Herrenknecht

The world market leader in mechanized tunnelling technology. Nearly every large tunnel project on the planet — metro lines, rail links, water systems — runs on machines from a village near the Black Forest.

If you have ever taken a train through the Alps, ridden London’s Elizabeth Line, or driven under the Bosphorus from Europe to Asia, you have traveled through a hole made by this company — and most people who make those journeys have never heard its name. Herrenknecht sits in Schwanau, a village of a few thousand people on the Rhine plain in Germany’s southwest. From there it ships machines the length of a football pitch and the weight of a warship: machines that chew through granite under 100 meters of water and hit their target on the far side within millimeters. This is the story of how an upholsterer’s son built the company — and why, fifty years on, nobody in the West can compete with him.

The Niche

A tunnel boring machine is not really a product. It is a one-off, project-specific factory that happens to move.

At the front, a rotating cutterhead presses against the rock or soil with thousands of tonnes of force. Behind it, over a hundred meters of trailing machinery erects concrete lining segments, hauls away the excavated ground, keeps the tunnel face under precisely controlled pressure so the ground above doesn’t collapse — sometimes under a river, sometimes under a live city — and navigates by laser toward a target kilometers away that it must not miss by more than a few centimeters. The largest of these machines are close to 20 meters in diameter, weigh up to 5,000 tonnes, and cost tens of millions of euros. Almost no two are alike, because almost no two patches of ground on Earth are alike: Alpine granite, Shanghai mud, and London clay each demand a different machine.

That is what keeps the niche a niche. The world only needs a few dozen big TBMs a year, every one is bespoke, and a failure is catastrophic — a machine stuck under a river can sink a billion-euro project. Buyers therefore don’t shop on price alone; they shop on the confidence that the machine will work, and that an engineer will be standing on the jobsite when it doesn’t. It is a market too small, too custom and too unforgiving for conglomerates to casually enter — and exactly the right size for one obsessive company to dominate.

The Origin

Martin Herrenknecht was born in 1942 in Lahr, the son of an upholsterer. He took an engineering degree in Konstanz, then spent the 1960s as a design engineer in Switzerland, Canada and Germany. The decisive years came in the early 1970s, on the Seelisberg road tunnel in Switzerland, where he ran the mechanical engineering department. His section used “Big John,” an American-built TBM of nearly 12 meters diameter — then the largest in the world, and constantly breaking down.

Where others saw a machine that didn’t work, he saw an industry that didn’t exist yet. “The Seelisberg project infected me with the ‘tunneling virus,’” he said later — “the idea that mechanized tunneling is a fascinating venture of constant innovation and development and, at the same time, has one direction only: forward.”

In 1975, aged 33, he set up a one-man engineering office. When he wanted to start building machines of his own, the banks turned him down. His mother Elsa lent him 25,000 Deutsche Mark, and in December 1977 Herrenknecht GmbH was founded. The first machines were small — pipe-jacking units for sewers and utility lines, tunnels you crawl through rather than drive through. By 1979 the company had six employees and about a million in sales.

It was a slog, and he has never pretended otherwise: “It took us around five years to sell the first 150 machines. Our business accepts only concepts that work absolutely reliably under the harshest conditions, under highest pressure, in the hardest rock.” That sentence, more than any strategy paper, explains the next fifty years.

The Climb

1985 — the technology bet. Working with the contractor Wayss & Freytag on a Hamburg sewer, Herrenknecht helped develop the Mixshield — a slurry shield that uses an air cushion to control pressure at the tunnel face with unprecedented precision. It was the key that unlocked tunnelling through soft, waterlogged ground under high pressure: exactly the conditions under rivers and cities, exactly where the future’s biggest projects would be. The small-parts maker now owned a big-league technology.

1996 — the giant leap. For the fourth tube of Hamburg’s Elbe tunnel, Herrenknecht built “Trude,” a Mixshield of 14.2 meters diameter — at the time the largest tunnel boring machine ever built. It worked. From that point on, when a project was record-breaking — deepest, widest, highest-pressure — the phone in Schwanau rang first. The records have kept falling ever since: 15.4-meter machines for crossing the Yangtze at Shanghai, and the 17.6-meter “Qin Liangyu” for Hong Kong, still the Guinness World Record holder as the largest TBM ever built.

2000 — going where the digging is. Herrenknecht delivered its first machine for the Beijing metro, and by 2002 had opened its own plant in Guangzhou. While much of German industry debated globalization, a village firm from Baden quietly built a Chinese operation that grew to hundreds of employees and, at its peak, roughly a fifth of group sales — supplying machines for metro lines in more than two dozen Chinese cities. The same pattern followed the world’s construction booms: subsidiaries and service bases across Asia, the Middle East and the Americas, with export share settling above 90 percent.

2003–2016 — the cathedral project. Four Herrenknecht Gripper machines bored more than 85 kilometers of the Gotthard Base Tunnel, at 57 kilometers the longest rail tunnel on Earth, through the roots of the Alps. When the eastern tube broke through in October 2010, the machine met its target with a deviation of 8 millimeters vertically and 4 horizontally — after years of grinding through granite deep under the massif. Crews nickname the machines like ships — Gabi, Heidi, Sissi under the Gotthard; Trude in Hamburg — and Herrenknecht noticed early that the machines themselves had become the brand.

The hard years, and the answer. It has not been one long ascent. In 2019, delayed European mega-projects cut order intake by a quarter; in 2020, COVID pushed revenue down to about €1.0 billion. The company’s response was characteristic: hold course, keep the workforce’s core, keep widening the niche’s edges — deep drilling rigs for geothermal energy (a business unit since 2005, reinforced by acquiring drilling specialist H. Anger’s Söhne in 2023), mining machinery, offshore wind foundations, cable-laying for the energy transition. By 2024, order intake hit an all-time record of €1.47 billion, and in 2026 came the crowning order: a 16.4-meter machine for the Lower Thames Crossing — the largest TBM ever deployed in Europe, designed to bore both tunnel tubes with a U-turn in between.

The Playbook

Hermann Simon, who coined the term “hidden champion,” lists the traits: ambition to be number one, narrow focus with depth, globalization from a small home base, closeness to customers, independence, leadership continuity. Herrenknecht doesn’t just tick the boxes — it’s practically the type specimen. Four traits carry the story.

The niche is narrow; the depth is bottomless. Herrenknecht makes machines that dig holes. That’s it — and within that, everything: hard rock and soft ground, 10 centimeters to 19 meters, plus the navigation systems, conveyors, segment moulds and logistics vehicles around them, largely produced in-house in Schwanau. Depth, not breadth, is the moat. Even the diversifications — geothermal drilling, mining, offshore foundations — are the same core competence pointed in new directions: making holes in the ground, precisely, under brutal conditions.

Closeness to customers is the real product. A TBM without support is scrap metal in a hole. Herrenknecht’s engineers assemble the machine on site, stay through the drive, and can supervise machines remotely from Schwanau — one drive near Mecca was steered with support from the German headquarters. About three-quarters of machines are bought back after their project and refurbished for the next one, which keeps Herrenknecht in the relationship for the machine’s whole life. As the founder puts it: “Know-how comes from gaining and having experience, not from copying.”

Independence is non-negotiable. The company is an AG that never went public — the family considered an IPO in 2000 and dropped the idea — and ownership was arranged so the company cannot be broken up by inheritance. The offers keep coming: “We received an offer — €400 million for 25 percent plus one share,” Herrenknecht said in 2018. “We are not selling.” Self-financing (the equity ratio stands near 50 percent) means no analyst calls, no quarterly logic — a company built for decades, run for decades.

Ambition, undiluted, for fifty years. Martin Herrenknecht is in his eighties and still chairman of the management board. His ambition never needed translation into corporate language. Asked about Elon Musk’s Boring Company, he answered with a measuring tape: “On his reference project in Las Vegas, Musk drilled 20 meters in one week. We can do the same route in one day.”

The Cracks

An honest profile names the shadows. The sharpest is succession: the founder, born 1942, has postponed retirement more than once; his son Martin-Devid joined the management board in 2022, but no handover date exists, and few companies are so identified with one person. The second is China: state-backed rivals bought up Western competitors, bundle machines with financing, and compete at prices Herrenknecht calls dumping — he now openly demands EU tariffs and describes his firm as “the last manufacturer of tunnel boring machines in the Western world.” The third is the business itself: bespoke mega-projects make revenue cyclical, as 2019–2020 proved, and margins are solid but not rich — earnings before tax run around 7 percent of revenue, a thin cushion in a price war. And the founder’s famously blunt political interventions are a recurring reputational sideshow that a quieter company wouldn’t have.

The Takeaway

Pick a problem the giants find too small and too hard, then out-invest everyone in it for decades. Herrenknecht’s niche looked tiny from the outside — how many tunnel machines does the world need? — but it was deep enough to absorb fifty years of compounding: every record project became R&D, every jobsite crisis became know-how, every refurbished machine became a customer relationship. The moat was never a patent. It was accumulated experience in a market where failure is unaffordable — experience that, as the man says, cannot be copied, only gained.