1919: The company after the end of World War I
The war and the terms of the Treaty of Versailles had a major impact on Siemens’ development. The company lost almost 40 percent of its capital, including almost all its international patent rights. The situation was further exacerbated by the loss of most of the company’s foreign subsidiaries and sales offices. Siemens’ management responded to these challenges by implementing internal restructuring measures and introducing mechanized mass production. Many manufacturing operations and company processes were successfully streamlined to enhance their efficiency.
Under the leadership of Carl Friedrich von Siemens, the Head of the House of Siemens after 1918, the company, its legally separate subsidiaries and its affiliated companies limited their activities to the field of electrical engineering. At the same time, however, they aimed to cover all the field’s applications. It was largely due to this strategy of unity and diversity that Siemens was once again one of the world’s five leading electrical engineering companies by the mid-1920s.
1919: Founding of the lamp manufacturing company OSRAM
To merge their lighting activities in the incandescent lamp business, AEG, Siemens & Halske and the Deutsche Gasglühlicht AG form the OSRAM GmbH KG on July 1, 1919. Siemens held a 40-percent stake in the joint venture. Faced with the loss of international markets as a result of the war and stagnating technological development, Germany’s leading incandescent lamp manufacturers had concluded that cost-efficient production – and thus increased competitiveness – could be achieved only by joining forces.
The new company’s efficiency was greatly enhanced by rigorously streamlining manufacturing processes, combining individual production steps and making increased use of machinery.
In 1924, OSRAM signed an international incandescent lamp agreement that gave its signatories extensive specific rights and, in effect, divided up the global incandescent lamp market. OSRAM also established sales offices worldwide. As a result, the company was one of world’s largest lamp manufacturers in the 1930s, with a market share of 70 percent in Germany alone.
1922: The beginnings of the European telephone network
In 1881, Germany’s first telephone exchange went into service in Berlin. In the years that followed, the telephone’s importance as a means of communication increased continuously. By 1900, not only local networks but also the first long-distance connections were in operation. The range of these connections was limited, however, to about 35 kilometers. To extend it, the company redoubled its efforts to improve long-distance telephony. Leveraging the insights of physicist Michael Pupin, Siemens researchers substantially improved transmission range and quality at the beginning of the 20th century.
Initially, almost all telephone connections in Germany were overhead lines – and therefore easily damaged. In the winter of 1909, heavy storms and sleet shut down the telephone system in the northern part of the country for weeks. As a result, the Reichspostamt – the German Post Office, which operated the country’s telephone system – decided to replace its network of overhead lines with pupinized cables that ran underground. Inductors incorporated into the telephone lines at regular intervals improved speech intelligibility considerably.
In 1912, Siemens & Halske began laying the Rhineland Cable, a pupinized line linking the east German state of Brandenburg with the industrial cities of the Rhineland via Berlin. During the 1920s, Siemens was involved in further expanding the German telephone system and linking it with those of other countries. In 1937, 1.1. billion telephone calls were placed within the European telephone network.
1923/24: International partnerships in Japan and the U.S.
In the aftermath of World War I, Siemens lost almost all its subsidiaries and affiliated companies. This made the company all the more determined – in the interest of its long-term competitiveness – to regain access to the international markets. To systematically tap the East-Asian market, Siemens-Schuckertwerke established a joint venture with Furukawa of Japan in August 1923. Headquartered in Kawasaki, the new company operated under the name Fusi Denki Seizo KK. Siemens held a 30-percent stake in the joint venture.
In the early 1920s, Germany’s electrical engineering industry lagged far behind that of other countries. To catch up with international developments, Siemens’ management reactivated old business connections in the U.S. At the time, companies such as the Westinghouse Electric Company were global leaders in power engineering. In October 1924, following lengthy negotiations, Siemens-Schuckertwerke signed an agreement with Westinghouse for the regular exchange of patents and knowhow. The agreement marked the beginning of a decades-long partnership.
1924: The beginning of assembly line production
During World War I, it became clear that technical and organizational streamlining was the key to efficient industrial manufacturing. This insight helped drive the modernization and reorganization of production at Siemens. In the early 1920s, the company began the shift to assembly line production by standardizing and realigning its manufacturing processes for domestic appliances and radios.
The main features of this new manufacturing method were the division of labor, the standardization of individual parts and components, precision manufacturing and uninterrupted production processes.
In December 1924, the first vacuum cleaners rolled off the assembly line at the Elektromotorenwerk in Berlin. The advantages of the new production process were quickly apparent. It reduced storage requirements by 40 percent and cut production time in half. During the 1930s, all suitable production lines throughout the company were gradually converted to assembly lines.
1925–1929: The Ardnacrusha hydroelectric power plant brings electricity to Ireland
At the beginning of the 1920s, large areas of the Irish Free State were without electricity. This situation changed only in 1929, when the Ardnacrusha hydroelectric power plant went into operation. As general contractor and supplier of electrical equipment, Siemens-Schuckertwerke was commissioned by the Irish government in 1925 to plan and build the three-phase run-of-river power plant on the River Shannon.
The implementation of the electrification project proved to be a massive organizational and technological challenge for all involved. This applied particularly to the civil engineering work for which Siemens-Bauunion was responsible. A total of 8 million cubic meters of earth had to be excavated and incorporated into dams and around 1 million cubic meters of rock had to be blasted and removed.
Against all odds, the dam system and power plant, which was operated by three 30-MVA generators, was completed in less than four years. This major project considerably enhanced Siemens’ status as an international competitor
1932: Establishment of Siemens-Reiniger-Werke
Founded in 1886 and headquartered in Erlangen, Germany, the medical technology company Reiniger, Gebbert & Schall (RGS) was an important competitor of Siemens. Until the mid-1920s, it dominated most of the German and a substantial part of the global healthcare market, particularly in the area of X-ray devices.
In 1924, Siemens acquired a majority stake in RGS, which, in its efforts to expand, had overextended itself financially. The joint marketing of medical products was highly successful. With the onset of the Great Depression in 1929, however, the booming healthcare market collapsed. A continuous decline in business coupled with internal disagreements about the companies’ different production locations, led Siemens to bundle its medical engineering activities in Siemens-Reiniger-Werke AG (SRW).
Although the new company was headquartered in Berlin, all its production was located in Erlangen. SRW quickly became the world’s largest company in electro-medical products.