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With unification celebration over, the hard work has only just begun.

With Unification Celebration Over, The Hard Work Has Only Just Begun

The talking has now stopped and been replaced by action. After all the initial euphoria over the unification of East and West Germany, the cold light of dawn has broken and the true facts of life are there for everyone to see.

A recent visit to the eastern part of Germany fully opened this writer's eyes to the sad state the region is in. To date, unification has already made a sizeable dent in what were the massive reserves of West German coffers. At the time of integration the Deutsche Demokratische Repbublik (DDR) economy was roughly one tenth that of the Federal Republic's. However, the system used by the Bonn government in unifying the currencies of the two states opened the doors of the DDR to the full blast of competition from West German factories backed by advanced Western marketing techniques.

This development has led to many plant closures and huge job losses as up to 50% of the work force is currently unemployed. It is said that production in the east is contributing no more than five percent to the total German economy.

Estimates of the time it will take to bring the old DDR up to West European standards varies between five and 10 years. The general state of eastern Germany is marked by limited autobahn facilities, mainly two-lane dual highways requiring much repair. The decaying secondary and town center roads - many of which are cobblestone - are in desperate need of maintenance. Pollution in many places is rampant, and the condition of factories, offices, hotels and private accommodations leaves much to be desired. On the bright side, the restoration of Berlin to its capital city status is bound to act as a major boost to the economy.

So all is not gloom, and it is pleasing to report that the frozen food industry is in the forefront of factory openings. Before expanding on new developments, a look back to 1989 frozen food statistics for East Germany makes for interesting reading. An update on these figures has not been possible because of the fluctuating state of affairs over the last two years. The total amount of QFF processed in '89 was put at 82,729 tons, with major categories broken out as follows: vegetables, 48,976; fruit, 7,851; ready made dishes (without meat/sauce and including pizza, pommes frites, tarts, etc.), 18,725; meat/sauce dishes, 5,126; chopped meat, 2,020.

Because of legal uncertainties concerning who owns what real estate, it has not been easy for companies to invest immediately in the east. However, development has begun and observations of the Scholler Lebensmitel GmbH & Co. KG's new factory in Potsdam highlight some of the problems entailed.

Nurnberg-headquartered Scholler, a major ice cream manufacturer, started production in the old DDR on May 17 after a construction period of only 11 months. To date it is the first such food manufacturing facility in the Potsdam area. This means that Scholler is now operating four factories throughout Germany, in addition to other plants in Belgium, Austria and Hungary. Its European marketing network includes sales offices in France, Holland and the United Kingdom.

Initially Scholler intended to go into partnership with an existing ice cream company in the east. However, this was not feasible because of the lack of manufacturing technology in the former communist state.

The next step taken was to search for a wholesaler for the distribution of ice cream. Sales were based on East German marks at a supposed exchange rate of 1.3 or less. At this point competitors of Scholler were accepting only West German marks, as it was still unclear what the rates of exchange would be. This meant that for some time Scholler conducted business only for the purpose of building market share along with its image. Because of the poor economic situation, the decision was made not only to sell ice cream in the DDR, but also to create employment. So the search for suitable production facilities began in earnest.

While construction got under way, the company was also busy building up a network of 25 wholesalers. Two "own" depots were established to support them, and more than 10,000 refrigerated cabinets were optioned out with 50 distribution vehicles dispatched to ensure that the operation ran smoothly.

In August of 1990 work began on the factory. In order to meet its schedule, Scholler decided to share the production facilities with Emzett GmbH, Berlin-Brandenburg, a dairy cooperative. A 20-year lease was signed, and today the 34,000 square meter site sports the following: factory, storage building for packaging and raw materials, coldstore, power plant, and administrative building.

The hourly capacity for ice cream sticks is 18,000. In addition, small pots and catering tubs are manufactured. The filling capacity is 5,000 liters per hour, allowing for total daily plant output of up to 100,000 liters. Employees number 112.

Frosta's Move

Frosta Tiefkuhlkost GmbH & Co. (a subsidiary of the highly successful Nordstern Lebensmittel AG), saw its 1990 annual turnover rise to 168 million DM from some 114 million DM the previous year. Part of this has been due to the company's continued prosperity from the overall development of the German frozen food industry. However, the bulk of the increase can be traced to the takeover of Elbtal Tiefkuhlkost, which is based at Lommatzsch in the former Deutsche Demokratische Republik.

Elbtal, whose estimated turnover for 1990 was 20 million DM, is predominantly involved in the freezing of vegetables including: spinach, peas, beans and carrots. One of the reasons for Frosta's involvement with the concern was the fact that the surrounding agricultural land was free of pollution, thus making it ideal growing territory - particularly with the new infusion of Western know-how.

So far Frosta has invested about one-fifth of the budgeted 10 million DM for this venture. The money is being spent on modernizing the whole plant, from factory site and processing lines to coldstore.

In previous years, Elbtal sold its products in the old East Germany under its own label. The company had a good image, so the name was kept. But major improvements have been made in packaging.

Under the former regime, production at the factory virtually ceased after the main harvest season. Now the plant produces during all 52 weeks of the year, with additional lines of frozen soups and yeast-type products turned out when vegetables are not packed.

Local agricultural facilities are inclined to be of the larger type farm, and contracts have been signed with farmers to supply produce. The difference here is that a full training course for staff, plus personnel exchange programs, ensure that Western techniques are transferred to boost efficiency.

Hansa in Halle

Hansa Tiefkuhlmenu GmbH & Co., a member of the Walter Rau Group, has taken over one of the largest plants for deep frozen ready-made meals in the former DDR. The factory, based at Halle, was founded in 1970 to supply meals to schools, canteens and restaurants. The line will now be called Menu Variant GmbH. This development has not only given Hansa an early entry into the local market, but also conveniently places it to make business links with former satellite countries of the USSR.

The site, occupying an area of 25,000 square meters, will be brought up to the high standards of Hansa's other factories. Some 10 million DM will be spent during 1991 to get the job done.

About 100 people are employed at Halle. They have joined another 800 workers at plants in Hilter and Bibergmuna who produce well over 350,000 meals per day. Turnover was in excess of 180 million DM last year.

Hansa, which is celebrating its 25th anniversary in 1991, is making hundreds of different products for the industrial and institutional catering markets, fast food chains, restaurants and retailers. Its customers are served from coldstores in Halle, Berlin and Hamburg. A special 15-person sales force has been established to cover the five new Bundeslander states.

Equipping the East

It is not only food processing companies that are investing in the eastern part of Germany. At least two machinery manufacturers - Bitzer Kuhlmaschinenbau GmbH & Co. of Sindelfingen and Machinefabriek C Rijkaart bv of Asperen, the Netherlands, have sunk stakes there.

Bitzer has taken over part of MAB Schkeuditz, a refrigeration compressor builder near Leipzig, following protracted negotiations with the German privatization agency known as The Treuhandanstalt. The new subsidiary company will do business as Bitzer Kuhlmaschinenbau Schkeuditz GmbH.

The Leipzig factory employs 210, which brings the total number of workers in the Bitzer Group to 700. The company now has four production plants: three in Germany at Sindelfingen, Schkeuditz and Hailfingen, plus one in Portugal.

Bitzer is planning to spend several million DM for new buildings and plant improvements at the 25,000 square meter site at Schkeuditz, which will continue to manufacture ILKA compressors. The new investment is geared to enable the production of Bitzer compressors as well in the near future.

Machinefabriek C Rijkaart bv last year took over the shares of a machine factory in the former DDR, thus being one of the first foreign investors on the scene. Situated in Dresden, the company is called Kosora and manufactures machinery for the food processing industry. With this acquisition, the employment roster totals 550.

Part of the production for the Dutch subsidiaries of the Rijkaart group will be done in Dresden. This will include fully automatic croissant curling and bending machines, which are capable of turning out 12,000 fully bent or 18,000 straight or partly bent croissants per hour.

PHOTO : Scholler's new ice cream manufacturing plant in Potsdam features modern, state-of-the-art equipment.

PHOTO : Potato Soup with Sausages is among the products packed in eastern Germany under the popular Elbtal label. Frosta, which bought the former state enterprise, is investing some 10 million DM to upgrade the Lommatzsch factory.
COPYRIGHT 1991 E.W. Williams Publications, Inc.
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Title Annotation:state of the frozen food and food processing equipment industries in Germany
Author:Brown, Morrison
Publication:Quick Frozen Foods International
Date:Jul 1, 1991
Previous Article:Frozen food registers 6.9% increase; potatoes and fish leading gainers.
Next Article:Is the rising market for healthy food global in scope, or rather provincial?

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