Present right from the start

Siemens and German Reunification

Nearly 30 years after German reunification, Siemens maintains a presence in 14 cities in the eastern part of the country, where some 5,600 of its employees work at seven branch offices and at 13 manufacturing and development locations. Siemens is an important economic engine in Germany’s eastern region. This impact stems partly from the company’s development and manufacturing operations, sales and service organizations, and training programs. Another important factor, however, is Siemens’ work with local research partners in projects that drive progress by fostering vital innovations.

 

While the impact of Siemens’ strategic realignment on the development of the locations that the company acquired in East Germany has caused conflict, it has also opened the door to new opportunities – a fact well illustrated by the Görlitz turbine factory, whose roots go back to the founding year of the Telegraphen-Bauanstalt von Siemens & Halske.

1989/90 – Time of profound change

The years 1989 and 1990 were a time of profound change for Siemens: For the first time since the founding of Siemens AG (1966), the company carried out a comprehensive organizational reform. Other milestones included the acquisition of British-based electronics company Plessey, followed by the merger of Siemens Data Information Services and Nixdorf Computer AG that established Siemens Nixdorf Informationssysteme AG (SNI). 

While these processes were unfolding within the company, the government of the German Democratic Republic (GDR) collapsed, and the border between the two Germanys was opened. This was followed by the currency union, the Unification Treaty, and finally the accession of the GDR to the territory of the Federal Republic of Germany on October 3, 1990.

The Company is firmly committed to investing considerable resources in the new German states. Our aim is to secure as solid a market position in this region as we currently command in the western part of the country.
Karlheinz Kaske, 1990

Tradition in Germany’s east – First Technical Bureau, 1889 in Chemnitz

The territory of the former East Germany had been part of the traditional core market of the "Telegraphen-Bauanstalt von Siemens & Halske," founded in 1847: Siemens opened its own sales office in Chemnitz back in 1889. Other so-called Technische Büros (technical bureaus) were established in Dresden (1892), Leipzig (1897), Erfurt (1897), Magdeburg (1901), Rostock (1910), and Cottbus (1929). Siemens also maintained several production sites, including the X-ray tube factory in Rudolstadt, which still exists today and is part of Siemens Healthineers. In 1939, Siemens had some 30,000 employees in the territory of what would become the Soviet occupation zone and eventually the GDR.

Situation after 1945 – "Siemens" officially erased in the GDR

In the wake of the Second World War, the name "Siemens" had been officially erased from the territory of the Soviet occupation zone and eventual GDR in 1949. Key production facilities were expropriated, and the technical bureaus were forcibly taken from the company, destroying the sales network in the Soviet zone. The former Siemens factories and branch offices were now Volkseigene Betriebe ("publicly owned enterprises"), integrated into the system of the socialist planned economy. From that point forward, business with the GDR’s centrally controlled economy was managed by the Siemens branch office in West Berlin. The staff there continued to nurture and cultivate German-German business relations for decades, subject to the political climate between the two German states. The Leipzig Trade Fair in spring and autumn and the Hanover Fair were the main source of major initiatives.

In 1984, Siemens signed an accord with a consortium of East German international trade organizations and collectives with the aim of promoting long-term scientific and technological collaboration. The pact was a success: Within just a few years, revenues from “eastern operations” skyrocketed from DM 46.5 million (1983/84) to DM 150 million (1988/89). Products and solutions in the fields of automation technology, medical technology, and data technology were in particular demand.

After the reunification – Euphoria and uncertainty

This systematic cultivation of good business relations meant that Siemens already had many good contacts in place when, in the spring of 1990, the conditions were created to establish joint ventures and otherwise collaborate with GDR companies. More than 20 statements of intent and partnership agreements were signed within just a few months, laying the groundwork for later acquisitions and takeovers of former publicly owned enterprises and collectives. At the same time, efforts began to establish a sales and service organization after the West German model. "We arrived with open arms and high expectations," recalls a manager who was at Siemens in Leipzig from 1990 to 1992. And he went on:

The euphoria was universal – and so was the uncertainty. But all of us – colleagues from East and West alike – were bolstered by a common will to make a new beginning.

Hopes and expectations – Tremendous pent-up demand in the new German states

Siemens had ambitious goals: The company wanted to quickly become the leading provider of electronics and electrical technology in the new German states – and achieve a market position there that was as solid as it enjoyed in the rest of Germany. Karlheinz Kaske, CEO at the time, summed it up in a nutshell: He wanted to achieve annual revenues in the east of DM5 billion, invest about DM1 billion, and hire several thousand employees.

 

All activities were coordinated by a small team based in West Berlin. The efforts in the new German states carried the expectation that Siemens would profit from the large projects to develop and modernize the eastern German infrastructure. There was, after all, a lot of catching up to do in the fields of communications and data technology, energy supply, factory automation, and medical and environmental technology.

 

Siemens also hoped it could leverage the relationships it had cultivated with former East German companies to tap into the electronics markets in Central and Eastern Europe. A hope that, with the collapse of the Soviet Union, would only be realized to a very limited degree.

Success factor employees – Investing in training and continuing education

Siemens prioritized training and continuing education for the new employees and demonstrated this by honoring all existing training contracts in acquired East German companies. In the early 1990s, nearly 1,600 young men and women completed apprenticeships, most of them through on-the-job training.

 

The company also invested over DM 30 million in renovating and upgrading twelve company-owned training facilities. To promote a broad-based transfer of knowledge, some 500 employees from the new eastern states visited sponsor companies in the West to “learn by doing” in preparation for their new responsibilities. A comprehensive seminar program trained several thousand managers and specialists in marketing, business administration, HR, and labor relations. 

"Once again open for business throughout Germany" – Development in the east successfully completed

 

By the spring of 1991, Siemens had taken over all or some of 15 former publicly owned enterprises from the public trustee agency, half of them production plants and the other half sales, engineering, and service entities. The next step was to integrate the new businesses from their interim structure as limited liability companies (GmbH) into the existing structures of Siemens AG by October 1, 1992. On the occasion of a visit by Chancellor Helmut Kohl to the Schwerin cable factory in mid-November of that year, Kaske’s successor Heinrich von Pierer proudly announced that this effort had succeeded and that Siemens was "once again open for business throughout Germany."

 

Today, nearly 30 years later, the company can look back on an eventful yet successful period of development: Since 1990, it has invested about €3.5 million in the new German states and established highly modern facilities. In 2018, with about 118,000 employees and several thousand apprentices, Siemens is one of the largest private German employers and training companies. Not all ambitious goals from 1990 have been achieved to date – but a lot has been accomplished. 

 

One of 15 examples – The turbine factory in Görlitz

One of the production facilities that Siemens acquired at the beginning of the 1990s was the turbine factory in Görlitz, a city on the Neisse River in eastern Germany. The history of this tradition-rich manufacturing location, at which 830 employees and trainees now work, began with the founding of Görlitz’s first engineering establishment in the year 1847. Considered to be the starting point of today’s turbine factory, the facility specialized in the manufacture of textile machines until 1858, when it switched to steam machine production, an activity that continued for more than 100 years. The construction of steam turbines for use in industrial applications and power plants began finally in 1906. Over the next four decades, order intake fluctuated greatly due to contemporary political and economic circumstances and to fierce foreign and domestic competition. During World War II, the factory was primarily engaged in armaments production.

 

 

Dismantled when hostilities ended, it received a license in the fall of 1946 to repair steam turbines and manufacture spare parts. At the beginning of 1947, the factory was converted into a state-owned enterprise, Volkseigener Betrieb Görlitzer Maschinenbau (GMB). The first steam turbines, which were based on a new design, rolled off GMB’s assembly lines five years later. From 1952 until the Wall fell in 1989, the factory supplied nearly 900 steam turbines, with a total capacity of 5,000 MW, primarily to customers in East Germany and other countries behind the Iron Curtain. The facility also boasted decades of experience in steam turbine services.

In March 1990, GMB management and the KWU Group of Siemens AG signed a memorandum of understanding to establish a future collaboration. The first employee assembly at the Görlitz factory took place a month later in the presence of Heinrich von Pierer, President of Siemens’ Power Generation Group (KWU). Pierer later recalled: 

I can still see the […] factory’s employees in front of me: On the one hand, worried: What will the future bring? But on the other, full of hope: At least, in Siemens we have a good partner. For those of us from Erlangen, this was a lasting impression – lived reunification, so to speak.
Heinrich von Pierer, 1990
With this pact for the future, we’re fulfilling our promise to play an active role in shaping structural change in the Görlitz region.
Joe Kaeser, President and CEO of Siemens AG, 2019

Sabine Dittler | Dr. Claudia Salchow

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Further information on this topic

Further reading

  • Siemens in den neuen Bundesländern 1990 bis 1992, hrsg. v. Siemens AG, Zentrale Dienststelle Regionale Koordinierung Neue Bundesländer (RKD), Berlin Januar 1993 (in German only)
  • Heinrich August Winkler, Der lange Weg nach Westen, Bd. 2: Deutsche Geschichte vom „Dritten Reich“ bis zur Wiedervereinigung, 5. durchgesehene Auflage, München 2010  (in German only)