Deutsche Babcock

Deutsche Babcock AG (full name: Deutsche Babcock & Wilcox Dampfkessel Werke Aktien-Gesellschaft) was a German manufacturing company based in Oberhausen in the Ruhr District, the center of the German economy. The company was established in 1898 as a German subsidiary of the British boilermaking company Babcock & Wilcox, Limited. In the beginning of the 20th century and the interwar period Deutsche Babcock expanded its business across the German Empire and the countries of Eastern Europe and, to a lesser extent, Scandinavian countries. Financial success and military conflicts between Germany and the United Kingdom led to de facto independence of Deutsche Babcock from its British parent, although the British owned the controlling interest in Deutsche Babcock until 1975.

After World War II Deutsche Babcock controlled the West German market for industrial steam boilers and nuclear power equipment. It diversified into oil and gas firing equipment, nuclear fuel,[1] reprocessing components, air conditioning systems, refrigeration equipment, specialty steels and wire, copper pipes, cast-iron fittings, desulfurization systems, and water-treatment plants. In 1996 the company experienced a severe crisis and was reorganized into Babcock Borsig. In 2002 the second crisis forced disbandment of Babcock Borsig and sale of its industrial assets to independent buyers. At the time of the company's failure it had 13,000 employees in Germany and 9,000 in other countries. As of July 2010, Babcock Borsig still exists as a shell company

History

Formation

The American boilermaking company Babcock & Wilcox, established in 1866, set up their first overseas operation in London in 1881.[3] In 1891 the American shareholders sold the majority of their interest in the UK operations to the public.[4] The parent company retained control over their intellectual property in the United States and Cuba.[5] The new independent British company, Babcock & Wilcox Limited, assumed control over the Babcock & Wilcox patents and licenses in the rest of the world.[5] It had already established itself in Western Europe, Australia and the Middle East.[5]

The British Babcock & Wilcox Limited entered the German market in 1887 through licensing of its technology and brand to a local manufacturer, Schwartzkopff.[5] By the middle of the 1890s the British became dissatisfied with apparently low volume of business: their German licensee "had too much else to attend to".[6] Direct operations in Germany were ruled out in fear of the strong anti-British sentiment among the Germans.[6] Instead, in 1898 Babcock & Wilcox Limited formed a German subsidiary company, Deutsche Babcock & Wilcox Dampfkessel Werke Aktion-Gesellschaft (Deutsche Babcock & Wilcox, DB&W).[6] Robert Jurenka and Alois Seidle from Bohemia signed an agreement with Babcock & Wilcox to convert their Berlin sales office into a fully operational subsidiary. Babcock & Wilcox Limited granted DB&W an exclusive license to sell Babcock & Wilcox products in Germany and its colonies. The British parent retained majority ownership and representation in the board of directors of DB&W.[6]

Expansion

Jurenka and Seidle bought a boilermaking factory in Oberhausen in the Ruhr District and started manufacturing with mere thirty employees. In 1909 Deutsche Babcock added a factory in Gleiwitz to make steam generators. By 1927, the company had 1600 employees. The company has been continuously profitable and always[6] paid dividends until (at least) 1939.[6] Jurenka led Deutsch Babcock until his death in 1942. He was responsible for a company culture that was unusual for its time. The company offered health insurance from the start, a five-day workweek prior to 1914, 421/2 hour workweeks by 1930, and pensions for retirees starting in 1938.

After the end of World War I Deutsche Babcock engaged in a conflict with its parent company. The war had already terminated the ties between British and German businesses.[7] DB&W acquired substantial market shares in Scandinavia, the Netherlands and the Baltic countries, which had formerly been a "British territory".[7] The German management, riding high on the wave of continuously strong financials, openly contested their British parent's rights to these market and asserted de facto independence of DB&W.

Post-war recovery

After taking over the company during World War II, Robert Jantscha faced numerous challenges. The Oberhausen plant was bombed, Silesia became part of Poland, and the Soviet Union imposed Communism throughout much of the area where Deutsche Babcock operated. The company succeeded, though, by changing its focus to agricultural machinery and building a new plant in Friedrichsfeld (Voerde), on a site purchased in 1921.

After World War II the British parent company assumed control over the board of DB&W. In 1954 the British confirmed the exclusive rights of DB&W for Central and Eastern Europe and the future United Germany.[12] The European subsidiaries of Babcock & Wilcox temporarily united with a common goal of post-war recovery and transfer of technologies.[13] However, in 1959 the fragile union was weakened by a conflict between European and American interests in nuclear powerplant construction.[13] DB&W, which possessed unique technology of making oversized boilers, led the opposition to the transfer of European technology to the Americans.[13]

Decline

A freeze on new nuclear plants in West Germany, a decline in new power plant construction overall, currency problems in Kuwait, and difficulty competing with foreign firms in the boiler industry led to some down years for the company. Still, Deutsche Babcock built a number of plants in the Middle East despite the Iran–Iraq War. The decline in nuclear power and a return to coal actually created a new area of business—pollution control. Deutsch Babcock also branched out into improvement in water quality and soil quality, and environmental engineering went from a tenth of the company's business in 1983 to a fourth in 1988. Helmut Wiehn became president as the company began its comeback.

The fall of Communism led to new markets in Eastern Europe, and agreements with companies in Czechoslovakia and the former Soviet Union resulted.[19]

In 1995, Deutsche Babcock lost 8.7 million marks and expected to lose 400 million marks in 1996 when the company's banks agreed to provide 500 million marks (about US$327 million) for reorganisation.[20]

History

Formation

Expansion

Post-war recovery

Decline

Babcock Borsig: the final years

See also

External links

References

trade name	Deutsche Babcock AG
founded	1898
parent	Babcock & Wilcox, Limited (1898-1975)
industry	Manufacturing
defunct	2002