Osram GmbH

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Osram GmbH

Hellabrunner Strasse 1
Munich, 81543
Germany
Telephone: (49 89) 6213-0
Fax: (49 89) 6213-2020
Web site: http://www.Osram.com

Private Company
Founded: 1919
Employees: 40,000
Sales: $5.8 billion (2006)
NAIC: 33511 Electric Lamp Bulb and Parts; 335121 Residential Electric Lighting; 335122 Commercial, Industrial, and Institutional Electric Lighting

Osram GmbH is one of the world’s two largest manufacturers of lightbulbs and other products, such as LED (light-emitting diode), fluorescent, and halogen lighting, and optical semiconductors. Osram is comprised of seven divisions: General Lighting, which in 2006 was responsible for 49 percent of company revenues, Automotive Lighting with 16 percent, Ballasts and Luminaries with 11 percent, Opto-Semiconductors with 12 percent, Precision Materials & Components with 8 percent, Display/Optic with 4 percent, and LED Systems. Osram is a global firm with 49 production facilities in 49 countries. With customers in approximately 150 countries, 88 percent of Osram’s revenues come from outside Germany. Osram is the world’s leader in automotive lighting and LEDs for automobiles. Osram is committed to the development of innovative new products, and 5 percent of the firm’s annual revenues are reinvested in research and development.

OSRAM’S BIRTH AS A BRAND NAME

The industrialization of lighting began in 1826 when the first gas light companies began providing service to cities and individual customers. However, gas light’s numerous disadvantages—the danger of explosion and poisoning, oxygen depletion, and the uncomfortably high temperatures it created in closed spaces—hastened the search for an alternative. This arrived in October 1879 when Thomas Edison demonstrated his first incandescent lightbulb. In 1883 the Berlin firm of Siemens & Halske launched a cooperative venture with Edison’s German licensee the Deutsche Edison Gesellschaft (DEG) to produce lightbulbs. They were the only companies in Germany permitted to produce lightbulbs after Edison’s design; and at the same time, their researchers looked for improvements that would yield brighter burning, longer lasting bulbs.

One successful solution used a filament made from the element osmium. The Deutsche Gasglühlicht-Aktiensgesellschaft (DGA) began manufacturing osmium bulbs in 1901 (the first company to do so) and before long it became Germany’s third largest lightbulb producer, behind Siemens & Halske and AEG (Allgemeine Elektrizitäts-Gesellschaft or General Electricity Company), as DEG had been renamed. In 1905, DGA introduced a further improvement, the tungsten filament lightbulb, a discovery so revolutionary that it would remain the most common of all types of household lightbulbs until the beginning of the 21st century. Looking for a striking brand name for the new bulb in 1906, DGA struck upon “Osram,” which combined the first two letters of osmium and the last three letters of Wolfram, the German word for tungsten. For the time being, however, Osram was only a product’s brand name.

In 1906 DGA and General Electric Company (GE) in the United States established a technology partnership for the sharing of research and patents. The agreement created a form of de facto research sharing between DGA and its competitors, AEG and Siemens & Halske, because both of those companies had set up their own similar relationships with GE. As a result, the research efforts of the three major German lighting manufacturers started following the same track. The GE partnerships marked the beginnings of a closer cooperation between the German companies which would soon bloom. In 1914, the three firms launched their first joint venture, a Spanish company called Osram Fábrica de Lámparas, Madrid. This was the very first Osram company.

WORLD WAR I AND THE BIRTH OF OSRAM

Plans were being made at the same time for another Osram joint venture in Russia, but they ground to a halt when World War I started in 1914. The war had other disastrous effects on the German lighting giants. Their collaborations with GE ground to a halt. They lost many of their foreign holdings, in England and France, for example. DGA even lost its trademark rights to the Osram name in Great Britain, the Commonwealth, and its colonies. Those rights would not return to Germany until 1986.

As the war was drawing to a close, DGA, Siemens, and AEG decided to unite their individual lightbulb production in a single jointly-held company. Hence, in November 1918 DGA spun off its lightbulb manufacturing units as Osram Werke GmbH. The following year, the company was reorganized as a Kommanditgesellschaft (a kind of limited partnership) with Siemens, AEG, and DGA as the three Kommanditisten, or partners. Each partner signed over its Berlin lightbulb manufacturing facilities to the new enterprise. As 1920 began, the two giants of the German electrical industry Siemens and AEG each held a 40 percent share of Osram, DGA the remaining 20 percent. The new Berlin-based firm took the name Osram because it was Germany’s most popular lightbulb brand and had the highest degree of consumer recognition. Osram, however, continued to produce and sell bulbs under the former AEG and Siemens brand names, especially in England where the Osram name could not be used.

As the 1920s started the company set out to reestablish business ties with customers elsewhere in Europe and the world, as well as to set up efficient production facilities. It opened offices in 16 German cities and 14 in Europe, Asia, and Latin America. At the same time, when nationalist feelings were creating high trade barriers, the firm also established fully owned subsidiaries in Spain, Czechoslovakia, Poland, Argentina, and Greece. In 1923 Osram became the first lightbulb company in the world to introduce a line of standardized bulbs in which the fewest possible types would suit the needs of most customers. The line was composed of six standard size bulbs in various wattages. At the same time, Osram’s chairman Dr. William Meinhardt set out to standardize bulb types worldwide. He succeeded in 1924 with the signing of an agreement by manufacturers throughout Europe. Companies in the United States and Canada refused to sign the agreement, but agreed to abide by it in principle.

COMPANY PERSPECTIVES

Osram is people. We respect each other and work in teams. Together, we encourage and honor initiative, creativity and assuming responsibility. We are customer focused. In everything we do, we ask if it benefits and satisfies our customers. We respect and care for the environment. Realizing that this is the only environment we have, we use resources carefully and avoid waste. With energy-saving lamps and systems we contribute to worldwide environmental protection. We are open to, and drive, positive change. We regularly question if we are doing the right thing. We welcome new ideas. We set clear and ambitious goals to stay ahead of the pack. Being in the game is not enough. With clear goals in sight, we try harder each day to remain ahead of our competition. We are profitable and strong. Only by making profits today can we invest in tomorrow, securing the future of the company through a steady increase in the value of the corporation.

Osram made a series of important technological breakthroughs in the 1920s. In January 1927 the firm put Europe’s first fully automated glass-bulb production works into operation. Osram’s labs were developing better types of glass for use in its bulbs. In 1929 Osram began manufacturing high pressure mercury vapor lamps along with the specialized equipment needed for their production. Meanwhile the company refined the production of high-quality tungsten filament to such a high degree that filament itself, for radios as well as lamps, became a significant part of the company’s product line both at home and abroad. Such advances were made possible in large measure by the firm’s R&D center, which had been established in Berlin in 1927 specifically to develop new products and production methods. The center worked hand in hand with the firm’s quality-control department established two years earlier, which among other things, systematically compared Osram’s products with those of its competitors. The company also brought out important new products in the 1930s including the first neon lights in 1931 and the first fluorescent lights, which Osram began selling in 1940 as illumination for underground armament plants.

As the 1920s ended, GE became a partner in Osram when it purchased a 16 percent share from AEG. The DGA shares had, in the meantime, passed into the hands of a Jewish businessman Leopold Koppel. When the Nazis came to power in 1933, the Koppel family emigrated to Switzerland and five years later sold their Osram holdings to Elektrische Licht und Kraftanlagen AG (ELKA), a Siemens affiliate. When the sale of the shares was complete in 1938, Siemens held a 36 percent share, AEG 32 percent, GE 21 percent, ELKA 8 percent, and another small shareholder the rest.

DESTRUCTION DURING WORLD WAR II

The Nazi dictatorship and World War II had far-reaching effects on the Osram company. Immediately after Adolf Hitler came to power, the Nazis forced Osram’s visionary chairman William Meinhardt to step down because he was Jewish. Business continued more or less as normal until the start of the war when Germany once again lost most of its foreign markets. In 1942 the entire German lighting industry was placed under government administration and lightbulb production was cut back to nearly nothing, to save money as well as raw materials that were deemed essential for the war effort.

When Germany and particularly Berlin fell victim to the nearly incessant Allied air raids, Osram’s offices and production sites were methodically destroyed or damaged. Osram tried relocating its facilities to less-endangered eastern regions of the country in 1942. However, by the beginning of 1945, with Germany’s defeat a certainty, the managers of the firm realized that those areas were going to fall into Russian hands. Frenzied measures were set in motion to transport the endangered equipment and goods back to western Germany. Some shipments made it; others did not. One 120-truck convoy, for example, left Weiswasser in March 1945 and was never heard from again, in all probability, captured by the Russian army.

KEY DATES

1883:: Siemens & Halske begin producing lightbulbs with the Deutsche Edison Gesellschaft.
1901:: Deutsche Gasglühlicht-Aktiensgesellschaft (DGA) starts manufacturing osmium lightbulbs.
1906:: DGA introduces the Osram brand.
1914:: Siemens, AEG, and DGA launch a Spanish joint venture: Osram Fábrica de Lámparas, Madrid.
1918:: Siemens, AEG, and DGA jointly spin off their lightbulb businesses to form Osram Werke GmbH.
1923:: Osram is the first company in the world to introduce a standardized line of lightbulbs.
1927:: Osram puts Europe’s first fully automated lightbulb factory into operation.
1945:: Lightbulb production resumes in West Germany.
1954:: Headquarters are moved to Munich.
1965:: New headquarters building, Osram Haus, is completed in Munich.
1976:: Company becomes a wholly owned subsidiary of Siemens AG.
1986:: Trademark rights to Osram name in Britain and the British Commonwealth nations, lost in World War I, are recovered.
1993:: Company acquires Sylvania North American Lighting.
1996:: Company is reorganized into six divisions.
2003:: A state-of-the-art opto-chip plant opens in Bavaria.
2005:: LED Systems division is created.

RISING FROM THE ASHES AFTER WORLD WAR II

Like that of other German companies, Osram’s future looked bleak when the war ended. Its production and research facilities had been almost completely destroyed. Its big factory in East Berlin was in Russian hands, while its West Berlin factories were stripped of 90 percent of their equipment by the Russians in the months before the Western Allies took over administration of the western sectors of the city. Osram had lost most of its foreign holdings once again. It was further handicapped by the lack of the raw materials needed for lightbulb manufacture.

Nonetheless, in July 1945, equipped with machinery from the few transport trains that made it to Bavaria from the east, Osram set up shop in the towns of Herbrechtingen and Neheim. A small production staff of skilled workers began making lightbulbs, usually by hand and frequently using the remains of burned-out lamps as parts. The rebuilding of the West Berlin glassworks began in mid-1946. Meanwhile the Swabian town of Heidenheim became a second headquarters because of the Osram warehouses there, where a large supply of lamps had survived the war. These products formed the foundation for Osram’s reemergence as a viable business. Factories were reopened in Berlin Siemensstadt and Wedding in the late 1940s, and the company sprang back with confidence. The first postwar fluorescent lamp was produced in January 1945; less than four years later, the one-millionth had left the factory. The well-known and trusted Osram name certainly helped. Its marketing did too. The 1949 slogan, for example, “Osram—hell wie der lichte Tag ” (“Osram—bright as the light of day”) captured the German imagination as the light of peacetime dawned after the war’s darkness.

The 1950s were marked by organizational changes. In 1954 Osram moved its second headquarters from Heidenheim to larger offices in Munich. Two years later, in order to avoid tax and legal complications, Osram reorganized itself from a Kommanditgesellschaft into a Gesellschaft mit beschränkter Haftung (GmbH), a partnership with limited liability. The three partners were Siemens with 43 percent, AEG with 36 percent, and GE with a 21 percent share. In the 1950s Osram set out to reestablish its network of foreign sales offices, producers, and customers. By 1962 it had either factories or branch offices in Switzerland, France, Greece, Sweden, and Spain. Between 1955 and 1967, it had founded subsidiaries in Brazil, Denmark, El Salvador, England, and Mexico.

The company also continued to acquire or open new facilities in Germany. In 1951 it purchased the Wolfram Lampen AG, a lighting company in Augsburg. In 1967 it built a factory in Eichstätt for the manufacture of xenon lamps. The site eventually became Osram’s most important facility for the production of specialty lamps, and in 1970 was expanded by some 3,450 square meters. In 1970, following the Four Power accords between the Western Allies and the Soviet Union that made travel into and out of West Berlin significantly easier, Osram announced the construction of a state-of-the-art glass factory on its grounds in Berlin-Siemensstadt. The new complex went into operation in 1974.

Despite its expansion, by 1974 Osram had begun to stagnate financially. The results in 1974 were the firm’s worst since the first postwar years. Perhaps as a result, AEG sold its Osram holdings to Siemens that year. When GE followed suit two years later, Osram became a fully owned subsidiary of Siemens. To halt the slide, Osram’s chairman prescribed a radical change of course. Since the war, the company’s strategy had been based on the continual expansion of its production capacity. Under the new regime, Osram began focusing instead on systematic rationalization, the stepwise modernization or phaseout of old facilities, the pruning of its workforce, and the development of innovative, competitive products. In an attempt to break into the huge American market—at that time dominated exclusively by American companies—the company also purchased a share in the U.S. company Kallmorgen Corporation. Although the move into America did not have the effect hoped for, by the 1980s, nonetheless, the new direction had led the firm out of its crisis and given it new strength.

Osram expanded further throughout the world in the 1980s. Subsidiaries were founded in the Netherlands in 1981, South Korea in 1988, and Japan in 1989. The fall of the Berlin Wall in 1989, the subsequent breakup of the Soviet Union, and the establishment of the European Union provided powerful impulses for an expansion in Eastern Europe. At the same time, pressures to cut costs and streamline production led to the closure of older western European subsidiaries, among them the Fábrica de Lámparas in Madrid, the first company to bear the Osram name.

OSRAM ENTERS THE UNITED STATES

One of Osram’s most significant postwar steps was taken in 1993 when it acquired Sylvania North American Lighting, together with all Sylvania holdings in the United States, Canada, and Puerto Rico from the GTE Corporation. Sylvania was North America’s second largest lightbulb producer, with $1.25 billion in annual revenues, 29 factories, and some 13,000 employees. The acquisition pushed Osram into the company of the world’s biggest lighting companies, with GE and the Dutch company Philips. Overnight Osram’s share of the world market jumped from 14 to 20 percent. Its revenues rose by an astonishing 70 percent from $3 billion to $5.5 billion. It had a workforce of approximately 26,500. The purchase gave Osram an unassailable presence in the Unties States and meant that the company would no longer be dependent on the whims of the German market.

The 1980s and 1990s witnessed the development of important new products, including new types of fluorescent lighting, the expansion of Osram’s line of halogen lamps, and the development of light-emitting diodes (LEDs) for new lighting uses. In 1999, the firm introduced a complete line of LED products, including infrared elements, lasers, displays, and diodes. By 2002 it was the world’s second largest producer of LEDs. At the same time, Osram began researching the application of semiconductor technology to lighting needs and in April 2003 it put a state-of-the-art opto-chip plant into operation in Burgweinting bei Regensburg. Osram implemented another companywide reorganization in 1996. Taking Sylvania’s structure as its model, the firm was split up into six divisions: General Lighting, Automotive Lighting, Ballasts & Luminaries, Display/ Optic, Precision Materials & Components, and Opto-Semiconductors. A seventh division, LED Systems, was added in 2005.

In 2005 Chairman Wolf-Dieter Bopst stepped down. During his tenure from 1991 until 2005, he had overseen one of the most successful periods in Osram’s history. The firm had taken on an international presence, with subsidiaries in Europe, North and South America, and Asia. Its workforce had grown from around 16,000 to more than 38,000. Its market share reached about 19 percent, and annual revenues increased to $5.3 billion.

In 2005, Bopst’s successor Martin Goetzler announced the company’s direction as the Osram brand name approached its 100th birthday. In the previous five years, sales had been doubled in Russia and Eastern Europe. Goetzler’s goal was to double Osram sales in Asia, an area representing about 50 percent of the world market, by 2015.

Gerald E. Brennan

PRINCIPAL SUBSIDIARIES

Osram Australia Pty. Ltd.; Osram Benelux B.V.; Osram Asia Pacific Ltd.; Osram do Brasil Lâmpadas Eléctricas Ltda.; Osram Sylvania Ltd./Ltee; Osram China Lighting Ltd.; Osram Prosperity Co. Ltd. (China); Osram S.A. S.U. (France); Osram Ltd. (United Kingdom); Osram India Pvt. Ltd. (India); Osram Società Riunite (Italy); Mitsubishi Electric Osram Ltd. (Japan, 49%); Osram Opto Semiconductors (Malaysia); Osram Pte. Ltd. (Singapore); Osram Sylvania Inc. (United States).