Sieper-Werke (The Sieper company) was founded in 1921 (Wagner 2002–2007). It was originally a manufacturer of metal tools and cutlery in zamac and aluminum and, later on, ashtrays, badges, medals, belt buckles, and buttons (Wagner 2002–2007). The factory in Ludenscheid was outfitted with new casting molds in 1949 for grating, sandblasting and painting zinc cast goods. The company was even contracted to make Mercedes-Benz's star-shaped hood ornament (Natrop 1998–2002).

The company also experimented with early plastics. In 1943 the company expanded to a facility in Hilchenbach, about 30 miles from Lüdenscheid, though the latter has always been Sieper-Werke's headquarters. Still, consumer products like plastics, furniture, mirrors and cabinets have been developed and manufactured in Hilchenbach. Lüdenscheid, in turn, generally focused on promotional items for major brands, such as the 'elephant shoe' and 'Zeller black cat' which were produced by injection molding.

It was not until 1950 that the company started producing toys in Lüdenscheid, registering the trademark SIKU for the new products. SIKU originates from abbreviating the name of the founder of the company, Richard Sieper, and the German word for plastic, Kunststoffe (e.g. Sieper Plastics). Originally, there was a broad variety of SIKU toys which at first were plastic, including figures and animals. These were often called 'margarine figures' because they came in margarine packages as a food promotion (Natrop 1998–2002). The success of the plastic figures gave capital to start a post-war vehicle line.

Between 1951 and 1955, the first vehicles were generic representations of a fire truck, a race car, an amphibious truck, a moving van, and finally, in 1955, a Porsche 356 (Natrop 1998–2002; Wagner, 2002–2007). The scale chosen was approximately 1:60. By 1958, SIKU had dropped figures to focus exclusively on the plastic vehicles, except where animals attended tractors and such.

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