Trabant Faces Uncertain Future

GERMAN BUSINESS

THE bricks are crumbling out of their mortar. The windows are cracked, some broken and unrepaired. Inside, frayed electric cords dangle over the assembly line, where workers pound away with oversized mallets to force together ill-fitting parts. Yet this plant, outdated before World War II, still produces Trabants, the flimsy, smoke-belching passenger cars that became one of the symbols of East Germany's failed experiment in communism.

Now, with East and West Germany united, this plant, this company, its workers and its cars, face an uncertain future.

Bernd Beltrame, chairman of IFA AG, has had to slash the company's operations, paring nine of 26 factories and 40,000 of 65,000 workers. The government subsidy of 1,500 deutsche marks (US$979) per car was canceled.

``Our debts are climbing so high, it's hard to organize the monthly finances of our company,'' Mr. Beltrame confesses.

But he sees some hope in IFA's joint venture with Volkswagen AG, Germany's largest carmaker. IFA already produces engines for VW, and it owns the Mosel assembly line, where eventually 250,000 VWs will be produced each year.

The importance venture was underscored on the day of reunification, when Chancellor Helmut Kohl went to Mosel to lay the cornerstone of the massive manufacturing complex.

The plant, an hour's drive from Zwickau, is already coming to life. Inside, about 400 workers have launched pilot production of VWs, and by the end of the year, they should be turning out several hundred cars a day. The $1.9-billion project was the largest West German investment in what had been East Germany.

Planned since the mid-1980s, the Mosel plant was to have replaced the decrepit Zwickau line. By Western standards, it is fairly primitive, with little robotic automation. Still, it is a vast improvement in quality and productivity.

That is good news for the plant's workers, who have watched the ranks whittled away at Zwickau and other IFA factories. Building Volkswagens means the plant is likely to keep busy, says line worker Holger Kowalski. ``There'll be a future. There wasn't with Trabant.''

Still, in the long-run, Beltrame hopes to keep the Trabant name alive. ``It is our desire to revive our brand in the future,'' he says.

Volkswagen officials dismiss that prospect, as do most industry analysts. The deal with IFA, they say, is a way for Volkswagen to firm up its position in a market that could soon become the fastest growing in the world.

VW in Eastern Europe

Since he became VW Chairman in 1982, Carl Hahn's office has sat only a few miles from the old border, what Hahn says was ``the eastern end of the Western world. But now, we are in the center of Europe.''

Today, VW sells about 3 million cars a year worldwide. Hahn's goal is to push that to 4 million by the mid-1990s. And Eastern Europe is a key to that strategy.

Volkswagen is also seeking a joint venture with Czechoslovakia's Skoda, considered the prize of East Europe's auto industry.

But others are in the battle. French automaker Renault is considered a front-runner in the bidding war for Skoda. And General Motors's German-based Opel subsidiary has developed extensive ties to East Germany's other automaker, Wartburg.

Huge potential market

The logic behind these moves is simple. The number of private cars in countries like Poland and Hungary is barely a quarter that of the West, and the potential market is tens of millions of cars.

Until the opening of the Berlin Wall in late 1989, East Germans had to wait years to get a Trabant.

By the beginning of 1990, a trickle of Easterners went West looking for cheap new or used cars. Then, when the Bonn government began a one-for-one trade of deutsche marks for the East's virtually worthless currency, the trickle became a flood. In July alone, approximately 250,000 cars were registered in East Germany.

Ironically, as demand for Trabant's dries up in the East, some West German motorists have picked up their own Trabis - as the cars are known to friend and foe - just to be different, and an open-bodied, Jeep-like model, the Scamp, has found some fans among young West Germans.