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German industry hesitates in North Africa

by Peter Hauff

In brief

Low wage costs, large share of women workers: Manufacture of bathing textiles for Adidas

Low wage costs, large share of women workers: Manufacture of bathing textiles for Adidas

The Jasmine Revolution shows that freedom is possible, but wild strikes pose an obstacle to Tunisia’s fledgling democracy. More industrial investors could increase confidence.

In the days after the revolution, strikes affected some companies in Tunisia. German company heads were also concerned although they are used to labour conflicts at home and understand why people want better wages and shorter work weeks. But in Tunisia, there are no rules for all that. “I hope that things calm down over the next few months so we can return to the calm and stability we had before the revolution,” admits Erwin Vehar, director of Electrocontact, a firm that has been manufacturing in Tunisia for two years and currently has 410 employees.

The situation does seem to be calming down. Nuremberg-based cable manufacturer Leoni says that four of its locations have gone back into business four months after Ben Ali was run out of office. The firm says that production is “back to normal” everywhere, and a fifth plant is now being considered. For more than 30 years, Leoni has been manufacturing electronics for cars, explains communications director Bernd Buhmann: “Our people understand that Leoni can only be successful if we are reliable suppliers.” Boxes containing cables from Tunisia cannot take more than five days to reach Daimler or VW on average; otherwise, there is no cost advantage. The firm has successfully discussed the matter with its staff, 67 % of whom are women.

This example shows where problems lie. Free labour unions, employee councils, wage autonomy, and a social market economy were all unimaginable in the former dictatorship. The German government has offered to create transition partnerships with Tunisia and Egypt to create such structures. After all, wild strikes scare off investors. Germany’s Economics Ministry also called German executives to remind them that jobs (and German subsidiaries) for Tunisia’s young democracy are in Germany’s national interest.

Germany’s industry realises its tremendous opportunities. The German Chambers of Industry and Commerce (DIHK) praised Tunisia in March despite all uncertainty. “Tunisians are dissatisfied about high unemployment, especially among young people, and about corruption,” says North African expert Felix Neugart. He adds that it is now important for the public to quickly benefit from their prospering economy and reduce bureaucracy.

They have little time to do so. The International Monetary Fund (IMF) expects growth to drop to one to 1.5 per cent after three per cent last year. Hotels also face a dismal future. They expect business to drop by 50 %. European tourists will not be the only ones missing this year, but also Algerians and Libyans, who were becoming more common guests. Tunisia’s tourism sector makes up seven per cent of GDP and employs 400,000 people.

Foreign countries are therefore all the more important. Germany has launched a number of campaigns. One of them is a ­pilot project for young, unemployed academics that just got started by the ­German-Tunisian Chamber of Commerce (AHK) in cooperation with Goethe Institute. In addition, the AHK started making the new country more attractive to midsize German companies in March. Roadshows took place in 12 cities, and Dagmar Ossenbrink, head of the AHK in Tunis, is planning a wind power workshop for ten German firms, taking place in Tunisia. She is concerned about reluctance among German entrepreneurs and says that Italians in particular have been more courageous, for instance by entering Tunisia’s publishing sector. Ossenbrink says the country offers unique opportunities for a lot of industries, such as generics manufacturers on the local market. “Unfortunately, some Germans hesitate”, she says, as long as they don’t get served offers on a golden platter.

Large family firms, including a lot of hotels, were once under the control of the clans of Ben Ali, Trabelsi, and other relatives. Today, provisional trustees manage them. A number of sectors face a profitable future now that these monopolies are gone. To promote photovoltaics and wind power, Tunis is offering bonuses of up to 40 %, roughly equivalent to as much as 5,170 euros. Here, German investors can also benefit.

Peter Hauff