German reunification at 209 April 2010
On 16 August 1961, sound engineer Horst Behrens went to work as usual at Funkhaus Nalepastrasse, the lavishly appointed orchestral recording and broadcast hall in the Soviet sector of Eastern Berlin. At his disposal was a 2”, 4-track Telefunken tape machine. In the middle of a live radio broadcast, the one that the Soviets used to mask the events of the day – the city was being divided by barbed wire in advance of the construction of a 12ft reinforced concrete wall – his daughter phoned the control room and implored him to return home. He felt he couldn’t leave, mid-session. He next saw his family when his application for a Budapest vacation came up – in 1978.
Stories like these, and there are many, put the human context of the Berlin Wall into stark relief. Its construction was bewilderingly rapid, although it represented 16 years of growing post-war tension in the city. Twenty years ago this month it came down in similarly chaotic fashion, again yielding to unstoppable political pressures, and a new Europe began to take shape. In purely business-to-business terms a status quo was reasserted: free-market democracy had prevailed, and it was time to sweep away the rubble of state interference and get profiteering. Within a few months, Behrens was looking at a half-inch, 48-track Sony DASH machine for a Hollywood movie soundtrack.
For the companies of the region, however, the overnight removal of deeply entrenched barriers demanded complex and sensitive adjustment. German pro audio, for example, found itself extraordinarily close to events – as if the contents of Hansa Tonstudio had absorbed the spirit of David Bowie’s alienated Cold War howlings of Heroes and Low.
No figure is more axial to the fortunes of German pro audio than Herr Georg Neumann himself. Neumann’s West Berlin HQ in Charlottenstrasse, the microphone maker’s home for nearly 30 years, coincided almost exactly with the existence of the Wall. It was only a few metres away from Checkpoint Charlie, the Allied border post that marshalled the limited traffic between East and West Berlin. After the wall came down, this location became prime real estate in the centre of a new Berlin and Neumann’s building made way for the developers – just as the brand became owned by Hanover-based Sennheiser.
Microphone production moved north to where the new parent company had always been based, while Neumann’s Berlin offices relocated to Ollenhauerstrasse, further out of town near Tegel Airport. Another seismic shift took place at the same time: as the recording industry embraced digital techniques over analogue, Neumann took the decision to abandon the expensive production of digital mixing consoles and to focus solely on microphones. The resulting departure of several key engineers was a crucial factor in the subsequent formation of Stagetec.
“The Stagetec Development Company was founded in 1993,” confirms MD Dr Klaus-Peter Scholz. “The employees came from both sides of the former Berlin Wall, from East Berlin and West Berlin. Before the reuinification some of these people had been developing mixing equipment for the German Post Authority in the Eastern part, others worked for Neumann in the Western part of Berlin. Around 1990 they all met at the Neumann headquarters, and by 1993 many of them had joined together with the Salzbrenner family to create a mutually attractive business that began developing digital mixing equipment from scratch.”
The story of Neumann and Microtech Gefell is even more entwined. Towards the end of the war Georg Neumann, his Berlin factory partly destroyed by bombing, had sought a safer location in South-East Germany and settled in the town of Gefell. There was still a facility in Berlin, to which Neumann and some of his staff returned after the war, but others remained in Gefell.
“After the end of the war, the Communists took over the part of Germany including Gefell,” explains Stephan Peus, president of development at Georg Neumann GmbH. “Just as with many other companies in Germany, such as Leitz, Zeiss and Agfa, soon there were two companies, one in East Germany and one in West Germany.
“We still have catalogues from long after the war showing the name of the Gefell company as Georg Neumann & Co Gefell/Vogtland, Elektrotechnisches Laboratorium. Georg lost ownership of this company during a period when all of these privately owned companies became the property of the people, as this was called in those years. In 1972 the company’s name was then changed to VEB Mikrophonbau – VEB means Volkseigener Betrieb, publicly owned business.”
So, after 1989, VEB Mikrophonbau joined a list of innovative manufacturers – including Herbert Jünger and the previously nationalised KME – able to re-invent themselves as capital investment companies. In the new context they could go to a free market with technology developed previously: unique dynamic range processing invented by Tonmeisters such as Jünger; 20 years of audio electronics perfected at Klingenthaler Musikelektronik; and the Neumann-inspired microphone skills that became Microtech Gefell GmbH.
“At first when the Wall came down the idea was to bring both companies together into one,” reveals Udo Wagner, sales manager at Microtech Gefell. “But the company in Berlin was bought by Sennheiser in 1990, so this was not possible. The company in Gefell had good business with the Eastern parts of the world before 1989, but this market was cut off by the new Deutschmark-based system. So the Gefell company had to start a new business system in the capitalist part of the world – so far very successfully!”
The new order makes innately good technology openly available, wherever it comes from, although there are those who prefer one provenance over the other. “In East Germany, technical and musical skills were able to work together in a way that wouldn’t be possible in the Western world,” says Jünger Audio MD Peter Pörs.
“The East German government broadcast system was highly developed, both in terms of its political sense and in terms of its artistic skills. But in Communist times the opportunity to develop those technologies in a commercial way was virtually zero.” Accordingly, Pörs acknowledges, the advantages of reunification are many. “The most important one, quite simply, is freedom for the people from the Communist countries of the world,” he says. “Also important is that this transition was accomplished in a peaceful way. This is so different from what we see today in some areas of the Middle East, or in parts of Asia. The world has new chances today.”
“Unification has made our daily life and business much easier, much smoother and indeed much more pleasant,” adds Peus. “We therefore see the unification as something very positive, especially those of us from what was once ‘West’ Berlin.”
“Management could go their own way, without being controlled by what was called Kombinat management – a combination of many companies,” says Wagner. “It was no longer necessary to use a brand together with other companies, like RFT or Robotron under the GDR. Our company also gained a brand new building, which was built for a scientific laser project for use in microphone production.”
For Kerst Glass, sales director at Klingenthal-based KME, the sense of liberation is equally strong. “In 1992 KME became a commercial company and attained complete economic sovereignty for all decisions and processes. In the following years the company invested in machinery, facilities and research capacities. For me, personally, this new freedom was the biggest achievement of the peaceful revolution and reunification of 1989. A strategy to develop an internationally active company, and to increase the prominence of the brand, could be implemented step by step. The social change of reunification was an important condition to implement the company’s philosophy to make KME a respected name in the pro-audio market and to develop products to increase market share.”
Others are keen to dissolve all previous differences and capitalise, both figuratively and literally, on the fresh start. “To a great extent Stagetec is not a traditional Eastern or Western company,” asserts Scholz, “but is the direct result of reunification. From the first day onwards there were no prejudices, concerns or controversial claims within this new enterprise that embodied the common aims of everyone involved.”
“The fact that the GDR collapsed peacefully is something we take as a matter of fact, but we should not forget that in autumn 1989 thousands of policemen and soldiers were garrisoned around Berlin and armed – ready to fire.”
It hasn’t all been plain sailing. “The unity within Stagetec was completely different from the situation that arose in the earliest days of the unified country, which initially created problems,” observes Scholz.
Roland Stenz, CEO of ADAM Audio when this article was written* (and now co-founder of EVE Audio), concurs: “To grow together is not always easy, and problems and misunderstandings are quite normal when two parties join who were separated so forcibly and for so long – remember, the Berlin Wall existed for 28 years! People’s backgrounds, education and experiences of life are very different, but we’re sure that everyone who had the doubtful pleasure of living in a dictatorship appreciates the freedoms they have now – rather than looking back and wishing old times would come back.”
“Not everyone who had worked in Gefell could stay on under the new system,” points out Wagner. “The number of personnel came down from 150 to 35. Now we have 50 people in the company. The old market broke down from one day to the next, so a whole new market had to be built just as a new financial system came into being. Technical standards changed too: wireless systems that had only been available in the East just disappeared, as the frequencies changed. Connectors suddenly had to match Western connection standards, so that most of the existing products had to be be changed or replaced.”
“Of course there have been disadvantages for many people,” adds Peus, “because in some cases the changes within their lives have been dramatic. This is true for their private lives, because many people left the Eastern part of Germany in search of better job chances in the old West German states; and it is true as well for their businesses, because thousands of former companies no longer exist. The economic situation between East and West is still not balanced. It’s becoming fairer step by step, but these steps are very small indeed.”
The economic balance between East and West is still the subject of much debate, especially in a time of recession when the usual advantages of capitalism come under scrutiny.
“In most people’s opinion it’s still unfair,” says Pörs. “The same work or the same job is worth more in the West than it is in the East, but this ultimately kills jobs in the West. This is something we see happening every day – and don’t forget the EC expansion to the East! In general there is a misbalance between real, valuable business and virtual financial businesses. I learned the theory of capitalism in school, and I think there is a lot of truth in it. But I doubt whether most of the young boys in suits, who are playing with billions of dollars every day, have ever read this. I really hope that the era of financial charlatans will end very soon. But sadly, it doesn’t look like it will.”
“The reunited Germany marks a strong economy in the middle of Europe,” reflects Stenz. “The Eastern German economy still suffers from the effects of the socialist experiment, and the rate of unemployment in this part of Germany is still higher. Although the economy in East Germany is growing faster than in West Germany, there is still a gap in productivity. Young people look for education and job opportunities in the Western part of the country, and this is more than a migration into cities because they also come from East German cities. The economic balance between the two parts of Germany is slowly becoming fairer, but it will probably need one or two more generations before differences will disappear completely.”
“The politicans told us there would be regeneration in a short time,” rues Wagner. “Now they’re saying it’ll need more like 50 years before economic performance will be the same in East and West. We couldn’t wait around for government decisions on financial backing, we had to raise our own money for investment, social systems and R&D.”
“There is still an imbalance between the different German ‘countries’, which results from its history,” agrees Scholz. “But it’s getting smaller. The extension of the European Union is a great chance to expand the business – and this chance is valid for everybody.”
It remains true that this chance is more valid for German pro audio as a whole than probably any other territory. In the end all of our protagonists agree that, if the past two decades mean one thing, they mean a new dawn for business – especially if you’re facing towards the sunrise…
“In our opinion the German pro-audio industry takes particular advantage from EC expansion to the East, as this opens up completely new markets,” says Stenz. “Since 1989 many East European countries have opened their countries and markets to the West. Germany’s location in the middle of Europe is like a bridge between East and West – don’t forget all the people in the former GDR who had to learn Russian and who are familiar with the mentality and modus operandi of people in Eastern European countries. And there are older relationships that exist from co-operation with Eastern Europe before 1989. The pro-audio business between East and West has started to gel, trade gets easier and we’re sure that in a few years from now doing business with Eastern European countries will be more or less the same as it is today with Western European countries.”
“There are new markets now where we were active more than 20 years ago,” says Wagner. “There are some users who remember the old business and they’re using still the same equipment. So we now have the chance to generate new business on the basis of loyal support for the old product range. There are new investment partners, but most don’t really have a strong enough business infrastructure for the new capitalist system. Some new problems have been created by the steps needed to develop from the seperate sales systems of each country into the central networks of Europe. The advantages are in the single currency and the minimised customs issues of the EU. New companies in competition with the old companies are a powerful force to break down the old borders and price systems – but everyone faces the same problems such as Chinese piracy. We all have to learn together how to exist in the new global business system.”
“The expansion of the EU of the past 20 years is, for us, an economic success,” adds Glass. “The reduction of customs limitations and the creation of a customs union considerably facilitates the development of a European distribution network – our European customers receive deliveries within 48 hours. Since the expansion of the EU we’ve developed our relations with distribution partners in Poland, Czech Republic, Slovakia and Cyprus.”
“As for every other qualified manufacturer in the world, we have more market to acquire,” concludes Pörs. “I don’t see a difference if we are East German-based or from somewhere else. Forget about the old Communist relationships. That story is done and dusted. What’s much more interesting is seeing how new technologies are changing the market as well as the landscape of those companies involved – in the East and in the West. Many changes are coming. Even two decades after the big challenges in Germany, it remains very interesting to observe upcoming developments.”
*(This story first appeared in print in late 2009 and online in April 2010)