Varta Microbattery is the longest continuously operating battery manufacturer in the world, having been in business since 1888. The company is headquartered in Ellwangen in Germany but has manufacturing and distribution facilities in Europe, Asia and the US. With over 115 years of experience in engineering, manufacturing and sales of different rechargeable and primary battery systems, the company has attained a leading position in the battery industry, with a customer base that includes the most reputable companies in the electronics industry worldwide. 

Giving an overview of the company’s long history, Mr Gordon Clements, General Manager of the company’s operations in Northern Europe, says, “Here at Varta we have been making batteries since batteries began. We produced our first accumulators in Hagen, Germany in 1888 and have, since then, become one of the global leaders in battery technology. One of the many major milestones up until today was the development of the button cell in 1950. We basically invented this concept and have continued to be the market leader in the production of this technology. This concept was followed up, in the 1970s, by the development of watch cells.”

He continues, “Then, we get into Nickel-metal hydride technology because, up until this time, we were using Nickel-cadmium technology. Nickel-metal hydride is environmentally better and chemically better in its performance. We then got into hearing aid batteries and through the 2000s developed this technology. Then, most recently, we got into polymer batteries where we developed a plastic battery with no liquid electrolyte so you basically have a solid polymer for a battery. This is really only a potted history of our company but there are many other historical milestones and innovations that could also be mentioned.”

Today, the company is split into three main business units; a division which is focussed on what the company call polyflex, its lithium-polymer battery; a division focused on button cells, where Varta continue to be the market leader; and a division which is focussed on consumer batteries such as hearing aid batteries (under the brand name ‘Power One’), watch batteries, lithium button batteries and what are referred to as electronic batteries. It has more than 500 employees in Germany and approximately 1,500 worldwide and an annual turnover of around €140 million. 

Divisions and facilities

Though the company’s divisions may have different interests, different markets and different challenges, each comes under the Varta branding. Elaborating on the focus of each division, Mr Clements says, “In the polyflex arena our focus is on the production of extremely thin batteries for consumer and industrial electronics devices such as mp3 players, mobile phones and organisers. These devices used to be thick and fat but are now thin and flat, which is mainly due to the development of display technology. Handheld portable devices now tend to have much bigger displays, which means that the footprint is better to be thin and flat rather than thick and long.” 

Within this division Varta can now produce batteries that are as small as .8mm thick and have recently been active in producing flat, non-rechargeable lithium-polymer primary cells for smart cards, which are only .4mm thick. “The battery fits in between the laminations of a smart card and powers a display which can tell you the balance and so on. This has been held up by display technology, which up until now hasn’t been bendable but, with a new innovation, it will be,” says Mr Clements. He then adds that in Varta’s lithium button batteries division it has, “All sorts of consumer applications like calculators, Small PDA devices, remote controls and pointers – anything that is cheap and electronic, if you like.” 

The company’s consumer battery division it is mainly producing Zinc Air batteries for hearing aids. “It is a very specific application and requires a lot of energy for short periods of time,” says Mr Clements. “The only real technology that has been able to deliver that up until now economically has been Zinc air. The battery is sealed and as soon as you open it you let air hit the battery which activates it and can drive the hearing aid. In a hearing aid it typically lasts between four and seven days, depending on the prescription that you have.” 

In terms of offices and factories the company has manufacturing and distribution facilities throughout Europe, Asia and the US, as Mr Clements explains, “We are based mainly in Ellwangen in Germany, which is where our headquarters is located. We also have a subsidiary in the US in New York State and a subsidiary in Singapore that has branches in Hong Kong, Japan, Taiwan and Korea. Then, we have two assembly units in Batam in Indonesia and Shanghai, China. Fundamentally, we produce cells, the individual battery components, here in Ellwangen - Ellwangen is the largest facility for the production of hearing aid batteries - and ship them to one of these locations for finishing, whether this means packaging, adding electronics or wires or connectors. Anything done by hand is in one of these two locations. They will be shipped back to Germany for European distribution or shipped directly to the US or Asian countries for distribution in these places. In addition we have sales office in the major European countries such as France, Italy and the UK. We really have a worldwide sales and logistics organisation.” 

Major markets and clients 

In terms of markets in geographical terms Varta has a fairly even three way split between the three main continents it is serving, as Mr Clements confirms, “We sell our products under two brand names, ‘Varta’ and ‘Power One’ and have around a third or slightly more of our business in Asia, around a third or slightly more of our business in Europe and a third or slightly less in the Americas. We are the market leader in many locations and a global leader in some types of battery.” 

While the company has a major market share in certain areas it doesn’t sell its products directly to the consumer on a retail basis supplying, instead, to electronics manufacturers on an OEM basis. Mr Clements explains, “We don’t sell particularly for retail or to the end consumer. In terms of hearing aid batteries, our biggest single market, we sell to the hearing aid manufacturers such as Amplifon and Oticon who distribute the product on our behalf and to health service providers such as the NHS. We don‘t market our product in a standard retail environment but in an OEM environment. All of our business, more or less, is focused on this area.” 

He then adds, about the growing market for hearing aid batteries, “Hearing aid batteries are sold on to people who are hard of hearing. You might think that is a small market or a closed market and not growing, the demographics of this market are such that people are working longer, living longer and hearing aid manufacturers are able to detect ever smaller imperfections in hearing. So, really the hearing aid market is growing around 5% per year and, in the UK alone, there are around 9 million people with hearing loss. The forecast is that this will grow, as will our sales, as young people continue to subject themselves to much higher levels of abuse in terms of music and noise.” 

In the polyflex division or arena Varta are the clear market leader worldwide when it comes to thin battery technology. “There is no one else out there producing batteries less than 1mm and very few producing less than 2mm, which makes this our key area,” says Mr Clements. “Our client list includes many large household names including Dell, Toshiba, NEC, Siemens, Bosch, Mercedes Benz, Volkswagen and Renault. In terms of button cells, for example, it has been quality, performance, runtime and packaging that have been key to this list being so full of trusted household names. When being used in applications such as water meters and heat-cost allocators, for example, where the run-time performance has to be 10 or 15 years before it gets replaced, the battery has to perform well and for the intended duration. That’s where we win with this type of product.” 

This is not the only product where Varta is ‘winning’ possessing, as it does, a market leading position in hearing aid batteries. “If you consider what has contributed to our success in hearing aids, I would say technology and the development of a product that is much, much better than our competitors in terms of performance and packaging has been crucial,” says Mr Clements. “We have a number of patented technologies in terms sealing and in terms of materials that allow us to produce hearing aid batteries that don’t degrade in the environment of the ear. There are very few hearing aid manufacturers and as far as I know, we know all of them at Varta, which has helped us, along with our quality, performance and innovative technology, to move from being number five or six in the hearing aid business to number one or two over the last five years.” 

QC, HSE and R&D

Quality control, safety and research and development are three key areas for Varta and have together been a major factor in the success of the company, as Mr Clements confirms, “These points are crucial to us at Varta. Safety is a very important concern because lithium batteries, but perhaps not so much hearing aid and button cells, used in the wrong hands and in the wrong way are extremely dangerous. For this reason we design quality aspects into the product that ensure they are safe in terms of the end user. We have built a system of components around the product that ensures, even under fault conditions, that the battery can’t be overcharged or over discharged and that, even if it were, there would be no fire or explosion.” 

Continuing to outline the importance of the three closely linked concerns, he adds, “The next consideration, and tied closely to safety, is that it should of the highest quality. This is done by sourcing the highest quality materials, ensuring our suppliers have quality systems in place so that materials can be produced consistently over a long period of time, ensuring we have stringent quality control systems in place and, finally, ensuring that every battery is 100% tested before it leaves the facility, whatever the application. Of the more than 500 personnel in Germany, about 10% are focussed on quality, a testament to its importance within our company.” 

As a company that has been at the heart of battery technology since batteries were first conceived, R&D is an extremely important focus for Varta. Although batteries don’t move quickly as an industry and are unlike semi-conductors or other electronic components, which can continually evolve on a six monthly or yearly cycle, finding new ways of extending the battery’s life or shape, for example, is a major concern. Mr Clements explains, “To develop a new chemistry or product can take up to 20 years, if not more, especially when it’s a rechargeable product and there are significant safety concerns. You have to evaluate things from every angle. Things are moving quicker these days, however. Our investment, in terms of R&D, is in perfecting lithium-polymer technology, in making thinner batteries and increasing the energy density of these batteries. We have invested something in the order of o80 million so far in Lithium-Polymer technology.” 

Trends and challenges

The major recent trend within the battery industry, the shift towards energy awareness, has been particularly favourable to Varta. “Energy allocation and energy use has become quite a hot topic lately so everyone is concerned about conserving energy,” says Mr Clements. “This means that the market for things like heat-cost allocators and metering is growing exponentially and everyone wants to control the use of energy, which means lots of opportunities for us.” 

In line with this major global shift, Varta Microbattery has looked at ways that it can improve its products and make them more environmentally friendly, as Mr Clements enthuses, “We have been trying to minimise, where possible, the use of heavy metals in our products. We have also noticed that the use of our products is in increasingly environmentally focussed applications like, for example, energy metering applications that require either to be battery powered or battery backed-up in case mains electricity is unavailable.”  

In terms of lithium battery products, the major shift has been in product size. “The driver in the Lithium arena has been the use of bigger displays, thinner displays and thinner products. What happens in the consumer world today happens in the industrial markets tomorrow. This is really driving that part of the business,” says Mr Clements.

Although these consumer and industry shifts have created an increase in demand and profitability for Varta, it is facing a number of obstacles. The first of these has been the challenge of rising raw material prices, as Mr Clements explains, “Certainly the biggest challenge for our company at the moment is the cost of raw materials. You only need to look at the London Metal Exchange to see what’s happening to things like nickel, silver, gold, cobalt. All the things that go into making batteries have doubled in price in the last six months. This is a big challenge, not just for us, for the whole industry, caused by the greater demand for mobile power which creates a greater demand for the raw materials.” 

The other challenges, according to Mr Clements, are centred on global economic factors and the shift of some of the company’s competitors and customers to the East, “The general economic factors at the moment are affecting us with the currency situation and the strength of the Euro in recent times, as well as our competitors and customers moving to places like China to save money with all the implications that this has for cost, quality and safety. When a Chinese company makes a big investment, like us, in all of these areas their price will actually be much the same as ours. Quality is one of our guiding principles and we would never compromise that.” 

The future 

Having covered every market that intends to and with no plan to make significant investments while the global economic situation is so tumultuous and unpredictable, what are the plans for Varta Microbattery going forward? “We have every country covered really or, at least, every country that we need to cover but what we have to do for the future is develop the markets that we’ve got, particularly the ‘thin’ area of our product range,” says Mr Clements. “We’re waiting for more industrial applications to arise, as well as trying to stimulate this at the same time.” 

He then goes on to say, “We are currently investing in increasing the production capacity of button cell technology and hearing aid cells. We want to get the best and most out of what we’ve got before we start investing in other things. We might be close to market leader in hearing aid batteries but we are certainly not in lithium-polymer so there is still a lot of work to be done. With the current economic climate it’s not a time to be making massive investment, it’s a time to be driving ourselves harder and getting the best efficiency and profit out of what we have already got.” 

In making the most out of the innovations that have ensured its success in recent times, Varta is making a sensible decision in a not particularly favourable economic climate. Though, as Mr Clements explained, the company is market leader, or close, in some areas it is not in others, making the future for the company about cementing or strengthening its position. Moving forward the company’s biggest asset is certainly its brand and the reputation for quality, reliability and repeatability that is tied to it. With many years of work, numerous patented innovations, a highly skilled and motivated team and global coverage having sustained its success in recent times, it is difficult to see that these strengths won’t ensure continued growth.