VOEST-ALPINE AG up to the Reform of ÖIAG
After VÖEST was merged with Österreichisch-Alpine Montangesellschaft, between 1974 and 1976 various other companies were consolidated to form new companies and – to the extent that this had not already been done in the past – were integrated into VÖEST-ALPINE AG.
Of special note here are companies of the nationalized special steel industry – to which Gebrüder Böhler & Co AG, Schoeller-Bleckmann Stahlwerke AG and Steirische Gußstahlwerke AG belonged – that were consolidated to form Vereinigten Edelstahlwerke AG (VEW). VEW was the largest subsidiary of the VÖEST-ALPINE Group.
The effects of the merger of VÖEST and the Österreichisch Alpine-Montangesellschaft coincided with the first oil crisis and the big trend reversal in economic development. From 1975 the repercussions of the international steel crisis, such as a general decline in prices, also reached Austria. The situation in the steel industry changed drastically and growth dropped sharply. This initiated rapidly accelerated structural alterations in the steel sectors of industrialized countries. The management of VÖEST-ALPINE concentrated on the expansion of industrial plant construction and finished products (Finalindustrie) in order to reduce the dependency of the steel industry on economic cycles.
In mid 1977 a new form of organization was instituted – a multi-dimensional business segment structure. The group was broken down into four business segments (steelworks, processing, finished products and industrial plant construction), each of which was responsible for its own operating profit. In 1978 – in the course of the reorganization – industrial plant construction was established as a separate area of Management Board responsibility. Moreover, there was a minor change in the name of VÖEST-ALPINE AG – the Ö became an O.
Beginning at the end of the 1970s, the company sought to expand its activities into a broader spectrum of market segments. In 1980 a comprehensive diversification strategy was initiated, focusing on highly processed and top quality products with the greatest possible added value, process innovations, entry into high-tech and promotion of the trade segment.
As part of this strategy, in 1982 the following companies were founded as subsidiaries and associated companies of the VOEST-ALPINE Group: VOEST-ALPINE Medizintechnik GmbH and VOEST-ALPINE Glas, Austria Mikrosysteme International GmbH and VOEST-ALPINE Energieservice GmbH. In the following year the combination of electronics and automation was established as a new area of Management Board responsibility that combined all production and service activities involving electronics.
In cooperation with the German company Korf Engineering GmbH, in which VOEST-ALPINE AG held a 49 percent interest, in 1979 work was begun on the development of the so-called COREX process to enable the inexpensive and environmentally friendly production of pig iron directly from non-metallurgical coal and iron ore (coal reduction process). In 1983 Korf Engineering GmbH became a 100 percent subsidiary.
In the years from 1975 to 1985 the following facilities were among those that began production: Cold Rolling Mill 2, Blast Furnace A with a hearth diameter of 10.5 meters and a maximum pig iron output of 5,500 tons per day, the world’s largest plasma melting furnace at the electric steel plant in Linz, a continuous caster for billets and a wire mill in Donawitz, the oilfield piping plant in Kindberg and the precision steel tubes plant in Krieglach. In addition, one of the most modern training centers for apprentices in Austria was completed in Donawitz.
A crisis had been brewing in the nationalized industries for some time – since 1981 VOEST-ALPINE had been operating at a big deficit and for this reason had several times received government subsidies, the use of which involved stricter state control. The situation finally came to a head in 1985.
Constant exertion of political influence, the misuse of the company as a national labor pool, changes in international framework conditions, the erosion of individual companies, failures in diversification, in foreign projects and in finished products (the Bayou Steel Corporation in the state of Louisiana in the USA and mechanical engineering in Liezen, among others) as well as enormous losses in the oil speculations of the VOEST-ALPINE trading subsidiary Intertrading, founded in 1978, led to bankruptcy and the resignation of the entire VOEST-ALPINE Management Board in 1985. The conglomerate, which by then had 70,000 employees, was broken up. The so-called “VOEST Debacle” led to a genuine national crisis and set in motion a far-reaching restructuring process for Austrian industry.