Licensing to rivals can boost profit for suppliers

Galvanizing specialist Voight & Schweitzer profits from licensing its patented coating process.

GELSENKIRCHEN, Germany -- Tesla Motors CEO Elon Musk's plan to grant access to his company's intellectual property to advance electric vehicle technology bucks a trend.

After all, licensing fees can yield hefty income.

"The proceeds from licensing fees have significantly risen in the last 15 years," says Floridan Schwabe, authorized representative at the technology licensing office for Baden-Wuerttemberg universities.

According to the World Investment Report, licensing fees totaled about 40 billion euros ($54 billion) in 1996. Now the figure is $271 billion and rising steadily.

Lars Baumguertel, CEO of galvanizing specialist Voigt & Schweitzer GmbH, is profiting from the trend. He grants licenses to the competition to use his company's microgalvanizing process.

Many automakers consider the patented process, which saves weight by adding a very thin coating, to be a durable, competitive alternative to a coating process called cataphoretic immersion priming, especially with high-strength steels.

Demand for the process is overwhelming. Control arms, suspension struts and other parts in more than 4.5 million vehicles are finished using the Voigt & Schweitzer process.

And now the volume of orders is poised to double: BMW AG wants to use only microgalvanized parts in some model lines from various major suppliers and a variety of production operations in Europe.

-- Anke Brillen