1905 was destined to be a very special year in Norwegian history. The biggest Christmas presents came early in December 110 years ago. First, Norway's long-awaited independence from Sweden was sealed when the Norwegian Parliament swore in the Danish Prince Carl as Norway's King Haakon.
A few day later, on 2 December 1905, three merry gentlemen left Sam Eyde’s engineering office in Christiania, as Oslo was then known. They were off to celebrate that they had just established "the biggest commercial company in Norway." No less! The host, Sam Eyde, had become the company's president, and one of the two Swedish brothers who were with him, Marcus Wallenberg, was chairman of the board.
Sam Eyde and the Wallenberg brothers had every reason to celebrate. They had started businesses together previously, but this time it was different. "Norsk hydro-elektrisk Kvælstofaktieselskab", the long name by which it was known then, was big. The plans were gigantic, the investment enormous, and the business idea seemed crazy.
Hydro sprang out of the greatest discovery ever to be turned into an industry in Norwegian history, and marked the start of an adventure that had international dimensions right from the start.
"Yes, we love this country"
Three days later, Sam Eyde and his partner Kristian Birkeland presented the new company to the Norwegian public. Well, not exactly the general public. The scientist Birkeland presented the technology that formed the basis of their company to his colleagues at the University of Oslo. None of them seemed impressed when they left the university that evening.
Sam Eyde, however, was in the prime of life, 39 years old and approaching the peak of his career. Rather than dwell on the technical details, he spoke in grand terms at the Polytechnic Society. An impressed and enthusiastic audience heard about the national significance of “noxious air” (nitrogen). Eyde held nothing back when he laid out his ambitious plans: n the coming years, the Norwegian people were going to see their waterfalls deliver 300 000 horsepower to large saltpeter factories. Between 60 and 80 million Norwegian crowns would be invested. This was equivalent to more than the entire annual national budget. "It is our hope that the impoverished valley where these factories are being built will flourish and prosper," Eyde stated.
The audience was carried away. There were songs and toasts to the new industry, the King and the Fatherland. "Now that we have won our independence, the time has come to build our country. Representatives from industry will play a leading role in this work," said Carl Berner, president of the Norwegian parliament. At this point, the audience stood up and sang the Norwegian national anthem "Yes, we love this country."
However, the story of Hydro does not begin in 1905 nor at the Polytechnic Society. We have to go three years back in time and far up in the Norwegian mountains, as far into the middle of Southern Norway as it is possible to come. In Vestfjord Valley, three waterfall speculators had acquired the bankrupt Rjukanfoss Hotel in the fall of 1902. One of them was engineer Sam Eyde. They had no plans to engage in tourism, but saw business opportunities in the hydropower rights to the rumbling tourist attraction right below the hotel.
At Rjukan however, they had miscalculated. Only a few hundred people lived in Vestfjord Valley. Neither there or anywhere else nearby was there a market for the 200 000 horsepower Rjukan waterfall could produce. Transmitting the power to the coastline was technically possible, but the power loss would be immense. Also, the first estimates in the autumn of 1902 indicated that it would cost 24 million Norwegian crowns to develop the waterfall. This was a huge amount of money for a project with a frightening number of uncertainties.
Faced with these challenges, the three investors tried to re-sell the Rjukan waterfall at a profit. Contacts in carbide, steel and aluminium industries were established and cultivated. No one would take the risk on such a demanding development project in such a remote area.
Turning point with excitement in the air
The turning point came on 13 February 1903. There was excitement in the air when physics professor Kristian Birkeland and engineer Sam Eyde met at a dinner party hosted by cabinet minister Gunnar Knudsen. Birkeland leaned forward and asked Eyde what the engineer was working on. Eyde replied that he had assembled large supplies of electricity and was toying with the idea of producing nitrogen. He had gotten the idea from the English scientist William Crookes, who in 1898 had claimed that the Western world was on the brink of a famine. Food production had to increase, and there was not enough natural fertilizer. What about trying to extract the nitrogen from the air?
"... What I want most of all, is the most powerful electrical discharge on earth," said the engineer in response to Birkeland's question.
"I can provide you with that, Mr. Eyde," replied the physics professor. One of his inventions was an electric cannon which he had tried to get the European superpowers to buy. During firing, the cannon had short-circuited, resulting in a powerful electric arc.
Collaboration and development
The dinner party marked the start of an intense and fruitful collaboration. Full of ambition, the two met again the next morning. One week later Birkeland had an application ready to patent "the generation of electric arcs with the largest possible surface area, particularly for use in the chemical bonding or splitting of gases or gas mixtures."
Although the application was filed three years before the company was founded, it is considered to be Hydro's "Patent number 1".
The following years were hectic for both the physicist and the engineer. Birkeland researched, developed and tested ideas in practice. He got help from Eyde's engineers, who contributed by giving the research direction and a systematic approach. Soon there were around 15 people working on the development of Birkeland and Eyde’s technology. One of them was Sigurd Kloumann, who eventually came to play a major role in building the new Norwegian industry.
As the work progressed, a pilot plant was built in Notodden, where Tinfos had a power plant with the capacity to supply enough electricity. Although Sam Eyde liked to think fast and big, it was not size for the sake of size that made Hydro big right from the beginning. Europe's largest hydroelectric power plant was needed to turn scientist Kristian Birkeland's invention into a full-scale reality. It was built in Notodden. The volume of electricity needed to extract nitrogen from the air was enormous. For the fertilizer industry to become truly large-scale, Europe's largest power plant at Svelgfossen had to be followed by the world's largest at Rjukanfossen. That way the 200 000 horsepower from the Rjukan waterfall could finally be utilized.
The first construction project took place during a time of high unemployment and with many workers wandering around looking for work. In 1905, they came by the hundreds to Notodden. In a roaring cauldron of a waterfall, they began digging, cementing and building.
Bit by bit, an entire power plant had to be lowered by cable over the raging waters. Time and again, the river struck back, wiping out weeks of work. In 1907, Svelgfossen had to surrender. Europe's largest hydropower plant gave vitality, not only to the new chemical industry, but also to a new industrial nation. New plants were built at a furious pace. Hundreds, even thousands, of migrant workers did the job, with Sigurd Kloumann as project manager. He was only 26 years old when work started. Some years and much experience later, he traveled to Høyanger to build the aluminium plant and local community there.
Large projects, large budgets
While the research work was proceeding, Sam Eyde travelled around Europe to ensure that it would not stop there. He needed money, a lot of money. There was none to be found in Norway, which had no major financial institutions. But it could be found in Sweden, Norway's partner in the union. On 2 January 1904, the Wallenberg brothers, who owned and ran Stockholm's Enskilda Banken (SEB), invested over two million Norwegian crowns in a newly created holding company which took over ownership of both the waterfalls and development of the electric arc process. It was called "Det Norske Aktieselskab for Elektrokemisk Industri," or Elkem, as the company is known today.
However, it soon became apparent that the Swedish money was not enough to implement the plans for industrial development in Norway. In France, Banque Paribas was sitting on a large stack of money. The French were fascinated by both the invention and the Norwegian engineer's determination. All the same, the final investment decision took a long time coming. In 1905, Sam Eyde and the Wallenberg brothers spent weeks at a time at the French bank. On 7 September, the green light finally came from Paribas – the same day union negotiations between Norway and Sweden collapsed in Karlstad. A week later, on 13 September, the same day as the critical negotiations in Karlstad resumed and Norway started a cautious military mobilization, the agreement was signed in Paris. Not surprisingly, Paribas decided to invest ‘only’ 2.5 million crowns. This was a disappointment for Eyde and his Swedish partners; who had hoped for at least ten million. But, after all, they were one step closer to realizing their plans for Telemark.
With the signed contract in their hands, Sam Eyde and Marcus Wallenberg headed home. In Cologne they received a telegram with instructions to return to Paris. They feared that the dispute over the union between Norway and Sweden had caused the French to have second thoughts. So the wealthy Swede and the determined Norwegian pretended nothing had happened and continued their journey back to Scandinavia.
Ups and downs
The following 25 years saw development projects the like of which Norway had never seen before, neither in scope nor importance, until in the late 1920s the company had a brutal encounter with international competition and new and better technology. To survive, Hydro had to replace the over 20-year-old Birkeland–Eyde technology with the more effective Haaber–Bosch method, and ended up as a subsidiary of the German IG Farben, the world's largest chemical company. This marked the beginning of a period that is still etched in the corporate memory as "the long dark twenties." The company was determined to never again get into a situation where it lost control of itself!
Things brightened up in 1945. After the war, the German shares were confiscated by the Norwegian government, and Hydro finally became Norwegian – although with the state as major
shareholder. As a provider of foreign exchange, the company became an important tool in postwar reconstruction, and gradually expanded northward and into new products such as aluminium and plastic.
Into aluminium and oil
When dark clouds reappeared on the horizon in the early 1960s, the lessons of the 1920s were remembered and used for all they were worth. In 1963, a new technological leap in fertilizer production was accompanied by the decision to use hydropower to produce aluminium. The production of aluminium required large amounts of electricity. And Hydro was an expert in power-intensive production, then as today.
Alnor was established in cooperation with the American company Harvey Aluminium. A brand new aluminium plant was built at Karmøy. Soon Hydro also started processing its own aluminium products. Ten years later, the Americans were bought out of Alnor for 20 million dollars – an amount recouped after just two years.
That same year, Hydro's senior executives hesitantly entered into a partnership with five French oil companies to start oil exploration in the North Sea – an idea almost as unthinkable as making fertilizer from air had been in 1905. The company got another leg to stand on two days before Christmas in 1969, when oil was discovered in the Ekofisk field. Hydro was the Norwegian pioneer among French and American oil companies in the North Sea. During the 1970s, this new business area underwent strong growth. The oil from the North Sea found applications on the Norwegian mainland through the establishment of petrochemical plants in Rafnes and modernization of fertilizer production in Herøya.
International growth and an ability and will to make bold transitions led to aluminium eventually becoming a natural focus area. From 1986 onwards, the company's position was strengthened through several major aluminium acquisitions. Large aluminium companies such as Norwegian ÅSV and German VAW were taken over by Hydro. The world's largest and most efficient fertilizer company was spun off and listed under the name Yara, plastics production was sold, and oil and gas activities merged with Statoil.
110 years later
110 years after its creation, Hydro is one of the world's leading aluminium companies with over 13 000 employees and a strong presence in Brazil, Germany and Norway.
In 1905, Hydro's founders faced one of most threatening problems of the times: how to provide enough food for a population that had grown dramatically through most of the 1800s. They took on the challenge, and saw opportunities where others saw only problems. In competition with the largest actors in the electrochemistry field, a determined Norwegian structural engineer and a creative Norwegian physicist found the answer. The result was the world's first industrial-scale production of nitrogen fertilizer.
Some of the greatest current and future challenges are related to energy and transport, resources, climate and environment. Hydro has taken on these challenges too. With a unique position as a supplier of aluminium, the company plays a role when future energy-efficient vehicles and buildings are on the drawing board. Through research and development, alone and in cooperation with some of the most exciting organizations in the world, Hydro will contribute with the best of what our 110 years of history can provide: Progress of a different nature.