Orga Card Systems Inc.'s president has resigned, citing differences with the company's board and shareholders.
Holger Mackenthun, 40, who had been president of the German-owned smart card company for three years, left two weeks ago, apparently in a dispute over how to enliven its sagging U.S. operations.
Industry observers said Mr. Mackenthun was blamed for Orga's failure to find a solid niche in the United States, and for the growing displeasure of Orga's lead shareholders in Germany.
Orga Card Systems, based in Paoli, Pa., is a subsidiary of Orga Kartensysteme, which develops and supplies microprocessor-based smart card technology. The organization has more than 550 employees worldwide.
"Orga has not shown the same level of commitment as Gemplus and Schlumberger" to the American market, said Benjamin L. Miller, chairman of Cardtech/Securtech, the Bethesda, Md., conference organizer.
Mr. Miller said Orga has not invested enough in its U.S. business, nor shown sufficient "corporate commitment." He said the company has lacked "a presence and a position across a diverse range of markets" such as banking, universities, and government.
On the plus side, Mr. Miller gave Orga credit for developing a presence in the GSM telecommunications market. GSM is a global standard for wireless communications that incorporates the use of smart cards.
Mr. Mackenthun acknowledged that the Orga operation needs help.
"Orga must find local manufacturing as fast as possible in the U.S. to be successful," he said. "If you want to manufacture smart cards, you must do it locally."
Lutz Martiny, president and chief executive officer of Orga Kartensysteme, said Mr. Mackenthun's strategic vision was "different" from that of the parent company. "We could not agree," Mr. Martiny said.
Orga has named Siegfried Eichinger, most recently Orga's vice president of technical services consulting, interim president.
One example of Orga's missteps in the U.S. was a joint venture it tried to form with Kirk Plastics Co., a Los Angeles-based card manufacturer.
In 1995, the two companies said they intended to forge an agreement by which Kirk Plastics would have manufactured Orga's smart cards. They terminated the deal a year later after failing to come to terms.
A Kirk Plastics spokesman said it was difficult to complete the transaction because Orga's lead investor-the German steel manufacturer Preussag AG-was rumored to be looking to sell its stock.
Instead, Kirk Plastics cast its lot with Francois-Charles Oberthur Group, a French currency printing and microprocessor company. That deal closed last October, when Oberthur bought the U.S. plastics company for an undisclosed sum.
"Orga's return on investment in the United States has been very poor," said Kirk R. Hyde, the former head of Kirk Plastics, who is now president and chief executive officer of Oberthur Smart Cards of Los Angeles.
"This business is crazy right now," Mr. Hyde said. "The changes going on and the money being spent are phenomenal."
Mr. Hyde called Orga "a rudderless ship." By contrast, he said Oberthur "had the money and the expertise, and they knew what they wanted from us."
Mr. Mackenthun said the deal with Kirk fell through because Orga "did not put down the money." By going with Oberthur, Mr. Mackenthun said, "Kirk got a better deal."