Editorial: The Convoluted Corporate Roots of BMW

Featured Posts, Interesting | March 11th, 2011 by 2
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BMW celebrates its corporate birthday on 6 March. That was the date in 1916 that Gustav-Otto-Flugmaschinenfabrik, founded 15 March 1911, became Bayerische Flugzeugwerke (BFW). So BMW was …

BMW celebrates its corporate birthday on 6 March. That was the date in 1916 that Gustav-Otto-Flugmaschinenfabrik, founded 15 March 1911, became Bayerische Flugzeugwerke (BFW). So BMW was BFW at one time? No, it never was BFW. BFW eventually became BMW. Rapp Motorenwerke became BMW too, but that was before BFW became BMW. Confused yet?

In October 1913, Rapp Motorenwerke was incorporated. It made aircraft engines near the Oberwiesenfeld in Munich, the hot bed of aviation activity in Bavaria. Gustav Otto’s operation was not far away from Rapp, for what it’s worth.

When World War I started the demand for aircraft engines soared (pun intended). Rapp, unfortunately did not make the best engines and in 1917 he was close to being shutdown as a manufacturer of new engines and was to be turned into an engine repair depot. However, Rapp had a manager (late of the Austro-Hungarian Naval Aviation service) named Franz Josef Popp, who happened to have in his employ an engineer working on a high altitude aero engine named Max Friz, how had recently departed from Daimler-Motoren-Gesellschaft (yes that Daimler, the one that merged with Benz in 1926).

Editorial: The Convoluted Corporate Roots of BMW

The commission assigned to render Rapp a repair depot was shown the plans for the high altitude engine and agreed to manufacture it on the spot (or as close to immediately as practical). That left the company in a bit of a quandary, given that the name of Rapp, what with its not so brilliant reputation, may have hindered acceptance of the new engine.

What was Rapp to do? Well send Herr Rapp packing and rename the company. That’s pretty much how Rapp became BMW. The name change to Bayerische Motoren Werke GmbH was done in July of 1917. The new logo, incorporating the Bavarian state colors into a roundel – not unlike the original Rapp roundel, came into being in October of 1917. In August of 1918, in order to secure additional capital, the company was converted to a share issuing corporation. And one of the major shareholders was one Camillo Castiglioni (this name will come back later on in this story).

The war was in its last gasps that fall, with the stubbornness of the German general staff, the Kaiser, and an unsettled political situation at home prolonging the agony. BMW continued to work on aero engines and its high altitude engine in particular. Just weeks before the Treaty of Versailles went into effect – July 1919, a new altitude record was set using a BMW high altitude engine (though not recognized because Germany was a country ‘non grata’ by then).

The impact of the treaty to BMW was to preclude them from building aero engines. Late 1919 saw BMW scrambling for work, any work. And they happened to find it in a Berlin based company trying to win a contract for railroad brake assemblies with the Bavarian state. The company was Knorr-Bremse and they entered into a licensing agreement with BMW for BMW to manufacture brakes for the Bavarian railroad. Eventually Knorr-Bremse ended up with all of BMW’s stock, and BMW effectively was swallowed into Knorr-Bremse.

Then in 1922, Camillo Casitglioni resurfaces with a deal for Knorr-Bremse. He offers to purchase the rights to the BMW name, technical plans for aero engines, and members of its technical staff. Knorr-Bremse agrees. And BMW re-emerges. But to what? BFW had been suffering after World War I, like all other makers of armaments in Germany. Camillo Castiglioni had purchased it earlier in 1922 before purchasing the rights to BMW back from Knorr-Bremse, even though BFW was a mere shell of a company by then. But that shell (the real property BFW had) became the host body for the resurrected BMW. And due to German law, BMW was allowed to adopt the date of BFW’s birth as its own.

The BFW name was discarded and BMW lived on. But that’s not the end of BFW. In 1926 Udet-Flugzeugbau GmbH, of Augsburg, was converted into a joint stock company and renamed BFW. A gentleman by the name of Willy Messerschmitt joined the company in 1927 and in 1938 BFW became Messerschmitt. Ever wonder why the Messerschmitt 109 was referred to as the Bf 109. It’s because it was created when the company was BFW. (It’s incorrectly called the ME 109).

Hope this resolves some of the confusion. If not, take two aspirin and call your Client Advisor in the morning.

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