Bilfinger & Berger AG History

Company Perspectives:

We are developing our construction group into a leading multi-service group for the real estate and infrastructure sectors. Our prime goal is to be a preferred partner to our customers, offering outstanding services in both domestic and international markets.

Key Dates:

1890:

Berlinische Bodengesellschaft (later known as Bauboag) is founded as a public construction firm.

1892:

Grün and Bilfinger A.G. is established; Julius Berger-Civil Engineers incorporates.

1969:

Julius Berger merges with Bauboag.

1970:

Grün and Bilfinger purchase a majority interest in Julius Berger-Bauboag.

1975:

Grün and Bilfinger and Julius Berger-Bauboag merge to form Bilfinger & Berger Bau AG.

1995:

The German construction industry enters a period of decline.

2001:

The company changes its name to Bilfinger Berger AG.

Company History:

Bilfinger Berger AG operates as the second-largest general contractor in Germany, just behind competitor HOCHTIEF AG. With origins that date back to 1890, Bilfinger Berger has evolved from a heavy construction services firm to a global multi-service group involved in civil engineering, building and industrial construction activities, build-operate-transfer (BOT) projects, industrial and real estate services, and environmental services. The German industry experienced an upswing after German reunification in the early 1990s. It has since deteriorated dramatically, forcing Bilfinger Berger to focus heavily on diversification and international operations.

Origins

The company's structure is the result of the 1975 merger of Grün and Bilfinger A.G. and Julius Berger-Bauboag A.G. Founded in 1892, Grün and Bilfinger incorporated in 1906. Berger-Bauboag was itself the product of a 1969 merger. Bauboag was founded in 1890 as a public construction firm named Berlinische Bodengesellschaft; it built thousands of apartments and many banks, stores, and shopping centers. Julius Berger, also founded in 1890, incorporated in 1892 as Julius Berger-Civil Engineers.

In his first ten years in business, Julius Berger concentrated on railway, road, and bridge construction. He quickly earned a solid reputation with the government and received contracts for hundreds of miles of railways and roads. In 1893 alone he built 22 stretches of railroad across Germany. August Grün was co-director of a successful company with experience in water-related civil engineering projects. When Grün's partner left the firm in 1892, Paul Bilfinger, an engineer working for the government, stepped in. At that time the company already employed 250 people and had accumulated equipment and experience in a broad range of construction areas.

Growth and International Expansion: Early 1900s-30s

From the start of their partnership, Grün and Bilfinger bid on a wide variety of engineering projects. The firm entered the international arena in 1907 when it built a 45-mile stretch of railway in Hungary. In the same year, Berger's firm began work on jobs outside its previous focus, building a canal in Hamburg, a dam and power station in Blesen, and hydraulic control installations on several German rivers and canals. In 1909, the two firms collaborated on a project for the first time, widening the 61-mile Kiel Canal, an important shipping route connecting the North and Baltic Seas.

Both firms landed major foreign contracts in 1911. Grün and Bilfinger entered a joint venture with another enterprise to build ship-landing stages at Swakopmund. Julius-Berger won an international competition for the five-year contract to construct the five-mile Hauenstein Tunnel in Switzerland. By 1913, both firms had expanded their international activities to less developed countries. Grün and Bilfinger began excavation work in Tanga (German East Africa) and Cameroon in 1912, and Julius Berger began surveying for road projects in southwest Africa, Costa Rica, and Colombia the following year. Between that time and the firms' merger in 1975, their combined efforts accounted for a large share of the road, rail, bridge, and dam development in Africa, southwest and southeast Asia, and Central and South America. Both firms specialized in modernization of inter-city travel and efficient redirection of busy inner-city routes. The merged entity has continued the effort.

Julius Berger made a crucial move in 1914 when it launched its own mining activities. From then on the firm's standard practice in international contracts was to set up its own mining operations on or near each construction site. The firm would adapt its established formulas to fit the local supply. Julius Berger has saved millions of marks on materials over the years by collecting its own ores and soils instead of buying from suppliers.

Both firms frequently played vital roles in the German government's travel systems improvement plans. Along with their traditional work on roads and railways, the firms received several subway building contracts, beginning with one for the Berlin underground in 1915. They undertook many water-related jobs as well, including widening and re-channeling rivers, digging and dredging canals, and building locks and dams.

In the period between the world wars, both firms saw rapid growth in the international market. Among the larger projects Julius Berger engaged in during this time were the Trans-Persian railway in Iran (1923) and the Benha Bridge across the Nile in Egypt (1930). Among other projects, Grün and Bilfinger worked on a sewage system for Salonika, Greece (1926); reinforced concrete roads in the center of Montevideo, Uruguay (1926); an underground railway in Athens (1927); 16 miles of tunnels for a drainage system and subway in Buenos Aires (1928); and the Carioba Dam in Brazil (1934).

The burst of international activity declined to a near halt after 1935. The slowdown lasted through the end of World War II, but the two firms sustained themselves with work on the projects Adolf Hitler had begun in 1933 in an effort to ease unemployment in Germany. Hitler's programs included construction of the autobahns, a network of asphalt and concrete highways that would crisscross the nation. Both firms were at the top of the list of bidders, and they received several contracts. Many stretches of the autobahns called for long and high bridge sections, each requiring individual planning and, often, creative designs. The challenging requirements kept engineers who had been working in exotic locales and unusual terrain stimulated.

Finding Postwar Opportunities

During World War II, both Julius Berger and Grün and Bilfinger built several airports and naval installations. Like most other German companies, they spent the two years after the war clearing rubble, making emergency track and bridge repairs, and repairing damaged railway stations, roads, dikes, and housing and industrial properties.

By 1950, Julius Berger had resumed its activities abroad, building pumping stations in Egypt and the Managil Canal in the Sudan. Also in 1950, Grün and Bilfinger employed a new method in bridge building, using prestressed concrete for the first time on a railway bridge in Heilbronn. The method of pouring concrete around metal-cable frames quickly became the most popular and effective use of concrete, and is still common.

The German postwar administration hired both Julius Berger and Grün and Bilfinger to build series of telecommunications towers. The first went up in 1952, and the projects soon became a staple in the companies' logbooks. Between 1969 and 1977, they built a total of 18 of the structures. At the same time, the companies began constructing numerous hydro-electric power plants, usually in conjunction with a dam or barrage. Julius Berger was a leader in modifying the technology involved in hydro-electric power.

Both companies also continued to be innovators in bridge construction technology, and through the late 1950s were leaders in water-related engineering projects, building dams, bridges, port installations, locks, and power stations around the world. One of their biggest accomplishments during the era was a joint venture formed to build the 5.5-mile prestressed concrete Lake Maracaibo Bridge in Venezuela.

Creation of Bilfinger & Berger in 1975

After World War I, the Bauboag firm had changed its building focus from apartments to commercial and industrial structures. Through the 1950s and 1960s, it built stores and malls, universities, and industrial plants. Julius Berger wanted to enter the field, but rather than expand from within, it merged with Bauboag in 1969. The marriage was immediately successful; later the same year Julius Berger-Bauboag received contracts to build the National Library in Berlin and to do structural work at Munich's Olympic Stadium. The stadium job included a cycle-racing track, flyover access roads, and a new metropolitan train station.

In 1968, another joint effort would bring Grün and Bilfinger together with Julius Berger on a work site. The success of the project, a long autobahn tunnel in Hamburg, led in 1970 to Grün and Bilfinger acquiring a majority holding in Julius Berger-Bauboag. The two enterprises merged formally on December 29, 1975 and took the name Bilfinger & Berger Bau A.G.

Although a recession hit the international building industry in 1973, Bilfinger & Berger flourished throughout the 1970s. The two larger constituent companies began building nuclear power stations and offshore oil-drilling rigs early in the decade. In addition, the merged Bilfinger & Berger received sustained funding from the European Community and West Germany's Federal Ministry of Research and Technology to develop its innovative concrete articulated tower, which consists of a ball-and-socket joint between a drilling tower and its foundation on the ocean floor. The structure greatly reduces the stress caused by wind and waves. The firm also built some of Europe's largest sewage treatment plants during this time period.

The international division of Bilfinger & Berger was very active during the 1970s and 1980s (its U.S. subsidiary is Fru-Con Corp. of Baldwin, Missouri). Some of the better known projects it worked were two nuclear power plants in Illinois (at Clinton and Baldwin), subway systems in Washington, D.C., and Atlanta, and the space shuttle launching complex in Vandenberg, California. The subsidiary Julius Berger Nigeria, Ltd., based in Lagos, modernized much of the transportation infrastructure in that country since 1970. The firm was also involved in the design and construction of the new Nigerian capital at Abuja. Bilfinger & Berger completed roadwork totaling over 330 miles in the Tripoli area in Libya in the past decade. Through the 1980s, projects abroad accounted for 60 percent to 70 percent of the firm's total construction volume.

By this time, Bilfinger & Berger was well known as a classical example of a successful civil engineering and construction firm. The company took on projects of all scales by solving the problems at hand efficiently, combining existing methods with its own creative new ideas wherever necessary. Its strong position in the industry served it well, especially in the early 1990s as German reunification took place.

Success Continues: 1990s and Beyond

In October 1990, East Germany and West Germany were reunited, creating the Federal Republic of Germany. The country ratified the Masstricht Treaty--this was the treaty that created the European Union--in 1993. The following year, Russian and Allied troops left Berlin and for the first time since World War II, leaving Berlin free of foreign occupation. These changes led to a boom for construction-related companies. Roads, housing, factories, and water systems needed to be upgraded in eastern Germany, creating solid business opportunities for Bilfinger & Berger. Parts of Eastern Europe, including Poland and the Czech Republic, also proved to be lucrative growth areas.

As the 1990s progressed, however, growth in the German and Western European construction markets slowed. Bilfinger & Berger began to consolidate its regional offices and launched a series of job cuts. It also stepped up its international expansion efforts, a strategy that continued into the new millennium. As many European countries began spending less on infrastructure projects, governments began implementing new programs to encourage private company investment. One area of focus for Bilfinger Berger was build-operate-transfer (BOT) projects and private finance initiative (PFI) projects. These were typically public infrastructure projects that were funded by private companies. The private companies were then able to recover their investment through various tolls or charges. Through subsidiary Bilfinger Berger BOT, the company bid on concession projects related to transport infrastructure, public buildings, parking lots, and water and waste water treatment facilities. By 2002, the firm was bidding on projects in the United Kingdom and Australia. In its home country, it was also working on the Herren Tunnel, which would alleviate traffic problems on the Herrenbrücke bridge in Lübeck.

During 2001, the firm officially adopted the name Bilfinger Berger AG. As its competitors reported slumping sales and earnings, Bilfinger Berger charged ahead with positive financial results--a sure sign its diversification into infrastructure projects was paying off. In 2002, competitor Philipp Holzmann went under, catapulting the firm into the number two position among German general contractors. The company acquired construction services firm Rheinhold & Mahla AG that year along with Wolfferts Group, a building services engineering firm. Bilfinger Berger also eyed certain Holzmann assets as potential takeover targets. Some of the larger projects the company was involved in at this time included a 345 kilometer railway track between Taiwan's capital of Tapei and Kaohsiung; the Cross City Tunnel in Sydney, Australia's business district; a lock project on the Kanawha River in West Virginia; a lock project on the Nile in Egypt; and a highway that would link Goteborg and Oslo in Northern Europe.

The German construction industry remained in a depressed state during 2002. According to the General Association of the German Construction Industry, nearly 10,000 companies filed for bankruptcy that year and 75,000 jobs were cut. Having evolved into a multi-services group, Bilfinger Berger's bottom line was somewhat protected from the problems in its homeland and both sales and profits increased during 2002. The company remained focused on winning privately financed concession projects, international expansion, and providing integrated solutions for construction projects. With this strategy in place, Bilfinger Berger's management was confident it was on the right path to continue its success well into the future.

Principal Subsidiaries: Achatz GmbH Bauunternehmung; Bilfinger Berger Baustoffe GmbH; Bilfinger Berger Freiburg GmbH; Bilfinger Berger Vorspanntechnik GmbH; Bilfinger Berger Baugesellschaft m.b.H; A.W. Baulderstone Holdings Pty. Ltd. (Australia); Beijing Oulu Property Development Co. Ltd. (95%); Bilfinger Berger UK Ltd.; Fru-Con Holding Corporation (United States); Hydrobudowa-6 S.A. (Poland); Kin Ching China Ltd.; Razel S.A. (France); Bilfinger Berger BOT GmbH; Bilfinger Berger Umwelt GmbH.

Principal Competitors: Philipp Holzmann Group; Bau Holding Strabag AG; HOCHTIEF AG.

Further Reading:

• "Bilfinger Berger Bucks Construction Slump," Handelsblatt, September 4, 2001.
• "Bilfinger Berger Continues Expansion Abroad," AFX News, May 27, 1997.
• "Bilfinger Berger Eyes Acquisitions Worldwide," Handelsblatt, May 8, 2002.
• "Bilfinger Berger Gains in Crisis," Die Welt, February 21, 2003.
• "Bilfinger Takes Over Rheinhold & Mahla," Handelsblatt, June 7, 2002.
• Harding, Ben, "Much Needed Shake-up in German Construction," Acquisitions Monthly, July 2002, p. 46.
• Marray, Michael, "Green Fingers: Bilfinger Berger Wants to Make Deals Sprout in the UK and Australia," Project Finance, January 2002, p. 37.
• Parkes, Christopher, "The European Market: German Construction Companies Prepare for Rebuilding of the East--Best Growth Prospects Are Beyond West Europe," Financial Times, June 15, 1992, p. 2.
• Reina, Peter, "Global Wanderlust Helps Cushion German Firms' Problems at Home," Engineering News Record, August 14, 2000, p. 44.

Source: International Directory of Company Histories, Vol. 55. St. James Press, 2003.

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