BUSINESS ABROAD: East German Recovery

Rolling into Germany with salvage crews and empty freight cars, the Soviet conquerors of 1945 carted off everything of value. To Mother Russia went East Germany’s largest factories, her atom scientists, aircraft designers and skilled laborers, goods worth $12 billion. But in 1950 the Reds decided that instead of taking out what little was left, they would let East German)-build up again and then drain off the profits. This experiment has paid off handsomely for Moscow, made East Germany the Kremlin’s lustiest satellite. Last week East German production had increased to such a level that the government announced it will cut the work week from 48 hours to 45, which might also help pacify any rebellious workers.

Cut Rates & Copying. East Germany gets few benefits from its recovery. Its best products are for export only, some 80% of its trade is with the Soviet bloc. Russia alone takes 47% of her exports of machinery, electrical equipment and optical instruments, reportedly at cut-rate prices set by the Soviets. East Germans say their steel production is up to 2,000,-ooo tons, brown coal up to 200 million tons, electricity up to 29 billion kw-h for 1,955, all double the 1936 output and way ahead of the wartime peak in 1943. Western authorities tend to accept these statistics, admit that the industrious Germans have made remarkable progress since 1950 by putting everyone to work and using women in backbreaking men’s jobs.

One of the better export industries that have risen from the ruins is the mammoth Carl Zeiss optical works at Jena. Forty percent bombed out during the war and dismantled by the Russians, it was rebuilt by the Germans, now makes cameras, binoculars and scientific instruments on a par with the West’s. Machines approaching Western standards and below Western prices are coming from the more efficient nationalized factories, among them Magdeburg’s Ernst Thalmann Heavy Machine Works, which the East Germans pieced together with infinite patience from scavenged old machinery and parts imported and smuggled from the West. In electronics, former subsidiaries of large West Germany corporations, notably Siemens and AEG, have caught up by copying West German products. Some even improve on Western designs.

Sick Call & Slowdowns. Not all the humming new factories do so well. East Germany’s Communist Party Chief Walter Uhlbricht complains that 70% of East Germany’s machine and machine-tool output is not up to world standards, and productivity is low. East Germany’s own statistics admit that workers spend 30% of their 48-hour week away from the job, attending party functions or “spontaneous” rallies where Communist functionaries often petition for extra shifts at no extra pay. Furthermore, almost 7% of East Germany’s man-hours trickle away in sick call (v. 3% in West Germany), largely because workers prefer to get sickness compensation rather than wait out plant slowdowns and receive the lower scale of layoff pay.

East Germany’s breakneck industrialization has brought other bureaucratic bumblings. This is notably true in the infant shipbuilding industry, which operated in the red until 1955 because parts often were promised for delivery after the planned completion of the ship, and supplying industries were built up far from ports. East Germany has launched one 10,000-ton freighter at Warnemünde, now is producing other freighters at Wismar and Rostock, plus 500-ton fishing luggers and luxury yachts (for Communist brass and export) in shipyards at Stralsund and Wolgast on the blue Baltic. But East Germany’s marine diesel engines are of prewar design, far too heavy and bulky to compete with the West’s. Radio equipment is antiquated, automatic welding in its infancy, the use of plastics just beginning.

Consumer Pinch & Cars. For all the progress, East Germany is the only satellite where food is still rationed. By most economic standards, East Germany is being far outdistanced by West Germany. At the end of its first five-year plan in 1955, the Soviet zone (pop. 18 million) fell short of its quota for new housing by completing only 215,000 new dwellings, while West Germany (pop. 50 million) was finishing more than 2,000,000. In roughly the same period, real wages went up 50% in the East, 100% in the Bonn Republic. Last week West Germany released a telling statistic. In the impoverished East, autos are still restricted to a sprinkling of doctors, technicians, specially privileged artists and the Communist elite; in West Germany one person in 25 now owns an auto.