Berlin Banker and New York Bridges
WHEN Kurt Kasch gets going in the morning, he sometimes looks out the window of his Berlin house to see if there are any strange vehicles on the street. As a managing director of Deutsche Bank Berlin AG, he could be a target of the Red Army Faction. That left-wing terrorist group killed a former head of Deutsche Bank, the most powerful bank in Germany.
But Mr. Kasch, visiting Cambridge, Mass., as a member of the board of Arthur D. Little Inc., a consulting group, likened his sense of caution to that of an American being careful in a tough part of town. His biggest concern these days is the unification of Germany and its consequences for his bank.
For one thing, Deutsche Bank bought the former state-owned commercial bank of East Germany. Thereby it acquired about 100 branches in the ex-communist part of the country. Now the bank is training the employees of these branches. In most cases, managers have been brought over from the West.
Most East Germans, notes Kasch, have no experience with a market-oriented economy or democracy. Only those citizens about 80 years old would have voted under the Weimar Republic, which disappeared after Hitler took over in 1933. Following Nazi Germany's defeat, they lived under communism.
At the moment, the economy of eastern Germany continues to go downhill, says Kasch. The pre-unification statistics showing that East Germany was one of the 10 largest industrial nations in the world have been found to be false. The German Democratic Republic economy was in worse shape than realized.
Considering the pronounced differences between the economies of the east and west parts of Germany, unification came ``much too early,'' says Kasch. But the West German government of Chancellor Helmut Kohl did grasp the political opportunity for unification at the ``appropriate time.'' By last fall, the Soviet Union probably no longer would have permitted it.
By now about 50 percent of the work force in eastern Germany is unemployed or under-employed. And it will cost 100 billion deutsche marks (US$57 billion) a year, maybe more, to rehabilitate east Germany, Kasch estimates. Already, though, some 300,000 new small businesses have sprung up, employing perhaps 1 million. Not all will last.
``There will be many social-economic challenges in the next two years,'' he adds. ``But money is not the issue. Management is the issue.''
Kasch expects clearer signs of economic recovery in east Germany by the spring of 1992 and prosperity by the year 2000.
East Germany was especially hit by the sudden collapse of its markets in the Soviet Union and its East European neighbor nations. These nations now deal in hard currency prices and no longer plan exports under barter arrangements.
One East German company had exported 1,500 to 2,000 railroad cars annually to the Soviet Union, which each year needs about 7,000 cars. The plant recently got an order. ``It makes sense to keep that plant running,'' says Kasch - something not true of many East German plants.
Kasch also reported a competition between a Japanese and a Scandinavian company for the purchase of East Germany's television tube maker. In Europe, TV tube capacity is limited.
Kasch sees an opportunity for some American firms to get into the European common market ``at low prices'' by buying some East German firms from the agency responsible for their denationalization. The German-American Chamber of Commerce in New York has a computerized list of companies for sale.
Driving into New York City from the airport, Kasch says the dilapidated condition of the highways and bridges reminded him of the situation in east Germany.
He sees a need for the US to develop more of an industrial policy to help its companies compete internationally. He calls the US the only truly deregulated economy in the world. Most important, Kasch says, the US must improve its educational system to give its people the training and background for modern business. Germany, he says, may not have an Ivy League of universities. But through apprenticeships and other vocational training, most Germans have the skills needed for today.