No Credit - The Credit Crunch Hits the German Economy

One victim of the financial crisis is in the eastern Fresian port of Emden -- the traditional Cassens-Werft has declared bankruptcy after its bank cut off all credit. While employees and the region absorbed the shock, the company's order books showed some 226 million euros worth of contracts. The shipbuilder was in the midst of work on a new container ship, but then the customer was unable to pay for it. Cassens executives say that in the past, the bank would help in such situations, but with the financial climate being what it is at the moment, the bank would not take the risk. Carmen Meyer visits the country's western-most port for Made-in-Germany to see how the credit crunch is putting the squeeze on German business. ------------------------------------------------------------------ It's brand new and 127 meters long. The managers of Cassens shipyard in Emden ought to be proud, but they are worried. The company spent months building the container ship, and now the buyer has backed out of the deal. As is customary in the industry, they financed the construction costs on credit. That was never a problem before. Christian Hohagen, one of the business managers at the Cassens shipyard says: "We have become a victim of the financial crisis, because just a few weeks before delivery, the shipping company told us it can no longer pay for it. And so our house bank cancelled our credit completely." Neither the prospective buyer’s bank nor the shipyard’s bank was willing to grant emergency credit. The banks’ fear has driven the little shipyard into bankruptcy proceedings. It’s quite a shock for the 90 employees. At the moment, the shipyard is keeping its head above water with repair jobs. But that’s not enough to keep the jobs safe. The business managers are desperately looking for a new investor. That’s not easy in the middle of a financial crisis. "We can’t afford to whine. We can’t just give up, we have a responsibility. We’ve been at the shipyard together for 15 or 17 years, we have grown together with the employees, we know all of them and their families personally. We have to look to the future together." People in Emden live from the maritime industry. "Herzlich Willkommen an Bord der Ratsdelft zur Hafenrundfahrt durch den Emder Hafen" Germany’s westernmost port is home not only to the small Cassens shipyard, but also to the big Nordseewerke. It builds warships for the German government, and funding in that area is secure. But the region will be in trouble if car exports continue to fall and the local Volkswagen plant has to scale back production. The Billion-Euro rescue packages for the banks can’t calm those worries, says captain Hans Flessner. "The government is doing the best it can. But we're still a bit afraid, because we don’t know where things are headed." The crisis is a crisis of confidence. The reserved northern Germans are having trouble mustering confidence in the banks. The IG Metall industrial workers union has gathered in front of a shopping center. Michael Hehemann and his colleagues are demonstrating for higher wages. He argues that especially during a crisis people need more money in their pockets, but employers see things differently. "The financial crisis is being used as an alibi for every problem in the plant, even the predictable ones. The IG Metall union is making the biggest demand it has in 16 years, an 8 percent wage hike. The employers are arguing that will be the nail in the coffin that makes even more factories topple."+++ So far, the managers of the Cassens shipyard have managed to do without layoffs. Whether they can continue will depend on what happens in the coming weeks. Maybe the government rescue measures will help them find a brave investor.

DW-World | October 14, 2008

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