Special Report on the Industrial Gases Industry: How Did Linde Transform from Equipment Manufacturing to Industrial Gases?

Customer demand in the refrigeration business sparked Linde’s exploration into gas liquefaction, leading to rapid technological breakthroughs. In the early 20th century, the brewing industry’s need for refrigeration fostered close collaboration between Linde and brewers. In 1890, Dublin Brewery ordered a carbon dioxide liquefaction unit from Linde—prompting Linde-Kahl to focus on gas liquefaction. During its first test in 1895, the team successfully produced several liters of liquefied air, paving the way for the establishment of Linde’s Gas Liquefaction Department in Munich. Because oxygen and nitrogen have similar boiling points, it was not until 1899 that Linde achieved its first fractional distillation yielding oxygen-enriched air—and introduced it into the chemical industry. The completion of Linde’s first nitrogen rectification column in 1905 revealed the enormous economic potential of gas liquefaction; the company immediately decided to monopolize the oxygen market, and within five years, all major domestic competitors sold their assets to Linde. In the 1920s, Linde extended its process horizontally to other gases, mastering low-temperature separation of hydrogen, nitrogen, methane, and ethylene from coke-oven gas—a core competency that enabled Linde to dominate the global market. By then, the Gas Liquefaction Department had far surpassed the Refrigeration Machinery Department in strategic importance. Wartime expansion through gas operations, followed by postwar liquidation and damage. As wartime demand for explosives drove increased ammonia requirements, synthetic ammonia plants—needing nitrogen extraction and other technical gases—became key Linde customers. During WWII, Linde supplied industrial gases and maintenance tools for military vehicles to the armed forces; after a brief adjustment period, revenues surged rapidly, generating substantial profits. Meanwhile, agricultural machinery began flourishing, prompting Linde to acquire Güldner in Aschaffenburg and enter diesel engines, agricultural tractors, and electric motors. However, over three-quarters of Linde’s equipment were destroyed during the war, and nearly all overseas assets were lost. Postwar outdated management philosophy hindered growth, prompting a strategic pivot toward balanced diversification. Rebuilding overseas subsidiaries consumed over two decades, leaving Linde far behind U.S. peers and France’s Air Liquide. Simultaneously, many Linde products became misaligned with modern development needs. Having lost its early technological edge, Linde suffered from high warranty costs, market-inappropriate sales policies, and generally excessive pricing—eroding competitiveness. Consequently, Linde underwent profound internal governance reform: Hermann Linde’s resignation in 1976 marked a turning point, as Hans Meinhart’s managerial philosophy gained ascendancy—transforming Linde from an engineer- and scientist-driven family enterprise into a management-led corporation. Eliminating redundant businesses to focus on gas development. In its earlier phase, Linde pursued a balanced strategy across multiple business lines—but constrained by expansion capacity and downstream market conditions, the company gradually refined its portfolio starting in the 1970s, concentrating resources on the more promising gas division. A structural crisis diminished agriculture’s importance in the national economy, pressuring Linde’s diesel engine and tractor divisions. Although Linde’s motor and tractor business held a 5.5% market share in Germany in 1968—ranking among the top ten manufacturers—the management decided to halt production and exit the sector immediately. Linde’s cold storage division achieved remarkable success in the 1970s, yet due to its relatively small market size, the company closed its first German cold storage facility—established in 1910—in 1981, and merged its remaining cold storage operations into an independent company in 1984, transferring shares to MuK; in the same year, Linde divested its turbine business within the refrigeration and installation engineering division.

How Did This Century-Old "Shop" Earn 180 Billion Last Year by Selling "Air"?

The Kingdom of Gases’ Concerns As the inaugural CEO of the newly merged company, Steve Ange perhaps did not anticipate having to lead his firm into a head-on confrontation with automotive giants upon assuming office. A consensus emerging from the auto industry raised concerns for Steve Ange. Automotive giants—including Volkswagen Group—believe fuel-cell vehicles will become obsolete within the next decade, making battery-electric vehicles the preferred path forward. This shift will trigger cascading effects. Compared to other industries, the automotive sector drives hundreds of upstream and downstream industries. Widespread adoption of battery-electric vehicles will fundamentally reshape the entire industry’s supply chain and value chain. Take the petrochemical industry, for example: replacing gasoline with electricity would severely impact global refineries—which are major consumers of industrial gases—and render Linde’s air separation units (ASUs) obsolete. In China, ASUs are deployed across major refineries, playing a critical role in ensuring safe refinery operations. Since Carl Benz of Germany invented the first automobile in October 1885, cars have been powered by fossil fuels for over 130 years. Yet today, battery-electric vehicle (BEV) manufacturers—led by Tesla—are transforming the automotive powertrain paradigm. The rapid rise of these BEV companies has unsettled traditional automakers. Even more unsettling is the shifting stance of these legacy automakers themselves. Steve Ange has just taken the helm of a new “kingdom of gases,” facing imminent headwinds to corporate earnings growth. Just one month ago, Linde Group released its 2018 financial report: revenue rose 5% year-on-year, reaching $28.1 billion—of which $24 billion came from gases, and 31% originated from manufacturing. This gas giant also projected that 2019 sales growth would fall short of the 2018 figure of 5%. As the first full fiscal year following the merger’s completion, the pressure on Steve Ange is palpable. Linde’s potential breakthrough in the automotive sector may lie in hydrogen fuel-cell technology. This “century-old shop” holds strong confidence in hydrogen’s application prospects—and has already begun strategic deployment. Christian Bruch, Executive Vice President and CEO of Linde Engineering, stated: “The new company will focus on major hydrogen growth regions, including Western Europe, North America, South Korea, and China.” In China, Linde Group signed a strategic cooperation memorandum on hydrogen energy with Zhongdian Smart Integrated Energy Co., Ltd. in November 2018. At the Hannover Messe industrial exhibition held April 1–5, Markus Bachmeier, Head of Linde’s Hydrogen Solutions Division, expressed strong confidence in the future of fuel-cell passenger vehicles. Yet Linde confronts the commercialization challenge of hydrogen. Spencer Dale, BP’s Chief Economist, noted that no country has yet achieved commercial-scale hydrogen applications. That said, this does not preclude future commercialization. As a “kingdom of gases,” the new Linde—with its 80,000 employees—may well possess the confidence to overcome hydrogen’s application barriers through technological prowess. Another initiative to break down these barriers is continuous boundary expansion. Over the past 140 years, Linde Group has evolved from a modest local firm into an industry titan operating across more than 100 countries—a trajectory likely beyond founder Carl Linde’s wildest expectations.

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