Making competitors into partners 

The origins of Siemens-Reiniger-Werke

In 1932, Siemens’ medical technology operations were up against the wall. Pressured by year after year of mounting losses in the wake of the 1929 global economic crisis, management was forced to act. And their choice panned out well: by 1939, Siemens-Reiniger-Werke, a child born of necessity, was already a world market leader in many fields. 

From stepchild to industry heavyweight – The medical technology business grows

Traditionally, Siemens’ medical technology business had always stood a little in the shadow of the two core companies, Siemens & Halske AG and Siemens-Schuckertwerke AG. True, Werner von Siemens himself had experimented with a vast range of applications, and in 1878 he even invented the “Phonophor,” a telephone earpiece for the hard of hearing. But in comparison with massive projects like laying the first direct transatlantic cable or building power plants, medical technology had always remained something of a stepchild.

 

Yet considered on its own, the healthcare business was another example of Siemens’ strength. By1896, shortly after x-rays were discovered, the company had already put its own x-ray tubes on the market, and within the following decades it evolved into one of the sector’s heavyweights. This was the situation in 1925, when one of the company’s biggest competitors, Reiniger, Gebbert & Schall AG (RGS), was in trouble. Siemens healthcare managers made the most of the opportunity: they bought the troubled firm. The takeover and the integration process were a success. A joint marketing company was established in short order, and production activities like those for x-ray tubes were pooled in Rudolstadt, in Thuringia. The healthcare business reported rising profits year after year.

 

All of that changed in an instant with the global economic crisis of 1929. As the economy collapsed, tax revenues slumped for governments – whose healthcare services had been one of the chief customers for medical technology. Losses grew steadily, as the annual report from the summer of 1932 made abundantly clear: 

Reduced purchasing power among our private customers and reductions in expenditures for medical purposes at hospitals and by local and national governments in Germany and abroad led to a decline in our new orders and revenue.

In 1930, Dr. Theodor Sehmer, the head of the joint marketing company, had already floated the idea of merging the individual companies. The first actual steps were decided in 1932. For one,  all medical equipment production would be relocated from Berlin-Siemensstadt to Erlangen and pooled there. For another, the organization would be tightened up and centralized.

 

The final decision was made by the head of the entire company, Carl Friedrich von Siemens: “The businesses must pursue concentration and simplify their organizations […] so that they can return to generating a reasonable return on capital with only 50–60% of their maximum revenue. […] A further point of special importance is combining the responsibility for managing the company as a whole within one managing board, compared to the former […] situation, which suffered from a division of responsibilities among one marketing company and three plants.” 

 

Thus the die was cast. The necessary steps and preparations were begun. By the end of 1932 the various boards had got the merger under way. 

Merger ends fragmentation – United by the global economic crisis 

A new name was soon found for the company. In July Max Anderlohr, the head of technology at RGS, wrote: “Nothing has been decided yet about a future name for the combined medical companies […], but I think Dr. von Buol [then head of S&H] will agree to the name Siemens-Reiniger-Werke (SRW), which has been used repeatedly in discussions lately. Both Dr. Sehmer and I myself are suggesting that name for the company.” 

The final, deciding special shareholders’ meeting of RGS was held on December 19, 1932. The shareholders approved the resolutions: the individual companies’ assets were to be transferred to RGS, and RGS would be renamed SRW. The new name was reported to the authorities early in the new year, and was entered in the Commercial Register on January 25, 1933. At eight a.m. just one day later, word went out: “All outgoing correspondence that still bears the RGS name must be marked with the new company stamp.” Siemens-Reiniger-Werke AG officially set to work.

 

Dr. Florian Kiuntke

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Further information on this topic

Further reading

Florian Kiuntke, Mit Röntgen auf Kurs – Das Röntgenwerk der Siemens AG in Rudolfstadt 1919–1939 (In German with English abstract)