In the summer of 1894, Siemens established the electrical engineering company’s first technical office in Latin America in Mexico City. The opening of the office marked the start of a story of highs and lows – a story of political unrest, two world wars, fast-paced economic growth and a government financial crisis. Despite these constantly changing business conditions, Siemens is still one of the most successful foreign companies in Mexico today.
The German electrical engineering industry at the forefront – The first contract in Latin America
On August 1, 1894, Siemens & Halske (S&H) opened a regional office under the name of S&H Despacho Técnico México in Mexico City. This office was initially set up and managed by Victor von Uslar, an external representative. In the following year, Siemens decided to run the office on its own. Under the leadership of Wilhelm Brockmann, the office won its first major contracts, including one to build the first Mexican steam power plant in the city district Nonoalco. To carry out the project, the company Compañia Mexicana de Electricidad S.A. was established in the capital. This contract also represented the first job performed by the German electric engineering industry in Latin America. During the same year, the regional office installed the entire electric lighting system for Mexico City. In 1903, Siemens became part of the project to build the country’s largest hydroelectric plant on the Necaxa River.
In 1904, Siemens-Schuckertwerke México Elektrizitäts-Gesellschaft mbH was established. The company’s primary business was to carry out high-voltage projects. But the company also served as the representative of the low-voltage business carried out by Siemens & Halske. Under the new Managing Director Alfred Hirsch, the regional company successfully expanded its business activities in the following years. As part of a major project to build a hydroelectric plant in Guadalajara, a sub-office was opened there in 1911. Another regional office was also opened in Monterrey in the same year.
With the help of the Mexican regional company, Compañia de Luz, Fuerza y Ferrocarilles extended a contract to the parent company in Berlin to electrify and expand a railway line connecting the city of Pachuca with silver mines in the surrounding area in 1911/12. In 1913, the first railway electrified by Siemens in Mexico went into operation.
Difficult situation caused by revolution and two world wars – but the new start succeeded
The continuation of activities in Mexico was hampered by the revolution of 1910/11. The unrest ultimately destabilized the country, harming the business climate in the process. The outbreak of World War I in 1914 worsened an already problematic situation: Communication linked and the flow of goods between the Siemens regional office and the headquarters in Berlin were disrupted. The situation did not improve until the war ended. In the interim, company leaders decided to operate the company as a stock corporation under Mexican law. During the period between the two world wars, Siemens profited from Mexico’s intensified efforts to industrialize the country. But World War II put an end to this success; Mexico sided with the Allies. In 1942, Mexico ordered the regional office to be closed, and all employees were laid off.
Siemens had to wait until 1953 for another chance to gain a foothold in the Mexican market. It took advantage of this opportunity by opening a representative office in Mexico City. Siemens set up its own regional company three years later. This company represented the interests of the three parent companies Siemens & Halske, Siemens-Schuckertwerke and Siemens-Reiniger-Werke. In the decades following the war, Siemens profited from a politically stable Mexico and continuous economic growth. But the good times soon ended for the Central American country: Its economy began to slow at the end of the 1960s. In 1982, the economy was battered by the Latin American debt crisis and the Mexican government’s inability to service its debt.
More and more major contracts – Siemens as a strong economic factor in Mexico
But the impact of these crises was relatively small because Siemens had been operating in a stable economic environment since the 1950s. Another positive factor was the company’s broad range of business activities in the country. These operations ranged from energy, transport and communication technologies to industrial systems and electrical medical devices. Thanks to this broad base of businesses, the regional company weathered these instable times and expands its operations.
The following decades were a period filled with major contracts. In one such project, Siemens played a key role in the expansion of public transportation. In 1987, it joined the project to modernize the transportation network in Guadalajara. During this multi-stage expansion project, a new light rail system was built in the city of more than 1 million residents in western Mexico. As part of this major project, Siemens also began to train local skilled workers. Ten years later, the state-owned oil company PEMEX awarded Siemens/KWU the largest order to date for modernizing the complete electrical and instrumentation system for a refinery.
In 2013, the regional company generated revenues of more than €700 million and employed more than 6,000 people. Something that Gerd Tacke said in 1967 while he served as Chairman of Siemens’ Managing Board applies in particular to Siemens in Mexico: “As our actions show, we don’t enter foreign countries as traders who sell their wares and then move on. Instead, we make our homes in foreign countries because our national subsidiaries give us roots.”
Dr. Ewald Blocher