On the Edge of Germany, At the Center of Europe

ZITTAU - On the way to a German factory in the Czech border town Hrádek, Holger Knüpfer finishes a conversation on his mobile phone and presses the off button.

"That was Saxony's Economics Minister," says Knüpfer, the economic promoter of the neighboring German town of Zittau. "I'm now waiting on a call from the Czech minister."

After 13 years on the job, Knüpfer, who looks a lot younger than his 58 years, has earned a well-deserved reputation as the man who makes things happen at the intersection of the German, Czech and Polish borders once labeled the "black triangle."

With Europe looking to stretch its borders south and east next year, Knüpfer is trying to maneouver the economically depressed region back onto the map.

There already signs of progress. In recent years, dozens of new companies have set up shop in Zittau, attracted by its concentration of highly qualified workers and its proximity to what economists predict will be a booming eastern European market.

Saxon charm and old-fashioned hustle

“As soon as the people there start making more money as a result of EU membership, they are going to buy a new car,” said David Schaefer, the head of American engine part manufacturer Cloyes, which delivers to companies like Opel and Skoda and opened in Zittau in 2002.

“The market is going to grow in the East, but the infrastructure is still not there for small and mid-sized companies," said Schaefer (photo). "The infrastructure is here in Germany, the education is here and there was a real desire to make us feel welcome here in Zittau.”

So far, Knüpfer has used his Saxon charm and good old fashioned sales hustle to bring 27 companies to Zittau since 1990.

When he started the job, he faced a city devastated by the fall of the wall. The textile industry that once employed 5,000 workers, now only employed 600. Businesses were closing everywhere, including an East German truck manufacturer that left more than 5,000 unemployed.

“We said at the beginning that we never wanted a big company again. We needed to attract small companies in order to have an industrial presence here once again," said Knüpfer. "This industrial presence is still too small, we know that. But we can at least now say that Zittau is once again an industrial center.”

Brains in the west, hands in the east

Keeping the brains of the company in the West while eyeing up the market and drawing on a workforce in the East has attracted other investors to Zittau as well.

Chemical coating company Techno-Coat came to Zittau to draw on the brain pool of science graduates from the Technical University Liberec and the Technical University Wroclaw across the border in the Czech Republic and Poland. Because their business is highly specialized, Techno-Coat can benefit from the research being done at the universities.

Knüpfer is already working on a network of cross-border contacts. He wants to stretch the business park across the border from Zittau in Germany to include Hrádek in the Czech Republic and Bogatynia in Poland.

A tiny sliver of Poland lies just across the river from Zittau that is only about a mile wide and is flanked by the Czech Republic on its other side.

Next page: Polish gas station, German employees

The gas station on the Polish side is busy. Fuel is much cheaper here and it’s only a ten minute trip by car from the center of Zittau. The petrol station attendant is Bernd Schneider from Germany. He couldn’t find work in his hometown of Zittau, where unemployment runs at 23.5%.

“I knew very few people were going to apply. Germans have these stupid prejudices about Polish people and working in Poland,” says Scheider. He finds his Polish customers quite easy-going and relaxed. Though he’d much rather work somewhere else, he says “There are simply no jobs here.”

Just a mile from the gas station on the other side of the Czech-Polish border crossing lies the modest town of Hrádek. Only a few old buildings are renovated, with fresh coats of colorful paint on the outside. The town square is busy, but muted. People sit at the square café drinking coffee, others window-shop on the short street.

Hrádek Mayor Martin Puda talks fast and energetically when it comes to multinational cooperation in the region.

“Hrádek is one of the cities where you can see the big difference. There were not many businesses or restaurants before,” said Puda. “The difference now is that the borders are more open and the cooperation works.”

The mirrored facade of the Thyssen-Krupp plant at Hradek is a shining example of what he is talking about. By way of a joint venture between Germany’s Thyssen-Krupp AG and the Czech company Ferrex s.r.o., a new company was set up in Hrádek in 1996, just across the border in the Czech Republic. But ownership is now entirely in the hands of Thyssen-Krupp AG, Pavel Gorčica, the general manager of Thyssen-Ferex says.

Thyssen-Krupp benefits from lower wage costs in the Czech Republic. But to Eva Svobodova, 42, a job is a job, even if her Thyssen-Krupp colleagues in Germany earn more. “I’m just a small person,” she said. “I was working at another company before, but it was corrupt.”

But things are changing fast. As a result of joining Europe’s top club, the Czech Republic is being forced to clean up its act. And that is one of the reasons Knüpfer sees a bright future in this remote part of the world. A cooperation pact between the three cities is intended as a roadmap that will pull the region back to economic prosperity.

The booming business park is a first sign of that cross-border cooperation taking shape. Knüpfer (photo) and others are hoping Zittau serves as a scaled-down model of how the bigger picture may develop in the wake of European enlargement in 2004.