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1924–1997 – The cooperation between Siemens and Westinghouse. An overview.
Title page of the patent and know-how exchange contract, 1924
After World War One, the German electrical engineering companies had a great deal of catching up to do in the area of energy technology. In the early 1920s, more and more German industrialists and engineers thus went to the U.S. to gather information that would enable them to close the technology gap. The CEO of the Siemens-Schuckertwerke GmbH (SSW), Carl Köttgen, visited numerous American firms on behalf of the company. He was mainly interested in whether any elements of American factory organization could be adapted for use by Siemens. Köttgen was accompanied by Hermann Reyss, the head of the “Overseas” department, which was generally interested in reinstating former business connections. Reyss wanted in particular to reestablish connections with the Westinghouse Electric Corporation (abbreviated to Westinghouse) which had been founded in 1886.
The result of this visit was a contract between the Siemens-Schuckertwerken and Westinghouse for a regular exchange of patents and know-how. However, it took a long time for this to happen, as Westinghouse secretly feared the German company as a competitor. First, there was quite “unexpected and strong opposition” to the fact that the then CEO of Westinghouse was suddenly in favor of cooperation with a mid-sized company. The two parties were eventually able to sign the contract on October 17, 1924. This date marks the beginning of decades of fruitful cooperation which was to extend beyond the area of energy technology. The agreement stipulated that Siemens could not operate in the U.S. and Canada in Westinghouse’s areas of activity, in return for which Westinghouse agreed not to conduct any business in Europe. Three years later, to avoid endangering this important partnership, SSW abstained from entering into an envisaged partnership with General Electric.
After interruption due to the war, the contacts to Westinghouse were reactivated at the end of the 1940s. In 1952 both companies entered into an agreement that was no longer limited to energy technology. Siemens-Reiniger-Werke AG (SRW), which was responsible for medical engineering in the Siemens concern, thus cooperated with the American partner on the sale of X-ray equipment and accessories.
In the postwar period, Westinghouse developed new methods of producing high voltage winding in generator construction. Further innovations were the remote control of electric drives and processes, the use of silicon as a semiconductor and the utilization of magnetic amplifiers in control technology. These achievements soon encouraged the Siemens-Schuckertwerke to reactivate the know-how transfer with Westinghouse, and in 1954 the companies signed an agreement on the free exchange of patents and know-how (License and Technical Assistance Agreement). Siemens accordingly obtained the right to produce selected Westinghouse electrical products in Switzerland and Germany and sell them everywhere in the world except in the U.S. and Canada. In return, Westinghouse was allowed to manufacture Siemens products under license and sell them on the North American market. While the German company profited in particular from the adaptation of the transformer sheet steel manufacturing method and plastic insulation, Westinghouse benefited especially from Siemens’ know-how in producing pure silicon.
From the 1950s on, the partnership was extended to include nuclear energy. In the department for reactor development established in 1955 in the SSW research laboratory, pressurized water reactors were developed on the basis of a know-how transfer with Westinghouse and an experimental reactor was first built in Munich Garching (1959). This was followed by the multipurpose research reactor in Karlsruhe (1965) and finally the nuclear power plant in Obrigheim (1968). In this business area, Westinghouse also proved to be an ideal partner, as the American company had begun to build the first large nuclear power plant in the U.S. in September 1954 in Pennsylvania, reinforcing its pioneering role in the area of reactor technology.
For Siemens the partnership with Westinghouse was not only strategically but also psychologically very important. The link to American know-how was immensely useful in enabling Siemens to catch up with technological progress during the postwar period. From 1945, the Germany company felt that for the first time it was being “treated on a fundamentally equal basis” in the U.S., as SSW emphasized. However, at the end of the 1960s, the connections gradually weakened. This was due on the one hand to the increasing ties between Siemens and the U.S. firm Allis-Chalmers, and on the other to antitrust law considerations. These developments led in 1970 to the cancellation of the various agreements. With the acquisition of the power plant business of Westinghouse in November 1997 by Siemens, the fruitful, close cooperation between the two competitors came to an end.
November 24, 2011 – Sabine Dittler / Ulrich Kreutzer