& Tornado Alley
Contrary to the belief of many, the automobile was not invented in the United States. Credit for its invention goes to Germany. Two Germans working independently, Gottlieb Daimler and Carl Benz, can claim credit for major developments for the automobile.
Carl Benz invented the two cycle engine in 1879. Initially he envisioned his invention being used only as a stationary power source, and he started his own company to manufacture engines for that market. By 1885 however, he was experimenting with mobile applications for his engine. Carl Benz was not enchanted with the allure of speed. He tried to limit the design speed of his vehicles to thirty miles per hour. That limitation did not hold for long as other members of his company pushed for high speed.
The modern automobile engine is descended from the four-stroke engine invented by Nikolas Otto in 1861. Gottlieb Daimler worked for Otto's company for about ten years (1872 to 1882) before leaving to form a company with Willhelm Maybach. In 1890 Daimler formed his own company, Daimler-Motoren-Gesellschaft, in a town near Stuttgart in southern Germany. A customer of Daimler, Austrian businessman Emil Jellinek had a profound impact on the company. Jellinek persuaded Daimler to increase the engine power of his automobiles. Later Jellinek became a business agent for the company and demanded that one product be named after his daughter Mercedes. At the turn of the twentieth century, the Daimler company, the automobile engineer Willhelm Maybach and the racing car enthusiast Emil Jellinek created high performance racing machines. Carl Benz' company was also producing top-performance racing machines.
It was not until 1924 that the two German companies saw fit to merge. Actually their bankers who saw the companies nearing bankruptcy encouraged the merger. When they did merge they created the most venerable name in the automobile industry, Daimler-Benz. The product line Mercedes Benz has been the epitome of pretige transportation for nearly a eighty years. The heads of state in Germany and elsewhere have made the Mercedes the vehicle of choice. In Africa, the top-level government officials are so closely identified with the Mercedes Benz that they are jokingly referred to as the tribe of Benz.
Now of course with the merger of Daimler-Benz with the American firm of Chrysler to form DaimlerChrysler the company product has a less strictly German identification.
Up until 1955 Daimler Benz was heavily involved in auto racing. A disasterous accident that year caused the company to withdraw from the racing scene. In the years afterward it concentrated on producing automobiles and trucks. Daimler Benz' success in the field of truck manufacture was even greater than its success in automobile manufacture. In 1997 Daimler Benz was the world's leading manufacturer of full-size trucks.
Bertelsmann is not a well known name but it should be. Bertelsmann is the world's third largest media company. Its origin was in book printing but now it is a conglomerate which includes music, magazines and entertainment.
The company was founded by Carl Bertelsmann in 1835 to publish Prostestant religious tracts. The company is still controlled by the founders family. His great grandson, Reinhard Mohn, sets policy but does not manage the day-to-day operations. In the nineteenth century the company expanded its publishing throughout German from its home area of western Germany, Westphalia.
In the Nazi era the company had a difficult time because of the antireligious nature of the regime and the wartime restrictions on the use of resources. Reinhard Mohn spent several years in America as a German prisoner of war. During his internment he learned something of new methods of management. When he returned to Germany, he not only got the publishing operations going but he took the company into new business field. One innovation he was responsible for the creation of book clubs. The German public, poor but literate after the war, wanted to replace their stock of books destroyed during the Nazi era and the war. Mohn's book clubs gave them an opportunity to purchase books at discount prices.
Remembering the past difficulties experienced by the company due to its total dependence upon book publishing he promoted the branching out of the company into related fields. Now Bertelsmann owns the magazine Der Stern and a major share of Europe's most popular newsmagazine Der Spiegel.
Deutsche Bank is not only the largest bank in Germany, it is deeply involved in the finances of the major companies of Germany. This is because, contrary to the American practice, Deutsche Bank can invest its funds in common stocks. Commercial banks in the U.S. were under the Glass-Steagal Act of the 1930's prohibited from making such investments. If an American bank wants to make such investments it is designated as an investment bank and is prohibited from taking deposits from the general public as a commercial bank. Banks in Germany have not been subject to that restriction and are called universal banks.
(To be continued.)
The roots of Lufthans go back to 1909, although the modern company had its founding in 1955. In 1909 a company called Deutsche Luftschiffahrts AG (German Aviation, Inc.) was founded in Frankfurt am Main. At that time the only aircraft suitable for commercial passenger travel were airships design by Ferdinand von Zepplin. During the period 1910 to 1914 the company had scheduled service to Berlin, Leipzig, Hamburg, Düsseldorf, Baden-Baden and Frankfurt. This service was provided by the company's seven airships. This was an extraordinary accomplishment for its time. The service ended in 1914 with the advent of World War I.
When the war ended, Deutsche Luftschiffahrts AG could be resume its service because of restriction imposed on aviation in Germany by the Versailles Treaty. It was not until the late 1920's that the restrictions were lifted. Deutsche Luftschiffahrts AG developed the huge airships, Graf Zepplin and Hindenburg, for trans-Atlantic service.
In the 1930's these airships made 163 trips. With their 7000 mile range they were ideally suited to the trans-Atlanic travel. These airships relied upon flammable gases as lifting agents because the U.S. had a monopoly on helium and was willing to sell stocks to others. In 1937, for reasons not known with certainty, the Hindenburg caught fire while approaching a docking tower in New Jersey. This ended the airship travel.
There was another root to Lufthansa's origins. When the restriction imposed by the Versailles Treaty on German aviation were lifted in the 1920 a number of airlines developed. The two most important were Deutscher Aero Lloyd, founded in 1923, and Junkers Luftverkehr, founded by the aircraft manufacturer Junkers.
In 1926 the German government chose to create a domestic airline. The government the decided to create a domestic airline. It then merged the existing airline operations to form Deutsche Luft Hansa Aktiengesellschaft (Air League, Inc.). Deutsche Luft Hansa Aktiengesellschaft, founded in 1924.
The Industrial Revolution of the late 18th and 19th century was fueled with coal. In Germany the most readily availabe coal deposits were in Ruhr region of western Germany. This region became the industrial heartland of Germany. In 1871 August Thyssen established a steel plant on the Ruhr River. He very soon branched out of the steel business by persuing vertical integration. He acquired coal mines and later a major coal company. He then built a major steel plant in Bruckhausen. In good times Thyssen acquired companies; in bad times he merged with other companies. Thyssen managed to remain the leader of the merged company.
The design for the classic Volkswagen had its origin in the mind of Ferdinand Porsche in the 1920's. Porsche was an Austrian self-taught engineering genius. While he was solving other engineering problem as an engineering consultant he also worked upon the design of a low cost car for the general public. Porsche often worked ahead so that while a client wanted a design for something he would have something already worked out.
In the early 1930's Porsche was approached by Adolph Hitler to design a people's car, a volkswagen. Hitler wanted a car which would sell for 1000 marks. Porsche could not meet that low price and he proposed one that would sell for 1550 marks. A contract was drawn up and Porsche started to work. Hitler gave Porsche soldiers from the Nazi SS to serve as test drivers. The protypes Porsche produced were driven intensively virturally aroung the clock. When a part failed Porsche redesigned it. The result was a robust vehicle of an inspired design.
Hoechst is one of Germany's premier chemical companies. Its headquarters are in Frankfurt. The history of Hoechst is notable. It had its origin in 1863 under the name Meister, Lucius & Co. as a plant to manufacture dyes from coal tar. The plant was in the city of Hoechst-on-the-Main. In 1880 the name of the company was changed to Farbwerke Hoechst.
The hyperinflation of 1923 in Germany was devastating to German business and Farbwerke Hoechst was on the verge of financial collapse in 1925. But instead of collapsing it merged with seven other corporations to create the chemical dye cartel, Interessen-Gemeinschaft Farben, commonly known as I.G. Farben. I.G. Farben was notorious for wiping out its competition and exploiting its monopoly position. Furthermore, I.G. Farben had strong ties to the Nazi Party. When World War II was over it was certain that I.G. Farben would not survive. It was broken up into its constituent companies in 1953.
Hoechst's specialization had moved away from dyes. The exciting things of the period were plastics, synthetic fibers and pharmaceuticals. High labor costs in Germany resulted in Hoechst developing production facilities outside of Germany. Hoechst internationalization was promoted when the Kuwait Petroleum Company acquired an almost one quarter ownership of Hoechst. Meanwhile Hoechst itself was expanding by purchasing businesses around the world, but notably in the U.S.
The final transformation into a transnation corporation came in 1999 when Hoechst of Germany merged with the French company Société des Usines Chemiques Rhone-Poulenc. The merged companies took the name Aventis and establish headquarters in the French city of Strasbourg in Alsace-Lorraine.
At one time Krupp was world famous for the quality of the cannons it produced. The firm was founded in the 19th century by Alfred Krupp. Alfred Krupp actually took over the management of his father's steel factory when his father died. Alfred Krupp was only 14 years old in 1826 when he took over that small factory. The steel factory was located in western Germany.
The young Krupp recognized that it would be difficult or impossible to develop on his own the methods of quality steel manufacturing while competing with the established steel companies of Britain. He then did the logical thing and went to Britain learn what he could of the methods of quality steel manufacturing. When he returned he prefected a process for producing tableware from sheet metal. Spoons were manufactured by running sheet steel between mill rolls which had the impressions of the proper shape. Thus the spoons would be created by a continuous rolling process rather than being cast or hammered into shape by hand.
Krupp did not long limit his production to tableware. By 1850 his firm was producing wheels for railroad cars and engines. Railroad wheels had to be flawless and a quality product could command a premium. Soon, in 1859, Krupp was producing another product in which flawlessness was essential, canon barrels. Krupp's company went through a period of near bankruptcy before it found its niche market.
There were several wars carried out by Prussia in the period around 1870 and Krupp supplied the canon for these, sometimes to both sides in a war. By the 1870's Alfred Krupp was known as the Canon King and some saw Krupp as an essential factor in the political success of Prussia.
In the 1880's Krupp was employing 20,000 and had turned the town of Essen into a great manufacturing city. Alfred Krupp died in 1887 but the firm went on to greater and greater size and achievemets. By the time of World War I Krupp was employing nearly 100,000 people. It was an essential element of the Nazi war machine.
After World War II the head of Krupp was imprisoned and the firm promised to not manufacture armaments. The occupation authorities tried to prevent the Krupp company from manufacturing any steel and steel products. It was a difficult time for the company.
By the 1970's Krupp needed an infusion of outside capital. To that end in 1974 one fourth share of the company was sold to the Shah of Iran.
In 1992 Krupp merged with Hoechst after acquiring over 60 percent of the shares of Hoechst using borrowed funds. The merged companies took the name of Krupp-Hoechst.
In 1994 the management of Krupp-Hoechst began negotiations with Thyssen Steel for a merger. That merger was finalized in 1998 as Thyssen-Krupp. The merged company was a truly gigantic conglomerate with aggregate revenues in 1998 of nearly 69 billion Deutsche marks.
The venerable electrical industry manufacturing firm of Siemens AG was founded by the inventive genius, Ernest Werner Siemens. He was born in 1816 near Hanover in Prussia. His family could not afford the technical training that Siemens felt he needed so he joined the Prussian Army to gain engineering expertise as an artillery officer. In 1841 Siemens was introduced to the potentials of electricity when he witnessed the operations of the telegraph. His future lay in the development of electrical devices. Even an unfortunate stay in prison, for serving as a second in an illegal duel, did not deter him. While in prison he managed to invent an electroplating process.
His immediate focus after the prison episode was to perfect and implement telegraphy. In 1847 he joined with Johann Georg Halske to form the company Telegraphenbauanstalt Siemens & Halske to manufacture telegraphy equipment in Berlin.
Although an identifiably German company, Siemens from the very first pursued international markets. Ernest Werner Siemens sent family members to represent the company in the other major European countries. This transnational positioning of the company put it into competition with Thomas Alva Edison's companies. The German company of AEG, (Allgemeine Deutsche Electricitätsgesellschaft), became an Edison company and was Siemens major competitor in Germany. Siemens' and AEG's operations in Berlin made that city a focus of the world's electrical equipment industry.
Through the nineteenth and twentieth centuries Siemens was one of the largest German companies. It developed and produced in almost all lines of electrical equipment. By the end of the twentieth century Siemens was decidedly a conglomerate corporation.
|Industrial Distribution of
Siemens AG Employment, 1998
The downside of the age and venerability of the firm is that some of the innovative spirit of the founder has been lost to bureaucratic sclerosis over the years. The structure and management philosophy of Siemens has been described as museum-like. Profitability is weak; the overall rate of return on capital was only 2.7 percent in the late 1990's.
Allianz, headquartered in Munich, may be the largest insurance company in the world. It was founded in 1890 and soon began to acquire other, older insurance companies. Its market are spread throughout the insurance fields of property and life. It also has subsidiaries in many countries.
An insurance company accumulates a financial fund in the course of providing insurance. This fund has to be invested so insurance funds become a source of long term capital investment comparable to a bank. This means that Allianz has a portfolio of investments that gives it influence in the control of manufacturing and service corporations. So Allianz plays a role in the German economy similar to that of Deutsche Bank.
One of the hottest items in business management in the past decade has been enterprise software. Such software allows the various division of an organization is interact with each other and with the organization's database. Businesses were getting more and more complex and cumbersome. The same information had to be entered into computers in diverse parts of the business. But there was no guarantee that the supposedly same information was, in fact, the same information. The idea of enterprise software was that items such as orders would be entered once into the enterprise data base and thereafter the divisions which needed that information would access it from the central data base. This requires an error-proof program for recording, accessing and deleting information from the enterprise data base. The enterprise accounting must also be compatible with the system. Likewise for human resources, etc.
The idea sounds new, but it had its origins in the ideas of four IBM employees in its German branch. These employees tried to interest IBM in the concept but IBM turned it down. The employees then started their own company in 1972, which they called SAP. SAP is an acronym for an English phrase: Systems Applications Processes.
By the 1990's SAP had worked out its system and developed the supporting software. It was the premier enterprise software system company, the Mercedes Benz of its industry. It was expensive and the time required for its implementation at a particular company time consuming and exacting.
SAP soon had competitors. Unocal, the company that operates the Union 76 service stations contracted in 1995 with Oracle Systems to create its enterprise management system. When it was completed in January of 1996, Oracle ran a newspaper advertisement in The Wallstreet Journal, quoting a vice president of Unocal to the effect that Oracle enterprise management system was installed in half the time with half the cost of a SAP sysem. Later in 1996 Unocal was effectively retracting its implied endorsement of Oracle's system cause the Oracle system did not work. SAP's reputation for quality remained intact.
SAP in recent years has been one of the top 5 software companies in the world, along with Microsoft. Microsoft itself had SAP install an enterprise management system.
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