E. German entrepreneurs experiencing frustration

July 31, 1995|By New York Times News Service

BERNAU, Germany -- The concrete-block factory sits abandoned on the outskirts of this eastern German town. Inside, one of the most modern machines for making circuit boards for computers and televisions lies idle.

The company that owned the plant was sold by the government to a subsidiary of Veba AG, a utility giant in western Germany.

Veba already controlled two companies in the western part making similar products, and it closed the plant here, saying it was losing money. The circuit-board machine is now for sale to anyone who will take it out of Germany so that it does not compete with Veba.

Many of the Bernau plant's managers, whose hopes had once soared with the arrival of western German business muscle and know-how, have since become disillusioned.

"Whenever a western German firm has to choose between jobs in western Germany or eastern Germany, it will always choose the west," said Edmund Luhrmann, a former senior manager of the eastern German company, Elektrolaminate.

Almost five years after German reunification, the situation here speaks to the frustrations of many eastern German entrepreneurs and managers who believed the claims of western German politicians that their industries would flourish within five years.

Some, like Mr. Luhrmann, accuse western German companies of buying up potential eastern German competitors in order to close them down. Veba denies that accusation. Others say that shrewd western German businessmen negotiated enormous tax breaks by buying in the east, then closed the shop and ran when those breaks were used up.

Others complain that western German retailing chains refused to put eastern German products on their shelves not only in the west but also in the east, where they were once the dominant brands. And still others, who bought small businesses from the government, say that western German banks have denied them loans, making it difficult for them to expand and compete.

"We feel intentionally betrayed by the west, with very little strength to respond," said Karl-Heinz Herms, a former manager of an eastern German steel fabricating plant in Eisenhuttenstadt and now a struggling entrepreneur.

"They told us we were all brothers and sisters, that we would work together. And we believed them. Now, they control our industry. They decide what to keep open and what to shut down. They threaten to put us out of work. And what is our option? We have to be like them or we don't survive."

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