Brown, Boveri & Cie: From Humble Beginnings to Global Leader

Brown, Boveri & Cie was founded in 1891 by Charles Eugene Lancelot Brown, Walter Boveri, and Ernst Rütschi in Baden, Switzerland.

The company started small, with a workforce of just 200 employees.

Brown, Boveri & Cie's early success was largely due to its innovative approach to electrical engineering, which led to the development of the first high-voltage generator in 1891.

This breakthrough technology quickly gained recognition and helped establish the company as a major player in the industry.

The company's commitment to innovation and quality led to rapid growth, and by the 1920s, Brown, Boveri & Cie had expanded to become one of the largest electrical engineering companies in Europe.

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BBC Brown Boveri was established in 1891. The company was one of only a few multinational corporations to operate subsidiaries that were larger than the parent company.

Brown Boveri had to establish subsidiaries throughout Europe early in its history due to the limitations of the Swiss domestic market. This led to difficulties in maintaining managerial control over some of its larger operating units.

The merger with ASEA, a company with strong management, was expected to help Brown Boveri reorganize and reassert control over its vast international network.

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Brown Boveri's growth was fueled by the rapid industrialization of Europe, creating a strong demand for the company's heavy electrical equipment. This demand was particularly strong in Italy, where the burgeoning railroad industry provided a significant boost to the company's Italian subsidiary.

The company's German facility actually did more business than the Swiss parent, and each of the subsidiaries grew individually, as if it were a domestic company in the country where it operated. This broad geographic coverage helped insulate the parent from severe crises when a certain region experienced economic difficulties.

In the early days, Brown Boveri's activity in the UK involved producing electrical components, such as locomotive motors and energy equipment for European railway systems. The company also entered into a licensing agreement with the British manufacturer Vickers in 1919, allowing Vickers to produce and sell Brown Boveri's products throughout the British Empire and parts of Europe.

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In the early days, Brown Boveri's activity in the UK was focused on producing electrical components, such as electric motors for locomotives and energy equipment for European railway systems.

The company's partnership with Vickers in 1919 marked a significant milestone, giving Vickers the right to manufacture and sell Brown Boveri's products throughout the British Empire and parts of Europe.

This agreement brought Brown Boveri a substantial sum of money and a promise of significant annual income, helping the company expand into international markets during a time when protectionist policies hindered global expansion.

Brown Boveri's products were used in various railway systems, including the SBB-CFF-FFS RABDe 12/12, SBB-CFF-FFS RBe 540, SBB-CFF-FFS RBDe 560, and PRR O1.

Here are some examples of the railway systems that used Brown Boveri's products:

Brown Boveri's growth was a remarkable story of expansion and diversification. The company's various subsidiaries grew rapidly, driven by strong demand for heavy electrical equipment in Europe.

Industrialization throughout Europe created a surge in demand for Brown Boveri's products. Italy's burgeoning railroad industry was a particularly strong boost to the company's Italian subsidiary.

Brown Boveri's German facility actually did more business than the Swiss parent, demonstrating the company's ability to adapt to local markets. Each of the company's subsidiaries developed individually, as if it were a domestic company in the country in which it operated.

This geographic diversification helped insulate the parent from severe crises when a certain region experienced economic difficulties. Broad geographic coverage was a key factor in Brown Boveri's success during this period.

Here are some examples of Brown Boveri's subsidiaries that grew during this time:

These subsidiaries were successful in their respective markets, contributing to the company's overall growth and expansion.

In the aftermath of World War II, Brown Boveri's subsidiaries faced challenges winning contracts due to being seen as foreign companies in many countries.

The Cold War presented a variety of business opportunities for defense-related electrical contractors, but Brown Boveri struggled to capitalize on them.

The company excelled at power generation, including nuclear power generators, and prospered in this field.

Electrification in the Third World provided Brown Boveri with substantial profits.

Brown Boveri underwent a significant reorganization in 1970, acquiring Maschinenfabrik Oerlikon and restructuring its subsidiaries into five groups. This move allowed the company to streamline its operations and better focus on specific product divisions.

The five groups were: German, French, Swiss, "medium-sized" (seven manufacturing bases in Europe and Latin America), and Brown Boveri International. Each group was further divided into five product divisions: power generation, electronics, power distribution, traction equipment, and industrial equipment.

In 1988, Brown Boveri merged with ASEA to form Asea Brown Boveri (ABB). This merger created Europe's largest heavy-electrical combine, allowing the two companies to combine their research and development efforts in areas like superconductors and high-voltage chips.

The integration of the two companies was a major task for the new management, led by CEO Percy Barnevik. Barnevik aimed to achieve an overall operating margin of 10 percent for ABB, and the company went on to decentralize and slash bureaucracy, reducing its corporate headquarters from 2,000 to 176 employees.

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In 1970, Brown Boveri underwent a significant reorganization after acquiring Maschinenfabrik Oerlikon.

The company divided its subsidiaries into five groups: German, French, Swiss, "medium-sized" with seven manufacturing bases in Europe and Latin America, and Brown Boveri International.

Each of these groups was further broken down into five product divisions: power generation, electronics, power distribution, traction equipment, and industrial equipment.

Brown Boveri's reorganization in 1970 was a major restructuring effort that aimed to streamline its operations and improve efficiency.

In 1988, Brown Boveri merged with ASEA to form Asea Brown Boveri.

The merger was a significant event in the history of Brown Boveri, as it marked a new era for the company.

Brown Boveri's merger with ASEA created Europe's largest heavy-electrical combine.

The joint venture between the two former competitors allowed them to combine expensive research and development efforts in superconductors, high-voltage chips, and control systems used in power plants.

Here are some key facts about the merger:

Brown, Boveri & Cie's structure was initially divided into three main branches: Electrical, Mechanical, and Automotive.

The Electrical branch focused on electrical equipment and systems, such as generators and motors.

The Mechanical branch dealt with mechanical engineering, including steam and gas turbines.

The Automotive branch focused on automotive engineering, producing vehicles and vehicle components.

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The structure of a typical organization is often divided into several key areas, each with its own set of responsibilities and goals.

The principal divisions of a company usually include the executive team, which oversees the overall direction and strategy of the organization.

The executive team is typically led by a CEO or President, who is responsible for making key decisions and setting the company's vision.

The company's operations are often divided into departments such as marketing, sales, and finance, each with its own specific functions and objectives.

These departments work together to achieve the company's overall goals and objectives, and are usually headed by a department head or manager.

The company's administrative functions, such as human resources and IT, are also typically included in the principal divisions of the organization.

These functions provide essential support to the departments and help to ensure the smooth operation of the company as a whole.

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Brown Boveri's growth was largely driven by the industrialization of Europe, which created a huge demand for the company's heavy electrical equipment.

The company's Italian branch benefited significantly from the growing railway industry in Italy, while the German branch was doing more business than the Swiss parent company.

Each of Brown Boveri's subsidiaries tended to develop independently, as if it were a local company in the country it operated in, which helped protect the parent company from severe economic crises in specific regions.

However, by the early 1980s, Brown Boveri's sales had declined, and the company's profit had decreased.

The German branch in Mannheim, West Germany, which accounted for almost half of the parent company's sales, recovered in 1983.

Despite an increase in orders, the company's cost structure hindered its ability to reduce profit losses.

In 1985, the subsidiary's performance improved due to cost-cutting measures, but the decline in international prices and unfavorable currency exchange rates largely offset this gain.

By 1986, the parent company had acquired a significant stake in the Mannheim subsidiary, increasing its overall share to 75%.

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