HISTORY OF SIEMENS & HALSKE


Siemens Founder - Werner von SiemensWerner von Siemens was born on December 13, 1816, in Lenthe, near Hanover, the fourth of 14 children of a less-than-affluent farmer.  He quickly developed an interest in science and engineering, but when the family's shortage of money precluded the possibility of a university education on completing school, Werner chose the only viable alternative path in those days ? technical training as an artillery office with the Prussian army.  Once in service, the young officer soon demonstrated that he had special abilities and, according to an appraisal by a superior, was "thoroughly capable of performing well in the technical field, thanks to his excellent knowledge of engineering and the sciences, and his inventiveness".

It was during his time with the military that Werner first engaged in business.  His brother Wilhelm had filed a patent in England for a method of gold electroplating.  The sale of the rights provided the brothers with a sound income for a number of years and allowed Werner to engage in his own research, parallel to his service with the army.

The main focus of his interest was telegraphy, a field that was as yet relatively undeveloped, but Werner nevertheless recognized that it would become a "technology of the future." He built a pointer telegraph, an apparatus that proved far superior to similar devices that had been constructed to date.  Convinced that his telegraph had the potential to become a success, Werner decided to go into business: Together with a highly skilled mechanical engineer, Johann Georg Halske, he set up a company, Telegraphen-Bau-Anstalt von Siemens & Halske, in Berlin, which went into business in October 1847.

Inspired by a number of successes that began in 1848 with the construction of a telegraph line between Berlin and Frankfurt/Main, the small company grew so quickly that it soon demanded Werner's undivided attention, prompting him to take his leave of the army in 1849.  The entrepreneurial decisions he then made proved pivotal.  Since the only contracts for major telegraph lines were likely to come from government offices in those days, it was essential that the company establish a presence abroad.  This gave rise to the first branch offices outside Prussia - one in London in 1850 and another in St. Petersburg five years later.  The two foreign branches were managed by Werner's brothers Wilhelm and Carl, whom he had involved in the business early on, having taken over the role of head of the family following the untimely death of his parents.  Just eight years after starting up, Siemens & Halske had become an international company.

After the first few years of success in business, the scientist and engineer in Werner von Siemens once again came to the fore.  In 1866 he achieved his greatest accomplishment: the discovery of the dynamo-electric principle and the invention of a "dynamo-machine", its first practical application.   His invention marked the dawn of the age of electrical engineering.  (The German term for this field, "Elektrotechnik", was initially coined by Werner; it had originally been referred to as the "applied theory of electricity".)  Werner was fully aware of the importance of his discovery: "Engineering now has the means to produce electric currents of unlimited strength  cheaply and easily.  This will be of immense significance in many areas within the field as a whole".  And it was with their habitual entrepreneurial vigour that Werner and his company, Siemens & Halske, set about specializing in the areas in question ? drives, lighting and power engineering.  This was the catalyst that ultimately caused Siemens & Halske to develop into a large-scale enterprise, and by 1890, when Werner retired from the company management, its workforce had grown in number to 5,500.

Werner von Siemens, who was raised to the nobility in 1888, also made his mark as a pioneer in a non-technical field ? social policy.  His view that motivated employees were the basis for the company's success still holds true today: "It soon became clear to me that the steadily expanding firm could only be made to develop satisfactorily if one could further its interests by ensuring that all employees work together in a cheerful and efficient manner." He introduced social benefits that were frequently ahead of their time, including a company pension scheme in 1872 (many years before Bismarck introduced national insurance legislation), a nine-hour working day in the same year (when 10-12 hours were the rule else-where), and a profit-sharing scheme, the so-called "stocktaking bonus", launched in 1866.

Werner von Siemens died in Berlin on December 6, 1892.  During what had been a full and active life, his interests has also extended to public affairs.  As a member of the German Progress Party he had held a seat in the Prussian parliament from 1862 to 1866; in 1879 he had co-founded the Electrotechnical Society in Berlin; and he had set up a foundation to support the Physical-Technical Institute of the Reich, established in 1887. 

The name of Johann Georg Siemens has faded into almost total obscurity, but had it not been for him, Siemens, now a major international company, might never even have existed.  He was Werner von Siemens' cousin, and it was he who provided the start-up capital of 6,842 thalers needed to launch "Telegraphen-Bau-Anstalt von Siemens & Halske".  His was the third signature on the articles of association of October 1, 1847, alongside those of Werner and his partner Johann Georg Halske, the company's other two "founding fathers".  The funds Johann Georg Siemens provided were well invested: The small ten-man operation soon began to thrive.  In 1852, just five years after the company was formed, its workforce was 90 strong and its domestic sales exceeded 500,000 marks.  Foreign markets were highly important too, even in those days, and export sales ran to almost 450,000 marks.  Werner rapidly began to internationalize the company.  Foreign branches were set up – first in England (1850), in Russia (1855), and then in Austria (1858).  In those days, the workforce in foreign countries exceeded the number of employees in Prussia.  Werner showed a keen eye for developing markets and a distinct lack of trepidation about committing himself to business ventures "at the far end of the world." The start of operations in Japan, for example, dates back to the early 1860s, and the company installed China's first electric generator, in Shanghai in 1879.  In 1890, almost half of Siemens' 5,500 employees worked in foreign countries; nine factories generated foreign sales worth 6.6 million marks and domestic sales had risen to 23 million marks.  By 1914, Siemens had formed subsidiaries in ten countries and had set up 168 branch offices in a further 49.

In 1897, the family enterprise re-formed as a stock corporation under the name Siemens & Halske AG, a move designed to procure a broader capital base for the company and enable it compete more effectively with a number of strong new rivals, including AEG.  Power engineering, which had advanced alongside communications engineering to become the second main pillar of the company's operations, brought sustained growth until World War I.  One key event that served to further this development occurred in 1903, when Siemens merged its power engineering activities with the company Elektrizitäts-AG vorm.  Schuckert & Co., based in Nuremberg, to form Siemens-Schuckertwerke GmbH (which later became a stock corporation in 1927).  Likewise in 1903, Siemens and AEG co-founded Telefunken, which rapidly took the lead in radio and, later, television.  In 1913, Siemens achieved sales totalling 400 million marks, and its workforce numbered 63,000.

In 1919, Carl Friedrich, Werner von Siemens' third son followed in the footsteps of his brothers Arnold (1904-1918) and Wilhelm (1918-1919) as head of the company and remained at its helm until his death in 1941 – more than two decades in all.  He successfully rebuilt the enterprise, which had lost virtually all of its foreign assets as a result of World War I.  Carl Friedrich established a key principle: to concentrate company operations solely on electrical engineering, but at the same to cover "the full breadth electrical engineering." He re-oriented the company accordingly, withdrawing from "non-native" areas of business, such as automobile manufacture, and building up other fields instead, like medical engineering.  The latter developed strongly following the 1925 buy-out of Reiniger, Gebbert & Schall, a specialist enterprise for electromedical equipment, based in Erlangen, which was later integrated in 1932 to form Siemens-Reiniger-Werke AG.

The operating results reflect the economic and political instability of the day: In 1923 the Siemens workforce rose above the 100,000 mark for the first time; in 1929 it increased to 138,000.  Then, during the Great Depression, 60,000 workers had to be laid off; but by 1939 the payroll had risen to 183,000.  Sales fluctuated similarly, rising from 315 million marks in 1924 to 820 million marks in 1929, before dropping to 330 million in 1933.  In 1939 the company first posted sales in excess of one billion marks.  At the time, Siemens was the world's largest electrical company.

During World War II the company was made to conform to the requirements of the National Socialist wartime economy and was compelled to increase production of goods important to the war effort.  The use of forced labour during this era constitutes a dark chapter in Siemens' history.

By the time the war was over, most of the company's plants had either been destroyed or dismantled and roughly 80% of its assets were lost.  Siemens began to rebuild at two main locations in the West: Erlangen (Siemens-Schuckertwerke) and Munich (Siemens & Halske).  At the end of 1945, Siemens' workforce totalled 38,000.  Under the supervision of Hermann (1941-56), Ernst (1956-71) and then Peter von Siemens (1971-81), the company gradually assumed the form it has today.  The single most important step in this respect was the merging of Siemens & Halske AG, Siemens-Schuckertwerke AG and Siemens-Reiniger-Werke AG to form "Siemens AG, Berlin und München" in 1966.  At the time, Siemens was Germany's biggest employer by a wide margin.  Its workforce continued to grow, passing the 200,000 mark in 1960 and rising to 300,000 in 1972.  Sales increased from DM1 billion in 1951 to more than DM5 billion in 1962, and DM11 billion in 1970.

Earlier, in 1957, Siemens had concentrated its consumer-goods manufacturing in Siemens-Electrogeräte AG (which re-formed as a limited-liability company in 1966).  Household appliances passed to the joint venture Bosch-Siemens-Hausgeräte GmbH in 1967.  In 1969, Siemens and AEG formed Kraftwerk Union (KWU), which advanced rapidly to become the leading company in the energy sector.  In 1977, KWU passed fully into Siemens' hands and has been part of the Power Generation Group since 1987.  In 1978, Siemens obtained the full complement of shares in Osram GmbH, a company it had originally co-founded in 1919 with AEG and Auer Gesellschaft.

Source : Siemens official website 

 
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Last revised: December 19, 2010

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