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Business

Business Briefs

World's biggest manufacturer of printing machines struggles to stay afloat; Chancellor Schröder to slash aid to eastern Germany; German car club ADAC wants to open own gas stations and more.

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A "yellow angel" of German car club ADAC, which is hoping to unveil its own gas stations.

Heidelberger Druck in crisis

The world’s largest manufacturer of printing machines, Heidelberger Druck, has plunged into further financial crisis. Head of the supervisory board Bernhard Schreier announced Thursday in Heidelberg, the ailing company would have to reckon with further job cuts, losses and closing of branches if the economic environment didn’t improve by September. For the first time in its 150-year-history Heidelberger Druck slipped into the red in the business year 2003/04. Turnover in the first two months of the current business year fell to €426 million from €541 million for the same period last year, while contracts shrunk from €767 million to €486 million. Schreier said the company would slash 3,200 jobs by the end of the current business year, two thirds of them in Germany. Schreier did not deliver a prognosis for the current year, but said he expected it to be negative. He has primarily blamed the ongoing crisis in the print media for the company’s downturn.

Chancellor Schröder to cut aid to eastern Germany

German Chancellor Gerhard Schröder said Wednesday during talks with State Premier Georg Milbrandt of Saxony that he would support pumping money and promoting investments to rebuild the economically-depressed former communist east. His comments come at a time when the government plans to slash state subsidies as part of a larger reform plan to rein in public spending. The newspaper Berliner Zeitung reported Thursday that the government would in future continue awarding a special status to the battered eastern part of the country as well as extend the special state promotion program for eastern Germany by two years starting 2004. However, it said state aid would be drastically reduced to €1 billion in 2005 from the present €2 billion and further cut to €500 million in 2006. Unemployment in eastern Germany is as high as 18 percent, while productivity levels are just around 60 percent compared to the wealthier western states.

German car club hopes to sell gasoline

Germany’s largest automobile association Allgemeiner Deutscher Automobil Club or ADAC is planning to build up a network of gas stations for club members. ADAC spokesman Dieter Wirsich said the car club was currently negotiating with various gas station chains throughout the country. ADAC is looking at the Dutch auto club ANBW as a model, which runs an independent gas station chain and offers a discount of seven cents per liter to car owners who pay with an ANBW credit card. ADAC press spokesman Peter Hemschick, however, pointed out that the club gas station concept might be more difficult to realize in Germany than in its neighboring countries on account of difficult conditions such as extremely high taxes. At present the government levies 75 percent taxes on every liter of gasoline sold in Germany. But Hemsick still hasn’t given up hope. "If we could get such a model to Germany, it would be a huge opportunity for ADAC," he said. Hemswick said that the club would attract many more members even with a discount of only two cents per liter.

Rail workers on hunger strike over plant closure

Employees of rail works Opladen in the state of North-Rhine Westphalia have locked themselves in their workplace to protest against the closing of their plant. The head of the railway union Transnet in Leverkusen, Kuno Dreschmann, said Thursday that all doors had been sealed with chains. For almost two weeks more than 20 employees have gone on a hunger strike to protest against the factory’s closure. On Monday two enervated employees had to be taken to the hospital due to deteriorating health. The Deutsche Bahn reiterated Thursday that there was no future for the rail works and that negotiations with private investors had failed. The Deutsche Bahn has instead offered the employees further work, while ruling out plant-specific lay-offs. A spokesman at the state transport ministry said Deutsche Bahn had repeatedly said it intended to shut down the works, and that politicians could not sway the decision. "Even the chancellor cannot insist that the works be preserved," he said.

German employees on fewer foreign jaunts

Fewer German companies are sending employees to work on projects outside the country according to a news report released by global accounting firm Ernst & Young on Thursday. About one-third of the 120 personnel managers surveyed said they were sending fewer workers abroad to supervise projects till the end of the year due to cost-cutting measures. "Only when the economic climate improves will the number of people being sent abroad increase significantly," Chief of Human Capital at Ernst & Young, Mark Smith said in Stuttgart. The report said many companies had realized the cost-saving potential in reducing the number of workers sent abroad. For instance, a married employee with children usually costs an employer between €250,000 to €75,000 for a one-year project in New York or Tokyo. EU states top the list with 71 percent as the most popular destinations for sending German employees. They are followed by the U.S. (58 percent) and the Asia/Pacific region (35 percent)