East Germany's Economy Totters

Unemployment soars as East finds little demand for its goods since economic union with West

SEA GULLS wheel over rows of idle derricks on Rostock Harbor's No. 40 quay, its once bustling cargo wharfs deserted, its deep-water slips abandoned. East Germany's most important Baltic port is nearly at a standstill, locked in the same predicament with thousands of other industries as the nation heads toward economic collapse.

``You missed the funeral,'' quips dock worker Wolfgang Kuckenburg, pointing to a barren pier and an empty channel. ``A month ago the dock was full of activity and the din was enormous,'' he says. ``There were ships in all the slips, crane operators were working overtime, and forklifts loaded trucks and containers around the clock.''

That all changed after the German economic union July 1. Now the harbor is eerily silent. In the weeks after the jolt toward a free-market economy, 1,200 harbor workers lost jobs. Of the 4,800 still on the payroll, more than 3,200 have been ordered to half-time shifts. Another 2,000 may be laid off soon. Says harbor spokesman Ingbert Schreiber: ``We were an artificial creation of a communist economy. Now we're in serious trouble.''

And so too are nearly half of East Germany's 8,000 factories, cooperatives, and industrial collectives, officials in East Berlin say. Since economic fusion in July, outmoded industries from Rostock to Dresden have been folding en masse. The number of unemployed workers has doubled to more than 270,000. Three times as many East Germans are on ``short time,'' in many cases just a euphemism for collecting partial pay for no work at all.

Some dire estimates by government officials forecast that nearly half of the nation's 7.5 million work force could be unemployed by year's end. East Germany's economic failure has brought calls for swifter unification to satisfy hesitant investors and to bring Bonn into more direct control of the vast economic recovery plan it is bankrolling.

East German industry is being buffeted from all sides. Even relatively solvent companies face enormous obstacles as they compete against Western products for the first time. Many manufacturing plants are obsolete, inefficient, and employ far too many workers. Only subsidies by the ousted Communist government kept them afloat. Few will survive without substantial overhaul.

There is also almost no domestic market for East German products. Consumers shun the drab (but not always inferior) East German products in favor of more attractively packaged Western imports. Many East German stores have signed contracts with West German retail chains, effectively banishing East German products from the shelves.

As factories close and orders slump, supply and delivery networks fail. ``It's total chaos,'' says Reiner Maria Gohlke, head of the East German Trustee Agency charged with dismantling state monopolies and restructuring the economy. ``All our predictions about what East German products would be competitive were wrong. The next six months are going to be the worst before we begin to pull out of the swamp.''

Economic merger has also thrown East Germany's trade agreements into disarray. ``We've lost all of our old contracts,'' says Mr. Schreiber, the harbor spokesman. Forty percent of the harbor's operations depended on trade with the Soviet Union, he says. There is little optimism that those trade levels can be maintained now that Warsaw Pact economic alliances are crumbling and payments must be made in West German marks. And with East-West land routes open again, there is less reason to ship goods to Rostock.

Schreiber says a Soviet freighter has been anchored outside the harbor for weeks with a load of ore. ``The contract was canceled while it was still at sea,'' he says. Canceled orders have left harbor warehouses crammed with East German export goods.

Rostock shipbuilding has been hit, too. The Soviets were the biggest customers, but contracts are being canceled and payments are overdue. Rostock Economics Senator Heinz Werner says half the industry's 53,000 workers may lose their jobs.

The future of East Germany's fishing industry is not much brighter. ``The trawler fleets have been called back from the Canadian and African coasts,'' Mr. Werner says. Half of the fleet will be scrapped, the other half sold, he says. Fishermen in the historic port city of Wismar are worried.

``Unification is going to bring lots of our friends over from [West Germany] with modern ships,'' says Peter Bobzin, who fishes for herring and eel in a 20-foot boat. ``When they come we might as well stay home.'' He says one fisherman on a modern boat with better technology can handle 200 nets. ``We can only handle 30 a man,'' Mr. Bobzin says.

Across town, the 125 workers at the Diamant clothing factory believe they will lose their jobs in October. ``We've been told that if we don't find a West German partner or land new contracts, that we'll close in two months,'' says seamstress Monika Kataneck. The factory makes conservatively cut black suits for men sold mostly to the Soviet Union. ``We're still fulfilling our contracts with them, but nobody knows if they'll pay,'' she says.

Next door, the Ostsee Dairy is somewhat of an exception to the rule. It has hung on by shipping 100 tons of milk per day to a West German partner in L"ubeck where it is used to make powdered milk. In return, the dairy gets West German yogurt and buttermilk it sells to its local customers.

``Without it we wouldn't survive,'' says manager Manfred Remus. ``We've lost 50 percent in milk sales since July 1.''

East German companies also face a struggle in the electronics and appliance sectors. ``We expect the worst,'' says G"unter Schultz, who works at a household appliance and instrument factory in Teltow, an industrial district near East Berlin. The company makes everything from barbecue grills to precision instruments and electrical components. ``The grills are about the only things we make that can compete,'' Mr. Schultz says.

East Germany's agriculture has been hit by the invasion of Western produce. Farmers are growing desperate, with roadside stands often their only outlet.

The agricultural cooperative May 1 in Lindenberg near East Berlin, is restructuring itself into smaller, more efficient units. Still, it expects to lose half or more of its 700 workers. ``Otherwise the changes will ruin us,'' says Siegfried Hahnsch, who runs the cooperative machine repair shop.

Workers who remain are busy in fields of wheat and rye that stretch for miles in every direction. But they have no guarantees their crops will be sold.

``It makes you wonder whether to harvest the crops with tractors or a book of matches,'' Mr. Hahnsch says.

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