Sun, May 05, 2019 - Page 16 News List

Germany’s poorer east
embraces tech revolution

In Germany, the east still lags behind the west 30 years after the fall of the Berlin Wall, but high-tech firms are leading a revival, while the government is supporting innovation clusters

By Paul Carrel  /  Reuters, JENA, Germany

Jenoptik chief executive officer Stefan Traeger poses on the roof at the company’s headquarters in Jena, Germany, on March 21.

Photo: Reuters

From the 12th floor of Jenoptik’s headquarters, chief executive officer Stefan Traeger points to his laser factory and the university that provides it with talent.

Welcome to “Optics Valley” — a role model for Germany’s east in a big year for the region.

Three elections in eastern states this autumn are focusing the minds of German Chancellor Angela Merkel and her allies, who want to win over voters unhappy that their living standards still lag behind the west 30 years after the fall of the Berlin Wall.

They have work to do. The east was given big promises after reunification, but its economy languished.

After cash injections of 2 trillion euros (US$2 trillion) over three decades, the east’s economic output per capita is still three-quarters of western German levels.

However, the east is slowly closing the gap and several tech hubs are giving it hope of catching — and maybe eventually overtaking — the west.

In Jena, Traeger says his predecessors turned “the ruins of the old East German Carl Zeiss conglomerate” into Jenoptik — a multinational lasers and imaging equipment group.

With most of the east’s old industries long gone, Merkel’s government is trying to encourage hubs like Jena to profit from disruptive new technologies.

“I do feel at times that here in the east, still today, there is this feeling of ‘well, maybe it’s okay that we just play.’ No, we want to win,” Traeger told reporters after presenting record earnings for last year and a bullish outlook.

Many German firms in the east closed after reunification, so why was Jenoptik different?

Traeger says its first CEO, Lothar Spaeth, a former premier of Baden-Wuerttemberg in the west, saw potential to create a world-class business out of an “unpolished gemstone.”

With the aid of government loans, Spaeth built Jenoptik from the Carl Zeiss group, but at a price.

“It was a very difficult time. Several thousand people lost their jobs,” said Helmut Bernitzki, 62, who joined the forerunner to Jenoptik in 1984.

“We had to expand into new markets,” said Bernitzki, who is now an expert in optical coatings at Jenoptik. “We fought to be profitable and to create jobs here again.”

In a city of 110,000 people, 22,000 of them students, Jenoptik has channeled ideas from the university into specialized laser and optics products to give the company a technological edge.

The upshot is high productivity: Jena’s output per worker is the highest in the eastern state of Thuringia, and slightly higher than towns like Bielefeld and Bochum in the western state of North Rhine-Westphalia, German Federal Statistics Office data show.

“Here in the Optics Valley in Jena, we have a very closely connected community and it does feel like Silicon Valley, on a smaller scale,” Traeger said.

He aims to turn ideas stimulated by Jena’s university into high-tech products that “create and justify price premiums.”

Generating this added value has eluded other industries in Germany’s east. Solar power firms made a promising start in the early 2000s before Asian rivals undercut many of them, with the loss of thousands of jobs.

Developing products that rivals cannot beat on price is the holy grail for the optics, biotech and artificial intelligence start-ups taking root in the east — many of which are around universities and research institutes.

However, for the east as a whole, productivity was three-quarters the western average in 2017, the latest government figures show.

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