Formation The American boilermaking company
Babcock & Wilcox, established in 1866, set up their first overseas operation in
London in 1881. In 1891 the American shareholders sold the majority of their interest in the UK operations to the public. The parent company retained control over their
intellectual property in the United States and Cuba. The new independent British company, Babcock & Wilcox Limited, assumed control over the Babcock & Wilcox patents and licenses in the rest of the world. Direct operations in Germany were ruled out in fear of the strong
anti-British sentiment among the Germans. DB&W acquired substantial market shares in Scandinavia, the Netherlands and the Baltic countries, which had formerly been a "British territory". The conflict was resolved in the 1920 contract that largely upheld the German interests. The agreement set the vector for DB&W expansion: unlike many companies, Deutsche Babcock expanded its operations to the east, not to the west. Throughout the
interwar period DB&W expanded their markets at the expense of the British parent. They made deals with clients in Scandinavia and Soviet Russia, and openly competed with the British in Poland. Establishment of the Nazi regime made DB&W bargaining position stronger, and in 1939 their British parent reluctantly recognized the right of DB&W management to enter contracts without consulting the British office. Numerous attempts by the British management to improve group-wide collaboration "made little impression on its German subsidiary." However, in 1959 the fragile union was weakened by a conflict between European and American interests in nuclear powerplant construction. In 1975 the
British company decided its profits from the German operation were too low and sold the government of
Iran its holdings amounting to a fourth of the stock and 33.92% of the voting rights for 150 million dollars. Acquisition of 25.01% share of
Krupp by Iran led to de facto merger of Deutsche Babcock and EVT GmbH, a Krupp subsidiary and the main competitor to Deutsche Babcock. Later, Iran recovered control over its investment and held it until 1986, when it sold to a group of German banks.
Decline A freeze on new nuclear plants in West Germany, a decline in new power plant construction overall, currency problems in
Kuwait, and difficulty competing with foreign firms in the boiler industry led to some down years for the company. Still, Deutsche Babcock built a number of plants in the
Middle East despite the
Iran–Iraq War. The decline in nuclear power and a return to
coal actually created a new area of business—pollution control. Deutsch Babcock also branched out into improvement in water quality and
soil quality, and
environmental engineering went from a tenth of the company's business in 1983 to a fourth in 1988. Helmut Wiehn became president as the company began its comeback. The fall of Communism led to new markets in Eastern Europe, and agreements with companies in
Czechoslovakia and the former Soviet Union resulted. In 1995, Deutsche Babcock lost 8.7 million
marks and expected to lose 400 million marks in 1996 when the company's banks agreed to provide 500 million marks (about US$327 million) for reorganisation. ==Babcock Borsig: the final years==