Industrialization

   The hallmark of the Industrial Revolution was the mechanization of labor in factory production. The process in the Austrian lands of the Habsburg Empire began with textiles: silk weaving facilities opened in Vienna in 1619 and in Walpersdorf in Lower Austria in 1666. Lower Austria also began manufacturing cotton and paper around the same time. After 1672, wool was manufactured in Linz.

   Seventeenth-century Styria was also a site for ironware manufacture, especially weapons for Habsburg troops fighting the Ottoman Empire. With the ebbing of Turkish military prowess in the 18th century, Austrian-made armaments were redirected to, and sold well in, trade abroad. Technological advances in mining iron and salt greatly furthered industrialization throughout the Habsburg domains in the 18th century. The presence of a growing labor force, the result of a population boom, helped too. Most crucial, however, was the Habsburg government’s resolve to augment its income. For both Empress Maria Theresa and her son Joseph II, manufacturing was a means to that end. The latter was quite willing to upend traditional socioeconomic structures to further industry and commerce; though he did not succeed, Joseph tried to end restrictions on production and trade with which artisanal guilds had long sheltered their livelihoods. The greatest growth in textile production and industry as a whole came in Bohemia, Moravia, and the part of Silesia still under Habsburg rule after the Seven Years’ War. Together the three provinces had more manufacturing establishments in 1770 than did all of the other Habsburg lands combined. But important developments also took place in Lower Austria and Vienna. Maria Theresa took over failing producers and nationalized them, often successfully. The Augarten Porcelain Works, founded in 1718 in an outlying district of Vienna, became a state enterprise in 1744. By 1783, emissaries from such faraway places as Morocco were eager to inspect its production techniques. Sugar manufacture, an industry that grew exponentially in the decades to come, started in Lower Austria around 1780 with cane imported from the West Indies.

   Manufacture of iron goods and textiles continued in the early decades of the 19th century and even expanded. Paper production was mechanized. By the 1830s, sugar was being processed from local sugar beets, lowering the retail price markedly. Chemicals, especially for dyes, soaps, matches, and even rubber goods were also available.

   Yet for all the reserves of iron ore and coal in the Habsburg domains, Austria included, the state was still economically disadvantaged after the Napoleonic Wars. England’s textile manufacture surpassed that of any other European country, but even parts of Germany to the north had a more developed industrial base than the Habsburg Empire. Artisanal workshops were still very much the rule in the monarchy’s holdings; factory production, the exception. Investment capital also remained in short supply. Entrepreneurship was socially suspect among aristocrats and would-be aristocrats, of whom there were many, and transportation was too fragmented to supply commodities efficiently for manufacture of scale. The overwhelmingly agrarian character of the general population kept discretionary income low and consumption standards modest. The pattern haunted the monarchy until its end in 1918.

   Industrialization of scale in the Austrian lands took place only after the Revolutions of 1848. With serfdom abolished, agricultural labor was free to market itself to the highest bidder. An increasingly elaborate system of banks matched investment capital with industrial needs. The expansion of railroads gradually made shipment of commodities to factories more reliable. The bulk of Austrian industry, particularly its more specialized branches, was largely housed around Vienna, with lesser centers in Styria and Vorarlberg. Production of iron and steel flourished, as did manufacture of related metal goods—wire, tools, including farm implements, and even motor cars. Between 1898 and 1912, six automobile companies were in operation around Vienna. Electrical goods; textiles, especially in the west of the Austrian lands; and paper mills were also significant sectors in the economy. Abundant new construction throughout the Habsburg Empire relied on brick works in Vienna and cement production in the Tyrol. Nevertheless, Austrian manufacturing in the19th century developed inconsistently. It took place in three stages: the first two, 1850–1860 and 1867–1873, were aborted by serious recessions. The last upswing, between 1896 and 1913, preceded a catastrophic war.

   The collapse of the Habsburg Empire following World War I dramatically reversed these advances. A lively interest in American and German mass production techniques and labor force rationalization existed in the new country, but on-the-ground conditions more than offset it. Except for iron ore, primary industry in the Austrian lands of the former monarchy had depended on other Habsburg crown lands for raw materials. The newly independent Austria had only .5 percent of the former empire’s coal resources. Government policies were often counterproductive. To keep people working, the Socialist regime governing the country in 1919 took over several key industries such as chemicals, heavy metals, and textiles; wary investors withheld their capital. The First Republic never would put the improvement of Austrian industrial technology high on its list of priorities. By the summer of 1919, major industry was at a standstill. In 1923, Austrian industry briefly reemerged from its slump; it entered the international market in a small way, and unemployment dropped. Positive though they were, these developments were shortlived. The German economic takeover of major Austrian industries began in 1925 when the German United Steel Corporation (Vereinigte Stahlwerke AG) acquired a majority holding in the Austrian–Alpine Mineworks Society (Österreichisch–Alpinen Montangesellschaft). As the world economic crisis began unfolding in 1929, Austrian industry, which was at the mercy of domestic banks for development credits, plunged downward once again. Personnel layoffs in the hundreds and occasionally thousands started immediately: 125,850 people were without work in October 929; two months later, there were 226,567 unemployed. By 1930, 20 percent of Austrians eligible for unemployment compensation were drawing it, some 284,543 men and women.

   The Nazi regime promoted Austrian industrialization aggressively from the Anschluss until about 1943. Eager to hide steel and other war-sensitive manufactures from Allied bombing raids, the Nazis established and expanded existing factories in Styria and Upper Austria, especially around Adolf Hitler’s hometown of Linz. Post–World War II Austrian industry quickly resumed its upward growth. Marshall Plan investment capital helped in the first few years. A period of close government regulation of major industry in the late 1940s was loosened considerably in the 1950s, because the dominant political parties, the Socialist Party of Austria and the People’s Party of Austria, differed sharply on the ways of managing a quasi-nationalized economy. Market demand, both domestic and foreign, was high for ferrous metal products and basic construction materials to be used in rebuilding Europe; Austrian manufacturing profited accordingly.

   Although energy supplies were initially low, after 1946 steel plants were functioning in Upper and Lower Austria and Styria. Aluminum production resumed that same year in Upper Austria, as did automotive manufacturing in the town of Steyr. Papermaking, especially important as an export, and rayon factories reopened around the Upper Austrian town of Lenzing in 1947. By 1949, the textile industry, concentrated in Vorarlberg, was in full swing. Steel production had also reached prewar levels, although rolled steel products were still lagging behind.

   Austrian heavy industry in the last three decades of the 20th century faced serious competition from abroad. The steel industry survived, in part by manufacturing for highly specialized niches, and by adopting cost-saving techniques such as the LD-Verfahren (LDProcess), first operational in 1953. One traditional manufacturer after another, however, has disappeared, either because of fiscal problems or price-cutting by counterparts abroad, where labor costs are lower. Emblematic of the change was the takeover in 2003 of Grundig, the venerable but bankrupt Austrian electrical goods manufacturer, by a Taiwanese conglomerate.