WEISSACH, Germany - What do Porsche AG engineers do when they are not busy coaxing extra speed out of the company's coveted sports cars? They help design Harley-Davidson motorcycles.
They also work on elevators, forklifts, earthmovers and heavy trucks as well as cars for other companies. Porsche engineers have sold their expertise to General Motors, DaimlerChrysler, Volkswagen AG and Ford Motor Co.
The engineering unit is Porsche's secret weapon, enabling it to employ more engineers than if it worked alone, giving it an edge in product development. Porsche expects to increase its sales by 50 percent when it brings out a sport-utility called the Cayenne, designed for itself and VW.
'Porsche would have a lot of difficulty building the Cayenne if they didn't do work for others,' said Georg Stuerzer, an auto analyst at HypoVereinsbank. 'They wouldn't have the engineering capacity.'
The Cayenne will move Porsche beyond its two sports car models, the 911 Turbo Carrera and the Boxster, and will increase vehicle production from about 50,000 a year to 75,000. Porsche is billing VW for the engineering work on its version, called the Colorado.
'This is a big r&d job for us. You don't think I'd give it away for free, do you?' asked chief executive Wendelin Wiedeking. 'I'm an entrepreneur. I have to be able to make money.'
Off the beaten path
The engineering unit is outside Weissach, a town of 7,000 people nestled 30 minutes northwest of the company's headquarters in Stuttgart.
The remote location is intentional. Porsche wants to protect the confidentiality of its work.
The company developed the Carrera GT there, which it is considering putting into production. It would cost at least $330,000. The entrance to the building where the GT was developed is in a courtyard behind a thick steel sliding door. Walls topped with barbed wire ring the courtyard.
Porsche insists that all visitors to Weissach sign a confidentially agreement, making them liable if they reveal any secrets they may learn at the complex.
'If you can't keep secrets in this business, you're finished,' said Ernst Friedrich Hahn, the head of Porsche's research and development.
The unit accounts for more than one-quarter of Porsche's 9,300 employees. Two-thirds of the unit's work is for Porsche and the other third for other companies. A car company dedicating so much of its design staff to outside work is unique in the industry.
Porsche most profitable
In the financial year to July 31, Porsche had sales of about $305 million in engineering, consulting and financial services. That compares with the company's total revenue of $3.4 billion. Porsche says the business is profitable, though it won't say how profitable.
Measured by margins, Porsche is the world's most profitable car company, with a pretax return on sales of 11.8 percent, compared with 3.3 percent for Volkswagen.
Porsche has more than 100 test facilities in Weissach, where experiments can be carried out on anything from engines to noise measurement to simulating a car crashing into a deer. It even rented its wind tunnel to Jack Wolfskin, the German sporting goods maker, to test the storm resistance of tents.
Adam Opel AG, GM's German unit, hired Porsche to work on its Zafira van and said it would work with Porsche again. 'The Porsche center at Weissach is universally recognized as one of the best facilities of its kind in the world,' said Paul Entwistle, an Opel spokesman. 'Everyone felt very good about the way Zafira turned out. I am certain Porsche would be high on the list of partners for future projects.'
Doing design work for others taps into a long tradition. Porsche began life doing engineering and design, not building cars. The company founded by Ferdinand Porsche designed the Volkswagen Beetle in the 1930s to fulfill Adolf Hitler's dream of a people's car. After World War II, Porsche and his son, Ferry Porsche, turned to sports cars, initially planning to build only 500 a year as an addendum to design work.
The cars were so popular that they became Porsche's main business, though the company still did other work, designing and building tractors, for instance.
To broaden the company's range beyond Germany, Porsche also has a design studio in California and an engineering complex in Troy, Mich. It also has branch offices in Tokyo and Shanghai where it doesn't do research but keeps contact with clients.
Porsche will do almost any kind of design work for other carmakers, except one: It won't work on competitors' sports cars. Everything else is fair game: vans, sedans, motorcycles, trucks and engines. Porsche says it could design a new small car if asked. It wants to expand and plans to hire another 150 engineers. The engineers keep busy. The company has its product line planned for the next decade.
'We just presented our supervisory board with products for 10 years,' Wiedeking said. 'Not ideas; products.'
But don't waste your time asking him what these products are.
Said Wiedeking: 'That's a secret.'