German Tradesmen Look East

With ten new countries entering the European Union on May 1, there's potentially a lot of work for those German companies who are game enough to go and find it. One such outfit is the mould construction and plastic processing company Wolf & Liegel situated in the southern German town of Schwabach. In the works hall, huge plastic injection machines pound away, shaping and creating plastic car parts with such conviction that it is hard to imagine the struggle many automobile manufacturers are currently facing.

Indeed, manager Klaus Wolf says his company is revving up, and is set to accelerate this summer when they open a new production plant close to the Skoda car manufacturer in the Czech Republic. Wolf, who is a great believer in increasing profit through low wages, is hoping that the labor situation at the new plant will balance out the costs at home. "We're hoping to do a kind of mixed calculation and to get more contracts from clients who are not already on our books in Schwabach," he told Deutsche Welle.

Although they haven't even opened yet, Wolf says his company already has a confirmed turnover of €5 million ($6.19 million) from the new plant, which is perhaps not surprising given the staggeringly low wage costs. In the Czech Republic, the hourly rate for employees working in the car supply service is just €5 an hour, whereas in Germany, trained employees can command up to €40 an hour.

Complex customs regulations

In the southern German town of Ansbach, paintbrush manufacturer Feurer is just as keen to see the 1st of May roll around, but for slightly different reasons. Manager Thomas Hackenberger and his company, which survives on the exports of its high quality 'Kolibri' artists' paintbrushes, is tired of running the gauntlet of customs procedures to get his product exported to eastern Europe.

The removal of the cumbersome customs conditions spells ease of trade for the company, and Hackenberger hopes this will boost turnover. As it stands, in order to send goods to Poland and the Czech Republic, he first has to fill out export documents to be certified by German customs officials before the goods can be dispatched to the target country.

Once they arrive, the story continues. "The goods are taken to the customs office responsible for a given region. Our customers then go to the customs office with their papers. Before they are given the goods, they have to pay the import tax," says Hackenberger, who believes the whole process is poison for client relations.

Staying at home

Although there is doubtless a myriad of opportunities just waiting to present itself, many small and mid-size German companies work on a regional level, and are either skeptical of, or not greatly interested in EU expansion. The cheap competition from across the border is their greatest fear. With low wage and production costs, businesses in the new EU neighbors could potentially threaten long-established German companies by pulling away clients and contracts.

But the wider belief -- especially among more internationally-oriented companies -- is that there's a lot of work to be done in the new member states, and someone is going to have to do it. There are roads to be repaired and public buildings to be restored, and for those German tradesmen who aren't shy of crossing the border, there are even EU funds especially earmarked for such reconstruction projects. The expansion process could thus prove profitable in the end.