DECEMBER 27, 2011 8:55PM

Werner Otto: Captain of postwar industry. 1909-2011

Rate: 4 Flag

 Werner Otto

"An aggressive modesty"? Billionaire Werner Otto and third wife, Maren

IF IT LOOKS AS if most new European and American fortunes are coming out of hedge funds and Ponzi schemes these days, part of the reason could be that the genuine captains of twentieth century industry are fast dying out. As reported today, one of the most successful entrepreneurs of that generation, Werner Otto, the founder of the world’s largest mail-order business, drew his final breath last week at age 102.

Werner Otto's story reflects the drama of his distinctively violent times. He was born in the town of Seelow near Berlin as the son of a retail shop owner. Dreaming of becoming a poet, he attended school until both his father’s and grandfather’s bankruptcies forced him into an apprenticeship at age seventeen, finally settling down as a small businessman in Stettin on the Baltic Coast. He and his first wife Eva later moved to Berlin, where together they opened a cigar shop near Alexanderplatz and Werner tried his luck as a writer.

Berlin's Alexanderplatz in the early 1930s

Berlin's Alexanderplatz in the early 1930s 

Werner, a woolly-headed leftist romantic, regarded himself as a “National Bolshevik” and made the error of supporting the wrong faction of the Nazi Party, namely the quasi-leftist, social revolutionary branch of Otto Strasser, which resisted the dictatorship of Adolf Hitler. In 1934, the Gestapo arrested Werner for smuggling anti-Hitler leaflets across the German-Czech border and for writing two subversive novels. He spent two horrific years in Berlin’s infamous Plötzensee penitentiary.

As soon as Werner got out of jail, the couple fled the Nazi-infested capital for the quiet West Prussian town of Kulm in 1939. There, in what he hoped would be provincial bliss, Werner opened a shoe shop and fathered the first two of his five children. But his luck couldn't last. Werner was drafted into the hated Wehrmacht in 1943 and experienced Germany’s surrender in a military hospital, where he was recovering from severe head injuries.

Kulm came under Polish control after the war and the Ottos fled to Bad Segeberg, a small town north of Hamburg. Werner carried two briefcases: one filled with a side of bacon, the other with largely worthless reichsmarks, all that was left of his failed shoe business. In Hamburg he stumbled across a heavy-duty sewing machine and decided to start a factory for wooden shoes – the only raw material available right after the war – that quickly succumbed to the competition from southern Germany. Otto’s motto in life was: “It’s okay to stumble, but not to stay on the ground.” The chance discovery of a catalogue from the Baur company gave him an idea. Why not go into the mail-order business?

When the currency reform came in 1949, Werner took his last 6,000 DM and opened a mail-order shoe company in Hamburg with four employees. At first he glued the photos into the catalogue himself. Within just five years he was doing 28 million DM in business annually.

The Otto-Versand filled a need in post-war West Germany – getting the new products of the Wirtschaftswunder (economic miracle) to consumers in a country still devastated by Allied bombing and thus lacking a smoothly functioning retail infrastructure. While there were plenty of other catalogues out there clogging people’s mailboxes, his innovation was to mail items with an invoice instead of demanding Collect on Delivery like everybody else. A rebate system for multiple orders won the hearts of customers everywhere. Other novelties included taking orders by telephone and, later, creating his own logistics company, Hermes-Versand, to get his wares to the consumers more quickly. Otto’s family-owned company boomed, sending goods of all kinds across Germany and, before long, to the world.


Today, the family firm has an overall turnover of over 15 billion euros and employs 55,000 persons. In 1965 Otto expanded into the realm of real estate. ECE Projektmanagement GmbH & Co. is one of Europe’s largest commercial real estate enterprises. It manages shopping centers all across the continent. In North America, he founded the Sagitta Group and the Paramount Group, which own large chunks of the New York and Toronto skylines. Upon Werner’s retirement in 1981, Otto’s son Michael, the current head of the group, transformed “Otto” into a global brand. Among other things, Michael identified the importance of the online business and made Otto into the world’s second largest Internet retail company, surpassed only by Amazon. After reunification, the group invested approximately two billion euros in the former GDR.

Werner Otto also founded a number of charities, foremost among them the Werner Otto Foundation, which provides money for medical research in Hamburg’s hospitals, and the Werner Otto Institute, which finances research for childhood developmental disorders and childhood cancer. He also financed the reconstruction of the stage of Berlin’s Konzerthaus music hall and the restoration of the jewel-like Belvedere palace in Potsdam’s royal gardens. A new foundation, which he founded on his 100th birthday, provides services to elderly people in Berlin and Brandenburg.


Werner Otto financed the restoration of Potsdam's Belvedere palace

Otto didn’t only have admirers. Both his mail-order business and his vast shopping malls have driven a stake through the still twitching heart of Europe’s small retail industry. And while he enjoyed an excellent reputation as an employer, the same cannot be said for his suppliers: Human rights groups have accused them of appalling workers’ safety violations in Central America, Indonesia, and the Philippines. At least one subcontractor in India employees child labor. According to Germany’s Südwind Institute, which studies economic justice issues, 

A general overview of working conditions in three {Chinese} plants reveals typical patterns prevailing in Chinese garment factories. This means a low piece rate, below the legal minimum wage, long working days of up to thirteen hours during production peaks, strong seasonal fluctuations in terms of working hours and income, a lack of labor contracts or legally anchored labor relations, {the absence} of social welfare insurance as provided by law, as well as occupational safety and health protection. A further problem is the fact that the monitoring of labor rights as provided in the voluntary legal codes of the purchasers is either insufficient or non-existent.

But the Ottos are learning: Their mail-order business is currently setting up a worker-controlled factory in Bangladesh in cooperation with microfinance pioneer and Nobel Prize laureate Muhammad Yunus, founder of the celebrated Grameen Bank.

Despite these ethical issues (which, I have to say, are pretty much universal – have you ever wondered how the computer you are reading this on was manufactured?), no one can dispute that Otto was – for better or worse – one of the authors of West Germany’s “economic miracle” and of the retail resurgence of the former GDR.

Werner Otto died in Berlin in the presence of his immediate family. He leaves behind a family fortune of eight billion euros - and a tough act to follow.



Your tags:


Enter the amount, and click "Tip" to submit!
Recipient's email address:
Personal message (optional):

Your email address:


Type your comment below:
I didn't really intend to transform my blog into an obituary website, but this generation just keeps dying!
Not bad for a cobbler.
[r] just love the otto motto. interesting that a clearly open heart still was enabling appalling substandard working conditions for ferriners. But he and his story still inspire. thanks. libby