Schröder Intervenes to Save Eastern German Bombardier Plant

Workers at the eastern German plant of Bombardier Corp. have Chancellor Gerhard Schröder to thank for the Canadian rail technology group's decision to keep the site open, according to the regional chief of the trade union involved.

Hasso Düvel, head of trade union IG Metall in the states of Berlin, Brandenburg and Saxony, said Schröder brought considerable pressure to bear on Hartmut Mehdorn, chief executive of Deutsche Bahn AG.

As a result, Germany's rail operator will bring forward some orders of rolling stock that it had not planned to make until 2006, added Düvel, who is also the deputy chairman of the supervisory board of DWA Deutsche Waggonbau, Bombardier's German unit.

With these orders, the position at the DWA plant in Halle-Ammendorf in eastern Germany should be stabilized by 2004, Düvel added.

But he said they would not be sufficient to prevent the introduction of short-time working this year.

A spokeswoman for Bombardier at the group's Canadian headquarters said though Halle-Ammendorf would now be kept open, some 20% of the plant's 900 jobs would be cut before the year's end.

Meanwhile, the Chancellery Office said Deutsche Bahn chief Mehdorn had refused to make firm commitments on the issue of orders for new rolling stock.

But a Bombardier spokesman said his group was expecting a large order from Deutsche Bahn.

The orders would form part of the railway operator's program of investments totaling 10 billion euros in new rolling stock, which it had announced last December.

But he said in view of ongoing negotiations, precise details could not be disclosed.

Deutsche Bahn, for its part, stressed that the course of action agreed by Schröder and Mehdorn involved nothing unethical and nothing running counter to European Union law. Bombardier/DWA's competitors may see things a little differently.

A high-ranking executive at one company described the decision to place the order with the eastern German plant as a 'scandal".

He said billions of euros had already flown into the site to save jobs there, but ultimately all that would be achieved would be to postpone the day of reckoning.

For Schröder, it is easy to see why it should be so important to save jobs at this particular plant.

pril will see local elections in the eastern German state of Saxony Anhalt, and they will be seen as a key indicator of the mood ahead of the general elections in September.

Certainly, the chancellor has in the past shown himself to be ready to step in and save endangered businesses, and his actions have always helped his standing with the electorate.

In November 1999, for example, after he averted the bankruptcy of construction group Phillip Holzmann AG, his personal showing in opinion polls improved.

And in January 1998, when he was still premier of Lower Saxony state, Schröder stopped the sale of the steel business of Preussag AG to Austria's Voest-Alpine group.

The business was instead spun off into a new company, today known as Salzgitter AG.

According to many psephologists, this paved the way for his runaway victory in local state elections, which in turn led his Social Democratic Party at national level to adopt him as their chancellor candidate in general elections held near the end of that year.