Škoda Works

Škoda Works (Škodovy závody; today ŠKODA TRANSPORTATION a.s. plus a variety of other companies in the Czech Republic and Slovakia whose names still contain the name Škoda) was the largest industrial enterprise in Austria-Hungary and later in Czechoslovakia, one of its successor states. It was also one of the largest industrial conglomerates in Europe in the 20th century. The current successor Škoda Holding is focused on transport vehicle manufacturing; some companies no longer connected with it use the brand Škoda in other industries.

1859 to 1899: establishment of Škoda
The noble Waldstein family founded the company in 1859 in Plzeň; Emil Škoda bought it in 1869. It soon established itself as Austria-Hungary's leading arms manufacturer producing heavy guns for the navy, mountain guns or mortars along with the Škoda M1909 machine gun as one of its noted products. Besides producing arms for the Austro-Hungarian military, Škoda also manufactured locomotives, aircraft, ships, machine tools, steam turbines and equipment for power utilities and still does so.

In 1859, Count Wallenstein-Vartenberk set up a branch of his foundry and engineering works in Plzeň. The output of the plant, employing over a hundred workers, included machinery and equipment for sugar mills, breweries, mines, steam engines, boilers, iron bridge structures, and railway facilities. In 1869, the plant was taken over by Emil Škoda, an industrious engineer and dynamic entrepreneur.

Škoda soon expanded the firm, and in the 1880s founded what was then a very modern steelworks capable of delivering castings weighing dozens of tons. Steel castings and, later, forgings for larger passenger liners and warships went on to rank alongside the sugar mills as the top export branches of Škoda's factory.

1899 to 1945: before and during World War II


In 1899, the ever expanding business was transformed into a joint-stock company, and before the First World War Škoda Works became the largest arms manufacturer in Austria-Hungary. It was a navy and army contractor, mainly supplying heavy guns and ammunition.

Exports included castings, such as part of the piping for the Niagara Falls power plant or for the Suez Canal sluices, as well as machinery for sugar mills in Turkey, breweries throughout Europe, and guns for the Far East and South America.

The First World War brought a drop in the output of peacetime products. Huge sums were invested into expanding production capacities. By this time, Škoda Works already held majorities in a number of companies in the Czech lands and abroad that were not involved in arms manufacture. In 1917, the company had 35,000 employees in Plzeň alone.

Following the emergence of the Czecho-Slovak Republic in 1918, in the complex economic conditions of post-war Europe the company was transformed from what was exclusively an arms manufacturer into a multi-sector concern. In addition to traditional branches, the production programme embraced a number of new concepts, such as steam (and later electric) locomotives, freight and passenger vehicles, aircraft, ships, machine tools, steam turbines, power-engineering equipment, etc.

In 1923, the company's world-famous registered trademark—the winged arrow in a circle—was entered in the Companies Register. The deteriorating political situation in Europe saw arms production rise again in the mid-thirties.

Škoda manufactured the world's first triple-barrelled gun turrets for the s of the Austro-Hungarian navy. Prior to World War II Škoda produced LT-35tanks, which are better known under their German designation Panzer 35(t). These tanks were originally produced for the Czechoslovak army and were used extensively by the Wehrmacht in the Polish campaign, the Battle of France and also in German invasion of the Soviet Union. In July 1944 Skoda started production of Jagdpanzer 38(t).

In 1924, Škoda Works acquired the Laurin-Klement car manufacturer, later known as Škoda Auto. Both companies became separated after 1945, when the entire Czechoslovak economy came under government control.

1945 to 1989: after World War II


After WWII, in 1945 (the year when nationalisation efforts began in Czechoslovakia and when the Communists started to come to power) Škoda was nationalized and many sections were split from the company (e.g. the car works in Mladá Boleslav (Škoda Auto), the aircraft plant in Prague, some factories in Slovakia, and other plants producing food-industry equipment). The company was renamed Závody Vladimíra Iljiče Lenina (Vladimir Ilyich Lenin Plants) in 1951, but since the new name caused losses of sales abroad, the name was changed back to Škoda in 1953. The factory concentrated on markets in the Soviet Union and the Eastern Bloc. The company produced a wide range of heavy machinery such as nuclear reactors and locomotives. A lack of updates to its product designs and infrastructure considerably weakened the company's competitive position and its brand.

After 1962, Škoda became well known in the USSR and other countries as a trolley bus manufacturer, beginning to export Škoda 9 Tr, one of its most successful models. The successor, Škoda 14 Tr, manufactured between 1982 and 1997, is still widely used, for example, in post-Soviet states.

In 1978 the company was turned into the government-owned group of companies ("koncern") Škoda. It was based in Plzeň and consisted of the companies: První brněnská strojírna [First Machine Works of Brno], ČKD Blansko, ČKD Dukla Praha-Karlín in Prague, Slovenské energetické strojárne S. M. Kirova [Slovak S. M. Kirov Energy Machine Works] in Tlmače, and Výzkumný ústav energetických zařízení [Energy Facilities Research Institute] in Brno.

1989 to date: after the fall of communism
After the Communist Party lost power in late 1989, the company was privatized into the hands of management. Mismanagement and asset stripping led to a collapse—the company was restructured and some factories closed. Except for some smaller companies named Škoda and Škoda Auto, after the chaotic 1990s period, the Czech Škoda companies were again regrouped within the holding company Škoda Holding a.s. in 2000. In 2010, the holding company changed its name to Škoda Investment, a.s..

Following the change in the political climate in 1989, Škoda started along a path of privatization, and used this time to come up with an optimal production programme, making new business contacts, and looking for markets other than those that had so far been its priority markets, i.e. the Communist Bloc countries and the Soviet Union, which collapsed after 1989.

In 1991, a foreign partner for the passenger car works Škoda Auto a.s. was sought by the Czech government. Volkswagen was chosen, and the German firm initially took a 30% stake, rising to 100% ownership by 1999. Škoda Auto is now a completely independent entity from other companies bearing the Škoda name.

In 1992, the company was privatized by the so-called Czech method. It began expanding its production activities, acquiring the TATRA and LIAZ vehicle works and constructing a plant to produce aluminum soft drink cans. This expansion put the company's financial stability in jeopardy. In 1999, it concluded an agreement with creditor banks, and restructuring of the entire capital structure of the Škoda group was undertaken. The result was legal and financial stability at the company. Currently a sectoral restructuring of production companies in the group is under way. In April 2000, Škoda Holding, a.s. took over the helm, controlling nineteen primary subsidiaries and most product lines.

In 2003, the Czech government sold its 49% stake to the Appian Group for 350 CZK million, later that year the Appian Group acquired the rest of its stake in a liquidation of the previous owner. The Appian Group is a holding company incorporated in the Netherlands and controlled through a screen of shell companies. The real owner or owners are unknown, despite investigations by the Czech police. In September 2010, a group of four managers (current or former Škoda or Appian managers) announced that they would acquire Škoda from Appian for an undisclosed price. The Czech media speculated that the acquisition was only a formality, as the managers probably owned the parent company Appian.

Škoda has recently focussed solely on the transport sector. Other divisions have been sold, a large part of them to the Russian company OMZ (the price was not published, estimated at around 1 CZK billion). Simultaneously some smaller transport companies were acquired, for example a part of the Hungarian company Ganz, VÚKV (owner of the Velim railway test circuit) and some transport-related assets of the former ČKD, now called Škoda Vagonka. Finally, in 2009, Škoda holding announced that the South Korean conglomerate Doosan will acquire its power section for 11,5 CZK billion ($656 million).

Present production
The power division (sold to Doosan) produces as Doosan Škoda Power steam turbines, heat exchangers and condensers.

The metallurgy division (held by United Group) produces as Pilsen Steel crankshafts, turbine components or ingots.

The nuclear division (sold to OMZ) produces as Škoda JS equipment for nuclear plants or oil refining, petrochemical and gas industry.

The transportation division produces trolleybuses, tramcars, electric locomotives, electric multiple units and rapid transit train systems.