Brown, Boveri & Cie

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. Because of the limitations of the Swiss domestic market, Brown Boveri established subsidiaries throughout Europe relatively early in its history, and at times had difficulty maintaining managerial control over some of its larger operating units. The merger with ASEA, a company which was praised for its strong management, was expected to help Brown Boveri reorganize and reassert control over its vast international network.

Activity in Britain

Brown Boveri's early activities included manufacturing electrical components such as electric motors for locomotives and power-generating equipment for Europe's railway systems. In 1919 the company entered into a licensing agreement with the British manufacturing firm Vickers which gave the British firm the right to manufacture and sell Brown Boveri products throughout the British Empire and in some parts of Europe. The agreement gave Brown Boveri a significant amount of money and the promise of substantial annual revenue, and also helped the company expand into foreign markets at a time when protectionist policies inhibited international expansion.

Activity in Continental Europe

In the early 1920s, Brown Boveri, which was already a geographically diversified company with successful operating subsidiaries in Italy, Germany, Norway, Austria, Czechoslovakia and the Balkans, suffered losses due to the devaluation of the French franc and the German mark. At the same time, in the Swiss domestic market, production costs increased while sales remained static, causing the company further losses. In 1924 Brown Boveri devalued its capital by 30 percent to cover the losses it had incurred. In 1927 the agreement with Vickers ran out and was not renewed. Besides the arrangement Brown Boveri had had with this British firm, it also had a similar relationship with Netherlands-based Heemaf which lasted well into the early 1960s when the Heemaf led the creation of Holec (Holland Electric).

Growth

During the same time, Brown Boveri's various subsidiaries grew rapidly. Industrialization throughout Europe created strong demand for the company's heavy electrical equipment. Italy's burgeoning railroad industry provided a particularly strong boost to Brown Boveri's Italian subsidiary, and the company's German facility actually did considerably more business than the Swiss parent. For the next few decades Brown Boveri grew as fast as technological developments in electrical engineering. Each of the company's subsidiaries tended to develop individually, as if it were a domestic company in the country in which it operated, and broad geographic coverage helped insulate the parent from severe crises when a certain region experienced economic difficulties.

Nazi era 1933-1945

Expansion continued during World War II. A BBC subsidiary, Stotz-Kontakt GmbH, in Mannheim, Germany, used forced labor to expand operations.

After World War II

After World War II, the Cold War presented a variety of business opportunities for defense-related electrical contractors, but Brown Boveri's subsidiaries were seen as foreign companies in many of the countries in which they operated, sometimes making it difficult for the company to win lucrative contracts involving sensitive technology and other government contracts. The company, nevertheless, excelled at power generation, including nuclear power generators, and prospered in this field. Electrification in the Third World also provided Brown Boveri with substantial profits.

In the later 1980s Brown Boveri took steps to reduce duplication of research and development among its various groups. While each subsidiary continued to do some product-development research for its individual market, theoretical research was unified under the parent company, making more efficient use of research funding.

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