Germany: Goring's Legacy

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After three years of staggering losses that have earned it the dubious distinction of No. 1 money loser in West Germany, Salzgitter AG, the government-owned steel giant slumbering in the strip next to the East German border, is going to be shaken up. A plan approved by the Bonn Cabinet foresees mergers of its component parts with private industry and, if need be, the shutdown of unprofitable plants. In 1966, on sales of $800 million, Salzgitter suffered a net loss of $45 million.

The idea of building a steel complex in the middle of sugar-beet fields, which led to the creation of the city of Salzgitter (pop. 120,000), was Reichsmarshal Hermann Göring's; the plants bore his name when opened in the early days of World War II. The West German government inherited the war-damaged plants, renamed them Salzgitter AG, and nursed them back at a cost of more than $1 billion. Salzgitter provided work for some 70,000 people in a tense and economically weak area and showed a modest profit after it was rebuilt in 1957. But those were still the years of Germany's reconstruction when any and all steel was in demand.

Blunders. With a return to normal times and increasing competition, trouble began. Salzgitter's iron ore proved inferior and too expensive to compete with ore from Sweden, Venezuela and Liberia. Ore stockpiles grew to 2,300,000 tons. Seeking to diversify, Salzgitter blundered into acquiring the ailing Büssing truck works for $12.5 million in the early 1960s. Recently Treasury Minister Kurt Schmiicker called that decision "the most striking error made by a company's management in the past few years." Büssing now contributes more than half of Salzgitter's losses; every fourth truck from Büssing goes without a buyer, and the park of unsold trucks stands at 700.

A more recent mistake was to invest $100 million in a new rolling mill that exceeds Salzgitter's steel capacity. Thus the company has to purchase semifinished steel from the Ruhr to use the mill economically. As Germany's largest producer of iron ore and ships, fourth largest coal producer, and seventh largest steelmaker, Salzgitter is in just about every problem industry in Germany. "The only thing we are missing to complete the whole scale of weak industries would be a textile plant," says Wolfram Langer, 51, State Secretary for the Treasury and new chairman of Salzgitter, who has the task of reforming the company.

Still Trying. So far, the program includes seeking out partners for Salzgitter's coal, steel and iron-ore production in the private sector. Two new oxygen steel converters are to be built at a cost of $9,000,000 each to restore a balance between steel and rolling-mill capacities. The merger of Salzgitter's shipyards, Howaldtswerke of Kiel and Hamburg, with Deutsche Werft, a private shipbuilder, into a vast enterprise with combined sales of $200 million will take place Jan. 1. Büssing will cut its labor force by 2,000, and has been ordered to try cooperation agreements with other truckmakers that might eventually lead to merger.