Power Play

When the American Electric Power Co. last year asked for bids on one of history's biggest orders ($100 million-plus) for steam-turbine generators, U.S. turbine makers confidently sent in their estimates. Last month they got a big shock. Awarding the contract, American Electric bypassed the two U.S. Goliaths, General Electric and Westinghouse, chose a little-known Swiss-based David called Brown, Boveri & Co.

The Swiss firm will build at least two, and possibly four, mammoth 4,800-ton turbines, each able to generate an unprecedented 1,100,000 kw. to 1,300,000 kw. of power. The first is to be installed at a nuclear plant in St. Joseph, Mich., by 1973. Altogether, four of the firm's "turbosets" could increase by more than 50% the power now produced by the 30 generating stations in American Electric's seven-state, Virginia-to-Michigan system.

A Felicitous Marriage. All this was no small feat, coming as it did in a market for which no foreign manufacturer has ever made a generator of over 500,000 kw. And two days later Brown, Boveri proved it was no fluke by winning a Tennessee Valley Authority order for two huge 1,300,000-kw. generators. Despite the fact that the $28.5 million Swiss bid included $4 million in import duties, said the TVA, it was more than $10 million under any other. No less enthusiastic, American Electric President Donald C. Cook cheered the arrival of a "third manufacturer" in the U.S. market, and went out of his way to twit the American producers. "They should welcome this," he said, "because they are both strong believers in American competition."

With 1967 sales estimated at $735 million, Brown, Boveri is Switzerland's second largest company (after Nestle), and it took the orders as a long-sought U.S. show of confidence. Brown, Boveri is hardly a household name; yet B.B.C., as it is known, has long generated wide respect for its heavy electrical equipment. Brown, Boveri's parent plant in Baden, near Zurich, depends on exports for 73% of its $146 million sales, which in turn are only a fraction of the company's global business. It has 17 manufacturing subsidiaries worldwide: 76,000 employees in 40 plants and 250 field offices make and sell turbines and locomotives, heavy transformers and radio transmitters.

Founded in 1891 by two ambitious young engineers, Englishman Charles E. L. Brown and Bamberg-born Walter Boveri, the firm got going with a felicitous marriage. Boveri's father-in-law, a wealthy Zurich silk merchant, provided the partners with an initial $170,000 stake. But technology was B.B.C.'s real dowry. The firm built a pioneering standard-gauge electric locomotive in 1899, rolled a long way with the expansion of European railroads, and soon began turning out early designs in circuit breakers, turbines and other heavy gear. And while its labs now work on cryogenics, lasers and other new technologies, B.B.C. continues to improve the old ones. A recent B.B.C. breakthrough in rotor-blade design will permit its American Electric turbines to use low-pressure, nuclear-fired steam and turn at a slow 1,800 r.p.m. while producing as much power as conventional turbines spinning twice as fast.

Another Ally. Long a family-run business, B.B.C. is now bossed by Dr. Max Schmidheiny, 59, a Swiss engineer who succeeded Dr. Walter E. Boveri, son of the founder, in 1966 (no Brown has been with the firm since 1941). While his three managing directors run day-to-day operations, Schmidheiny has been tuning B.B.C. up for a broad assault on the lucrative U.S. market. He thus considers it fortunate that, unlike most European firms, B.B.C. has not based its production on licensing agreements with the large American companies.

Moving to back up B.B.C.'s technological clout with more efficient production, Schmidheiny last spring completed a merger with Maschinenfabrik Oerlikon, Switzerland's second biggest electrical company. And only last month, shortly after winning the huge American Electric and TVA orders, he signed up another U.S. ally. Brown, Boveri and North American Rockwell Corp. announced plans to study ways of mating the U.S. company's nuclear know-how with B.B.C.'s turbine technology to enter the mushrooming American market for atomic-power plants.

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