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Siemens organizational structure, 1969

1969: Corporate Principles and corporate structure of Siemens AG

The founding of Siemens AG in 1966 was the first step in reorganizing the company. Three years later, as of October 1, 1969, the former central business units were restructured into six largely autonomous operating Groups. The Components and Data Systems units were taken over into the new structure almost unchanged. The Power Engineering, Electrical Installations and Telecommunications Groups were new. Siemens-Reiniger-Werke was renamed the Medical Engineering Group. This arrangement was accompanied by five central departments to ensure consistent management of the company. There were also 14 “offices” in Germany and 38 international companies. The Corporate Principles defined the basic conditions for how all parts of the company would work together.

 

In parallel with the founding of Siemens AG, a new identity for the company as a whole went into development. The former company marks were replaced with a single trademark, made up of the previous Siemens word mark plus the S&H monogram that had been in use since 1899 – but now the latter would stand not for Siemens & Halske, but for the "House of Siemens."

 

The new corporate structure and trademark strategy left Siemens well-equipped to respond flexibly to customers' needs and the challenges of increasingly global competition.

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Advertisement for employee shares, 1970s

1969: Employee shares introduced

Enabling staff to share in the company's success had a long tradition at Siemens. Siemens & Halske employees had first benefited from profit-sharing as early as 1858. That arrangement was expanded systematically starting in the mid-1860s. After an interruption because of World War II, Siemens reintroduced a “success bonus” in 1951. When annual payments of these bonuses had to be cut back in the later 1960s because of the business cycle, management decided as a replacement to enable staff to share in the company's equity.

 

In 1969, German employees of Siemens AG had their first chance to buy employee shares at a preferred price of 156 German marks – half the trading price on January 23 of that year, the day when management adopted the resolution. For tax reasons, purchases were limited to no more than three shares per person. About 25 percent of the employees took advantage of the offer. In the first year of the plan, Siemens issued more than 135,000 employee shares, with a nominal value of 6.8 million German marks.

 

The response was so positive that the share plan evolved into an integral part of employee orientation. Today, one out of every three employees is a Siemens shareholder.

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Motor production at the Siemens plant in Kalwa, India, 1970

Starting 1960: Systematic build up of international locations

Early in the 1960s, Siemens realized that it could not tap the world market for the long term merely through exports or by setting up international sales companies. To achieve its targeted position as a global player, in 1960 the company began gradually setting up production facilities outside Germany. The main focus was on Western Europe for the moment, but sites overseas were soon added. Telecommunications and switchgear technology started producing in South Africa in 1961. Production in India had already started back in 1957, and five years later a large three-phase motor factory began operations in Kalwa. Additional plants followed in South America, Africa and Asia. By 1985 the company had established a total of 154 production sites in 54 countries.

 

Faced with advancing globalization, Siemens took a step further from 1970 onward, and stopped requiring products to be developed only where corporate headquarters and primary production were located. Portions of research and development work were also gradually relocated to other countries. By the early 1980s, Siemens had research locations in Switzerland, Austria, Scandinavia and the USA.

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The Munich-Perlach site, 1987

From 1975 on: Setting up the Munich-Perlach site

In the 1960s, microelectronics began evolving into the key technology for Siemens. In the next decade the transition from analog to digital technology accelerated vastly in every field of electrical engineering. Siemens gradually transformed from an electrical company into an electronics company. Data technology became the company's core line of business.

 

In the fall of 1975, Siemens began building a new research center in Neuperlach, Germany. By 1984, a new "thought factory for data technology" had grown up in this southeastern suburb of Munich, with buildings that housed both the Data Systems Group and the central research unit. Two years after construction began, some 4,000 employees, who had been working at more than 80 leased sites all over Munich, moved to Perlach.

 

Putting departments that worked in intersecting fields of technology all in one place made communication and collaboration easier. Over time, Perlach became a microelectronics center that attracted engineers and IT technicians from all over the world. It was a site where Siemens achieved important advances in microchip development.

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Hicom terminal, 1984

1980: The digital telephone arrives

Rapid advances in microelectronics expanded Siemens' product portfolio. The ability to digitally process large volumes of data fast had an especially great impact on telecommunications and other forms of communications engineering, and yielded a great many innovations.

 

In 1980, Siemens made its successful debut in digitalizing telephone technology, with its EWSD digital electronic exchange system. EWSD soon became the world's best-selling landline switching system. Four years later, the company introduced the Hicom private communications system – its first proprietary digital telephone set solution. The product found rapid acceptance in industry, business and government. This further development of the EWSD met the worldwide standard for the future Integrated Services Digital Network (ISDN).

 

The digitalization of the telephone network represented a fusing of telecommunications with data technology. Higher transfer capacity made it possible now to transmit not just voice digitally over telephone lines, but texts, graphics and data.

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Chip production at the Siemens plant in Regensburg, 1989

1984: The MEGA Project begins

In the mid-1980s, Siemens – like the entire European semiconductor industry – had fallen behind the competition, where US and Japanese firms dominated. To make up for the lag of about two years, the company decided to attempt a major feat. Jointly with Philips, and with state support, Siemens would rise to world leadership in chip development within five years. The MEGA Project was launched in 1984, to advance development of 1-Mbit and 4-Mbit chips. The time pressure and the volatile semiconductor market meant that Siemens was taking a major risk, and not just financially: For the first time in its history, it would conduct research, development and production on a product not in sequence, but in parallel.

 

The results were inconclusive. In purely economic terms, the MEGA Project was not a success, in part because of the large investments and in part because individual chip generations were so short-lived. But strategically the picture was much better. After all, the company had caught up with its worldwide competitors. Now in cooperation with Toshiba, in 1987 Siemens was the first Western company to begin mass-producing 1-Mbit chips, at a plant in Regensburg, Germany. Production of 4-Mbit chips would start two years later.

Highlights from 170 years of Siemens history

Learn about selected events from the company’s history on our History News website, which we’re continually expanding for you