Bad food. In Bad Essen, orthodontist Dirk Wiechmann and the 3M Group fight for supremacy on the German market with internal braces. Behind the scenes of the perfect smile there is fierce competition for market shares and employees.
Around ten years ago Wiechmann sold his first company Top-Service for lingual technology to the 3M Group – in 2008 thanks to good timing (a few months before the Lehman Brothers bankruptcy) for a mid double-digit million sum, as industry experts suspect. He has made an international name for himself with braces worn on the inside of his teeth.
In the meantime, the medium-sized company with its new company DW Lingual Systems, which also produces internal braces, generates annual sales of twelve million euros and overtakes the 3M subsidiary in sales in Germany, as a representative survey by the German Society for Orthodontics (DGKFO) shows. The two companies compete from Bad Essen near Osnabrück for the German and European market – the company buildings are only 1.3 kilometres apart as the crow flies. Together, their market share amounts to 74 percent. For years Wiechmann and the 3M subsidiary have been engaged in a small “war of braces”, which is also carried out by legal means.
Customers from Hamburg to Dubai
The business model of the two braces manufacturers: orthodontists send a model of their patients’ jaws to Bad Essen. Using highly complex technology, individual plates are produced which are later glued to the inside of the teeth. By means of a wire attached to it, the dentist can bring the patient’s teeth into the desired position in his practice. At first glance, the brace models of the two competing companies from Bad Essen are similar. Wiechmanns is silver, that of the 3M subsidiary golden. They differ in production.
Patients have to pay up to 10.000 Euro
The German market, which accounts for one third of Wiechmann’s turnover, is limited and the customer base fiercely contested. Only trained orthodontists are allowed to purchase the braces and only a fraction of them use the technology. One reason: Treatment with premium braces for two jaws can cost patients up to 10,000 euros. Statutory health insurance companies only pay for braces from the outside. And so do the private health insurance companies. So far, only one patient has won her claim for reimbursement. Andreas Bartelt, Chairman of the German Society for Lingual Orthodontics (DGLO), says: “If the market continues to grow, it will do so very slowly”.
“Pope” of the industry
On the niche market Wiechmann fights against 3M for every user. The 52-year-old is considered by many to be the “Pope” of the industry. An orthodontist who does not want to be named describes him as a “guru”, to whose workshops hundreds of disciples “pilgrimaged”. Orthodontists in Hamburg or Munich report that they switched to Wiechmann in the last two years after having been customers of the 3M subsidiary for years. The medium-sized company attracts changers and new customers with significantly lower initial prices.
3M subsidiary market shares diminished
According to the survey by DGKFO and expert Claudia Obijou-Kohlhas, 74 percent of German orthodontists used the products of the 3M subsidiary in 2012. In 2016 it was only 36 percent. In contrast, 38 percent used the new braces from DW Lingual Systems. Jörg Karthaus, Managing Director of the 3M subsidiary, confirms that the 3M Group lost market share through the introduction of Wiechmann’s new equipment. The effects are negligible globally. Karthaus did not want to comment on whether the development had a negative impact on sales and profits of the 3M subsidiary Top-Service.
Competition over prices and employees
In this highly specialized niche market, competition is not fought primarily through prices, but through the best employees. 30 to 40 employees of the 3M subsidiary were transferred to Wiechmann’s newly founded company in 2012, which currently has 150 employees and, according to its own figures, is growing by 20 percent every year. Wiechmann and former employees accuse the 3M Group of having deteriorated the originally developed product over the years. The management of the 3M subsidiary disagrees. Internal quality checks have shown that “the quality of the products is continuously at a high level”, as Managing Director Karthaus says, who is already the third man in this position within the last three years. “Our employees are satisfied with their workplace,” says Karthaus.
In order to respond to the increasing demand in the Asian and Russian markets, Wiechmann established sales offices in Moscow and Tokyo. But he would never open another production location abroad. “Here on site I have responsible and motivated employees who I would hardly find abroad,” says the entrepreneur.
Since 2014, 3M Germany has been involved in legal disputes with Wiechmann’s company DW Lingual Systems GmbH. “If one thinks that contractual agreements have been violated, one defends oneself against it by legal means,” says 3M Deutschland. The lawsuits against Wiechmann for breach of contract were all dismissed in November 2016, although an appeal on a partial aspect is currently being dealt with by the Federal Supreme Court.
Dirk Wiechmann’s Bad Essen-based company DW Lingual Systems is one of the “hidden champions” of the region, i.e. one of the medium-sized German companies that supply the whole world from the province. His “invisible” braces, which are worn on the inside of the teeth, order orthodontists from Hamburg to Dubai. In lingual technology, brackets – the small metal plates on the teeth – and wires, with which each individual tooth is pushed to the optimal position with light pressure, are attached to the inside of the teeth. Brackets and arches are manufactured individually for each patient using a computer-aided process.
The successful model of the listed conglomerate 3M, which most recently had a turnover of 30.1 billion dollars, is to buy up companies with highly specialized technical products and thus open up new technology sectors. This is why the 3M Group bought Wiechmann’s first company Top Service for lingual technology in 2008.