintain prices by avoiding competition. It merged with the Dutch firm Enka in 1929 under the holding company Algemene Kunstzijde Unie (AKU), but the two retained their legal identities. AKU made significant investments in rayon production in the United States. The company suffered government interference in Nazi Germany (1933–45) and lost competitive strength during World War II, but partly recovered after the war with American assistance.
In 1969 AKU merged with the Dutch manufacturer KZO to form AKZO, now part of AkzoNobel. Successor companies formed during various divestitures, mergers and acquisitions continue to be active in various related industries.
Origins
In 1857 the Swiss chemist Matthias Eduard Schweizer (1818–60) found that cotton could be dissolved in a solution of copper salts and ammonia and then regenerated. In 1890 the French chemist Louis Henri Despeissis invented the cuprammonium process for spinning fibers from cotton dissolved in Schweizer's reagent. Despeissis died in 1892 and his patent was not renewed.
Max Fremery (1859–1932), a German chemist, and Johann Urban (1863–1940), an Austrian engineer, were manufacturing lamp filaments in Oberbruch near Aachen in 1891 using cotton and Schweizer's reagent. Fremery and Urban decided to start making artificial silk (Glanzstoff), and patented a version of the Despeissis process with the addition of a practical method for spinning the fiber. They filed the patent under the name of Dr. Hermann Pauly (1870–1950) so as not to alert their competitors. The patent was challenged but was upheld. Fremery and Urban moved their headquarters to Elberfeld, now a suburb of Wuppertal. Vereinigte Glanzstoff-Fabriken (VGF) was launched on 19 September 1899 with 2 million marks of capital. The Bergisch-Märkischen bank provided financing.
Early years (1899–1918)
The VGF rayon that began to be sold early in 1900 had relatively coarse yarns of 100–200 denier. Although VGF's product was less versatile than rayon produced by the viscose process the scale of the operation allowed for reduced prices. Fremery and Urban, with the Alsatian textile chemist David Emil Bronnert (1868–1928), took out two more basic patents in 1900. In 1900, the first year of operation, profits were $15,480. The company set up two smaller plants in Alsace, and in 1903 started manufacturing in Givet, France. Profits were $422,000 by 1904 and continued to grow in following years. Between 1901 and 1911 the labor force increased to 6.7 times the initial level, and production increased to 16.3 times the initial level. VGF was profitable throughout the period before World War I. Production rose from 86 tons in 1902 to 820 tons in 1912. In 1906 VGF opened a facility in Sankt Pölten, Austria, and in 1908 opened a plant in Flint, Wales.
It was clear by 1909–10 that viscose, with its cheaper raw materials and simpler spinning process, was economically superior to cuprammonium. In July 1911 the chairman of VGF, Hans Jordan, decided to pay 2 million marks for all the German patent rights for the viscose process and for the Donnersmarcks Kunstseide und Acetatwerke near Stettin. He planned to fully convert the Donnersmarcks plant to the viscose process. The company headed by Count Guido Henckel von Donnersmarck (1830–1916) had been the first in Germany to use the viscose process invented by Courtaulds in Britain. VGF quickly expanded viscose production.
Around 1911 VGF began to invest in J. P. Bemberg, a cloth dying and finishing company that had been experimenting with a version of the cuprammonium process, and encouraged Bemberg to focus on producing yarns for which that process was suitable. Bemberg was using the "stretch-spinning" process invented by the chemist Edmund Thiele (1867–1927) to make cuprammonium rayon with equally fine filaments to the artificial silk of Hilaire de Chardonnet (1839–1924), and with better physical properties. The VGF product was not competitive. Although Thiele had applied for a patent on his process, a German court ruled on 4 May 1907 that it had been anticipated by the "Pauly" patent.
For some time VGF, Courtaulds and the French Comptoir des Textiles Artificiels dominated the rayon market. Courtaulds became concerned about competition from VGF after the purchase of the Donnersmarck viscose plant, and initiated discussions on ways to avoid harmful competition. VGF and Courtaulds headed a European rayon cartel formed in 1911. Under the 1911 agreements the companies gained domestic monopolies, shared the basic patents and agreed to share future advances made by any of the members of the cartel. The companies planned to form a consortium that would to coordinate sales, set prices and production volumes, and share profits in each region, but were unable to agree on a formal contract before the outbreak of World War I (1914–18).
During the war VGF focused on producing the staple fiber later called rayon, which was spun together with cotton. The German government, faced with a cotton shortage due to the Allied blockade, ordered 3,000 tons of viscose staple from VGF, which was used for a variety of military textiles including clothing. Consumers saw the rayon fabrics as inferior to cotton and associated it with wartime privations. The Niedermorschweiler plant was destroyed by fire during the war. Germany's defeat in the war cost the company market share both domestically and internationally.
Weimar Republic (1919–33)
In the inter-war period VGF was the largest rayon producer in continental Europe. However, competition developed from companies in the United States, the Netherlands and Italy. VGF steadily increased its holdings in Bemberg and gained full control in 1920. In 1922 VGF invested in a new Japanese firm in partnership with Shitagau Noguchi (1873–1944) and Asahi Chemicals. The technology was licensed under conditions that prevented competition in VGF's home market, and ensured that VGF would receive the rights to any technical advances made in Japan. VGF built a factory in Obernburg in 1924.
The European rayon price cartel was formed again after 1925. The arrangement was a form of cartel in which rayon patents and technology were shared between the partners. VGF, Courtaulds and the Comptoir shared technical advances until shortly before World War II (1939–45). VGF initiated lawsuits against IG Farben over rayon technology, but dropped them in 1924–25 when IG Farben agreed to join a price cartel in Germany and to reduce its production of rayon. In 1925 I. G. Farben acquired a stake in VGF and Bemberg. The joint venture with I. G. Farben lasted until the latter closed its Hölken rayon plant in 1929.
In 1925 Courtaulds and VGF founded a joint venture named Glanzstoff Courtaulds to build and operate a large viscose manufacturing facility in Cologne. In April 1928 Glanzstoff Courtaulds began artificial silk production in the north of Cologne. In 1927 Courtaulds and VGF combined to buy a controlling interest in the Italian manufacturer SNIA Viscosa. A German director of VGF, Karl Scherer, replaced the company founder Riccardo Gualino (1879–1964) as head of the firm and cut output drastically.
In April 1925 Fritz Blüthgen of VGF, suggested a joint venture with Courtaulds in the United States. When Courtaulds declined, VGF entered the US market in competition with Courtaulds. J. P. Bemberg and VGF organized the American Bemberg Corporation in 1925, and began making rayon using the cuprammonium process in October 1926 at a newly built facility near Elizabethton, Tennessee, nine miles from Johnson City, Tennessee. In the fall of 1928 VGF opened a viscose factory nearby. This was operated by the VGF subsidiary North American Rayon. By 1929 Bemberg and VGF had about 5,000 employees in the United States. The city of Elizabethton provided tax concessions and favorable rates for the large amounts of water used in rayon production. There were ongoing labor problems, starting with a strike in March 1929, but the plants operated profitably throughout the Great Depression.
As of 1929 VGF had a workforce of 13,400 in Germany, and was chaired by Fritz Blüthgen. Although thriving, VGF was deeply in debt. That year Oscar Schlitter (1868–1939) of the Deutsche Bank arranged for VGF to combine with Nederlandsche Kunstzijde (Enka). Enka was based in Arnhem, Netherlands. It had been founded in 1911. A new German-Dutch company was created, Algemene Kunstzijde Unie (AKU), through an exchange of shares. Enka, VGF and Bemberg remained distinct legal entities owned by AKU as a holding company. The AKU supervisory board had four members from the Dutch group, four from the German group and one neutral member. Enka remained technologically behind the German facilities, and was relatively under-equipped. The German plants accounted for the bulk of AKU's production, and made 60% of the viscose in Germany in the early 1930s. VGF had five members of the seven-person management committee.
Enka competed with Courtaulds with a factory in Britain established before the merger. After the merger AKU continued to operate in Britain despite strong protests from Courtaulds and lengthy negotiations to try to resolve the issue. AKU also had subsidiaries in Italy, Czechoslovakia and Austria. After the 1929 merger AKU opened a viscose plant in Asheville, North Carolina. The plant was operated by the American Enka Company, which had been organized in 1928. The company became the third largest rayon manufacturer in the United States after Courtaulds and DuPont. In 1930 VGF used lawsuits as a bargaining counter with Châtillon S.p.A. to ensure that imports of rayon from Italy to Germany were controlled. In the 1930s VGF was deeply in debt to Enka, a situation that worsened as VGF bonds issued and sold in the US were bought up by the Dutch. The percentage of German ownership in AKU steadily declined.
Nazi era (1933–45) A bitter internal management dispute blew up in 1933 when two VGF executives, Carl Benrath and Willi Springorum, were accused of rigging the books. Benrath in turn attacked the Deutsche Bank executive and AKU supervisory board member Oscar Schlitter. Benrath wrote to another Deutsche Bank executive, Emil Georg von Stauss (1877–1942), "We live in a New Germany in which – thank the Lord – the honor of the individual is protected by a strong hand. I too rely on this protection and I am sure that I will come into my rights." Benrath and Springorum had to resign from AKU, while Schlitter was made the "neutral" delegate on the AKU supervisory board and Stauss was appointed to the board.
Stauss helped the company through his contacts in government. The regime wanted to reduce reliance on imported fiber by increasing domestic manufacturing, and one Nazi Party expert on textiles proposed that AKU should be taken over by I.G. Farben, a true German company. AKU responded by increasing the amount of production in Germany. AKU cut back production in the Dutch factories in Ede and Arnhem, and the Deutsche Bank helped the VGF interests to buy up Dutch shares.
The company gained from government-generated demand for its products, and from the cotton and wool import restrictions implemented in the 1934 New Plan. By 1934 Glanzstoff Courtaulds was employing 3,000 men and women. VGF increased production by 600% from 1933 to 1941. The company made rayon and also a tyre-corduroy using synthetic thread that the Ministry of German Basic and Raw Materials ordered on a large scale. However, they lost international market share and lost contact with foreign innovations as Nazi Germany became increasingly isolated in the period before World War II.