Škoda

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ŠKODA.

Pilsen Machinery Works, later Škoda, was founded in 1859 by Ernst Waldstein, who purchased an ironworks factory near Pilsen, in the Czech lands. In 1869 Waldstein sold the company to its director, a young engineer named Emil von Škoda, who transformed it into the most important engineering firm in the Austro-Hungarian Empire—which then governed the Czech lands—and, subsequently, its principal arms manufacturer. At first Škoda concentrated on the production and processing of steel. From 1886, however, when Škoda began experimenting with armor plating, military production became increasingly important. Civil production included steam engines, turbines, and equipment for sugar refineries, breweries, mines, and iron works. In 1899, Pilsen Machinery Works became a shareholding company, named Škoda Works (Škodovy Závody), with the majority of the shares in the hands of its owner. At the time of Škoda's death, in 1900, the company had forty-two hundred employees, and its products were sold the world over. With the First World War, production reached its peak: during the conflict, Škoda supplied the empire with more than 12,000 artillery pieces, and by 1917 it employed 30,000 people.

In 1918, with the collapse of the Austro-Hungarian Empire and the birth of Czechoslovakia, Škoda was nearly dismantled, lacking both the financial resources needed for reconversion and a market for its products. In addition, since Škoda was owned by an Austrian citizen (Emil von Škoda's son Karl) and by German banks, the Czechoslovak government applied the 1919 act of domestication of joint-stock companies, transferred the company's headquarters from Vienna to Prague and, after delicate negotiations, backed the acquisition of controlling interest in the company by the French company Schneider-Creusot. Relations between the Czechoslovak government and the company remained close, however. In these years, the government appears as a protector of Škoda interests, as a purchaser of its products, a channel for orders from other countries and a guarantor of its foreign credits, as well as rescuing it from financial difficulties. This ensured Škoda's almost uninterrupted growth from 1921 to 1938, as well as the establishment of a horizontal monopoly on the entire Czechoslovak engineering industry.

In 1925 Škoda acquired one of the leading Czechoslovak automobile makers, Laurin & Klement, thus tying its brand to the history of automobile manufacturing. Škoda-Auto (Akciová Společ pro Automobilový Průmysl), as the new shareholding company was named, modeled itself after the "American model of mass production," but it was able to tread the thin line between the technological and organizational modernity of Fordism and the realities of a limited market. In 1936 Škoda Auto was the domestic market leader with sales totals of three thousand vehicles, which increased the following year. In 1937, it employed over five thousand workers and produced more than eight thousand vehicles.

Following the new balance of power established in 1938 by the Treaty of Munich, Schneider sold its shares, leaving the company in the hands of German investors. On 15 March 1939, Czechoslovakia was occupied by German troops, and Škoda became part of the Reichswerke Hermann Göring A.G. After 1940 civilian production was limited, and the company's energies turned to supplying the military.

After the war, Škoda was nationalized on 7 March 1946, and broken up into several companies: Škoda Works was responsible for the production of machine tools, locomotives, electrotechnical materials, and arms. Škoda-Auto plant, renamed Automobiles National Plants (AutomobilovéZávody, Národní Podnik), became the center of Czechoslovak automobile production.

During the Cold War, the divergent destinies of SpolecŠkoda-Auto and Škoda Works reflected the priorities of the Communist regime, which came to power in February 1948, and the growing international tension. With the First Five-Year Plan (1949–1953), most of the country's resources—raw materials and manpower—were directed to heavy industry. Škoda automobiles became less and less competitive because of poor investment, obsolescent plants, and a chronic shortage of raw materials and manpower. From the 1960s on, economic reforms and a new emphasis on consumer goods throughout the socialist bloc revitalized Škoda-Auto: a new plant was built and, though not without difficulty, new automobiles of good quality were produced (Octavia, Rapid, Favorit, 1000 MB) in consistently high volumes. In 1989, with the fall of the Berlin Wall, the company stipulated a joint venture with Volkswagen, which relaunched the Škoda brand on the global automobile market.

The communist takeover could not stop the growth of Škoda Works: by 1989 Škoda controlled more than twenty plants and was active in ninety-one different product groups; production included electric locomotives and trolleys, energy equipment and systems, heavy industrial machinery, rolled steel, forges, presses, castings, and other mechanical devices. Privatization of Škoda Works proved more complex: after the failure of talks about a joint venture with Siemens in 1992 and a long restructuring process, the firm in the early 2000s was controlled by an international investment group.

See alsoAutomobiles; Czechoslovakia; Volkswagen.