German Chancellor Schröder caused surprise when he promised to consider China’s request to buy a German plutonium factory recently. However wholesale deals on old industrial plants aren't out of the ordinary for Germany.
Made in Germany, rebuilt in China.
If a retired steel worker from the Westphalia region of Germany wants to show his grandsons where he used to work, he may be faced with a slight dilemma.
He could either show them the empty land where his steel plant once stood and rely on their imagination to fill in the gaps or he could fly them about 9,000 kilometers to the east to see where it currently resides. Because the plant where Grandfather used to toil and sweat is now one of many German industrial sites that have been dismantled, shipped and reassembled in China.
The end of a productive life for many German steel plants does not necessarily mean dilapidation or destruction in this day and age of global trade. Plants like the Thyssen-Krupp steelworks and the Deutsche Steinkohle’s Kaiserstuhl Cokery, both originally situated near Dortmund, have found a new lease of life thanks to Germany’s close trade ties with the People’s Republic of China.
From Dortmund to Shanghai
After only eight operational years, the Kaisterstuhl closed in 2000, an uncertain fate stretching ahead of it. That is until the Chinese Yankuang Group, the state-owned mining conglomerate which also purchased the Thyssen-Krupp plant when it fell into disuse, purchased the 250,000 metric tonnes of steel jigsaw puzzle that is now being reconstructed near Shanghai.
It really seems that one man’s junk is another man’s treasure. While Germany adds to its reputation as the world’s number one exporter by including the sale of disused facilities abroad on its balance sheet, the Chinese get cut-price factories and plants that are integral to its quest for social development.
Social development linked to coke
“As social development grows in China, the economy also becomes stronger and stronger,” says Yankuang Group project manager Mo Lishi. “The people have more money, and the technology becomes more and more extensive: the need for heavy industry grows as does the need for more and more steel. For that, we need coke, because without coke one cannot melt steel.”
The resale of whole plants and factories is just the very large tip of a scrap yard iceberg built on the used machinery market which generates global revenue running well into hundreds of billions of dollars.
Trade fair offers global bargains
Germany's RESale, the world’s leading trade fair for used machinery which has now recently moved to Karlsruhe, attracts thousands of interested customers every year. The majority come from Eastern Europe and many from developing industrial nations in Asia. The trade fair provides essential machinery – everything from computers and textile machines to medical and power plant equipment – which many companies would struggle to afford if they were new.
It seems on the surface that everyone involved in the trade is a winner. The exporters, wanting to remain competitive in industry by having the latest machinery and technology, have a need to renew their equipment almost yearly. The resale market gives industry in countries like Germany the opportunity to dispose of their cast-off machinery to clients like the Chinese, while foregoing expensive disposal charges, environmental problems and making money to boot.
Benefits from old machines
The import countries find themselves with bargains that can be built and made operational in a fraction of the time it takes to put together a brand new plant. These older machines are also easier to repair than newer more complex models.
But there are drawbacks. Used machinery often comes with the risk of pollution from previous operations and high levels of fuel consumption arising from the wear and tear the equipment has received over the years in its country of origin.
Importers ignore drawbacks for profit
“The buyers very rarely consider the environmental effects and generally high energy and resource consumption of these used machines," says Walter Kahlenborn, manager of the independent consultation institute Adelphi Research.
“They mostly look only at the investment costs and maybe a little at the operating expenses.” Kahlenborn added that there is also the danger that the importing of used machinery and equipment into a country can damage the developing home-based market for industry hardware.
Despite these factors, the resale trade is booming. Something the chancellor on his tour of the Far East and Asia is well aware of.