E. German Hatter Gets Ahead

WILKEN K"AMPFE hangs up the phone and smiles broadly. It looks as though his ship has just come in - and it's loaded with hats. Mr. K"ampfe is east Germany's last surviving hat manufacturer, and he is trying mightily to save his family's business after 30 years under state control. The telephone call was his big break: an order to supply caps for the entire police force in his home state of Thuringia.

This energetic manager is proof that not all businesses have fallen to their knees in what had been East Germany. Since the start of last year, more than 330,000 businesses have been founded or reprivatized in this former communist country. Most of them are small or medium-size companies like K"ampfe's, which employs 60 people.

In the last few months, this trend has strengthened, says Regina Wierig, a spokeswoman for the Economics Ministry in Bonn. This is ``a good sign,'' she says, because small and medium-size companies - referred to as the Mittelstand - are the backbone of the muscular economy of western Germany.

A marketable product aside, the prerequisites for a successful east German entrepreneur are individual initiative, knowledge of the business, and a willingness to learn.

K"ampfe has this golden combination. He applied for reprivatization of his hat company, now called H. W. Bachmann Nachfolger GmbH, last February, shortly after the about-face in East German politics. ``Above all, I wanted to be independent,'' he says.

In April, he was on the road in West Germany, canvassing fashion and textile trade shows for customers. He changed his product-line overnight, which he could only do because, after 25 years of working in this factory, he knows every aspect of the hatmaking process, including design, modeling, and sewing.

Reminders of the past

Just in case the workers at H. W. Bachmann forget what things used to be like, a display case in the foreman's office sets the ``before'' and ``after'' cloth hats side-by-side.

The new line-up includes baby and toddler sun hats, baseball caps, and porkpie hats in pastels, prints, purples, pinks, and denim.

The overall impression from the old lineup is functional hats of brown, black, and grey with red or blue thrown in for color.

``They look dead,'' says Ines Schr"oder, one of two foremen, glancing over her shoulder at the communist-era remnants.

K"ampfe's company goes back to 1836, when it was founded in Arnstadt by his great, great uncle. At its zenith in the 1930s, when this region was a Mittelstand bastion, it employed 450 people.

As K"ampfe tells it, the company's troubles started in 1945 when a firebomb burned its building to the ground. Shortly after that, the postwar authorities decided the land could be better used for an apartment house, and told K"ampfe's grandfather - the owner at that time - to relocate.

Grandfather Hans Bachmann ended up here on North Street, renting a narrow, three-story building that today looks like it hasn't seen a mason, carpenter, or painter since the war. He was not compensated for the lost land - a sign of times to come.

In 1960, the gradual forced takeover of the firm by the state began. It climaxed at the end of 1980, when the hat producer was put under the jurisdiction of a textile Kombinat located 320 bumpy kilometers to the east, in Cottbus on the Polish border. Kombinats, the communist vogue of the 1980s, were giant conglomerates.

``Except for the fact that they would not allow you to go under,'' there was not a single good thing about the Kombinat, which also swallowed East Germany's five other hatmakers, says K"ampfe. Although he was director of the factory by this point, K"ampfe was never allowed to decide what was produced, how much was produced, where it was sold, or at what price.

H. W. Bachmann could have been one of the 11 percent of reprivatizations and start-ups in east Germany that crash upon takeoff. Last summer, after currency union, East Germans fully rejected their own products in favor of western goods. ``The market in East Germany was gone,'' K"ampfe bluntly says.

After struggling for several months, H. W. Bachmann found a key paying customer, a clothing and hat manufacturer on one of K"ampfe's trips to West Germany. The company, Kubach Moden of Mainz, wanted to boost production but was already running at full capacity. It saw an opportunity in H. W. Bachmann, which could offer 45 percent lower labor costs. Kubach Moden provided K"ampfe with new cloth and paid the east German company for the labor of stitching everything together.

Since that time, Kubach Moden has grown to be about 30 percent of H. W. Bachmann's business. ``Without Kubach, we couldn't have bridged the gap'' between the collapse of the east German market and the inflow of new orders.

Careful with cash

The Kubach Moden contract alone, however, couldn't have rescued the hatmaker. Then, as now, cash flow is still the biggest problem, says K"ampfe, who is perfectly willing to put up with a chilly office and rickety furniture if it will save him a few marks.

K"ampfe applied his wits, but not his alone. He hired a tax advisor from West Germany. He used his full 60 days before paying any bills, and even then, often made only partial payments. He used up material he already had on hand. And with the new products in hand, he and his two salesmen began knocking on retailers' doors, taking down orders and then producing according to demand.

Meanwhile, many of the workers at H. W. Bachmann - mostly women - have been put on part-time shifts. K"ampfe decided against layoffs to preserve his pool of skilled labor for better times ahead.

Pressures of capitalism

Workers have mixed feelings about the changes, says foreman Schr"oder. She likes the fact that the company can now design and market its own products. She is gradually getting used to making her own decisions instead of taking them to K"ampfe.

``But work now is more stressful,'' Schr"oder says. Workers are making more money, she says, but they complain that the new method of being paid according to pieces produced puts them under too much pressure.

The past year has been so tough on K"ampfe that he says he's gone through daily mental gyrations over whether to give the business up or not. H. W. Bachmann is still operating in the red, he says, ``though we haven't got any really big debts.''

But now it looks like the hard work, changes, and persistence are paying off. This month, ``we'll be back up at full production.'' And the order for the police hats is big enough to prove to a bank that H. W. Bachmann is now a going concern and creditworthy, hopes K"ampfe.

The hat producer has done without credit for the entire last year and needs it desperately to stabilize the business and make some improvements on the building, though his sewing machines are fairly up to date. But in the bank's eyes, ``I'm officially nobody,'' because H. W. Bachmann has still not been officially reprivatized.

The culprit is the Treuhandanstalt, the government agency charged with privatizing the vast state holdings of East Germany and probably the most criticized organization among German investors today. K"ampfe's application has been filed for over a year and he has heard the promise, ``in 14 days,'' so often that he stopped believing it long ago. Now, it turns out, the Treuhand says it has no record of the application.

Whether H. W. Bachmann exists in the files of the Treuhand or not, it is becoming a strong, economic presence in this east German town - and so are the businesses being run by K"ampfe's wife, daughter, and son-in-law. Between the three of them, they own or run two women's dress shops, a travel agency, a real estate agency, and an insurance office.