From Coal to Centers of High-tech
October 13, 2004
Once the country's coal-mining and industrial center, Germany's Ruhrgebiet region in the western German state of North Rhine-Westphalia has been suffering for decades as coal mines closed and steel plants struggled.
Efforts to stem the economic downturn have been going on for almost as long. Back in 1968, a so-called "Ruhr development program" aimed to improve the region's infrastructure was started. Currently, the "Goal 2 program 2002-2006" represents yet another attempt to infuse life into dying cities.
Together with the European Union, the state has set aside almost €2 billion ($2.46 billion) to help fund companies working in six "fields of excellence," including logistics, life sciences, micro systems and energy technology.
Small firms can especially profit from the program, said Hartmut Weigelt of the Life Technologies Ruhr Network, who helps identify fund-worthy projects at universities and in the private sector.
A never-ending process
The money can help companies to set up new production technologies, especially in the biomedical sector, Weigelt said, adding that the program aims to finance new projects that might not take off otherwise because of high economic risks.
Economic experts said the program is a step in the right direction.
"Structural change is not something that you can do and then you're done with it," said Christoph Schmidt, president of the RWI economic research institute. "It has to go on, you have to keep adding things to be able to compete internationally. That's why it's the right thing to focus on research and education, on new technologies, on scientific transfer."
Bureaucratic hurdles
But bureaucratic hurdles have prevented many companies from seeking funds so far, Weigelt said: Approval can take up to two years and applicants have to have matching funds -- a problem for many German companies.
"We have a structural problem," Weigelt said, adding that there's a need to come up with financing mechanisms to raise a company's equity share so that it can apply for funding.
Some success stories
North Rhine-Westphalia is trying to do just that: The state is willing to vouch for up to 80 percent of bank credits. Time is running out to apply for the funds as €130 million will return to the EU's new technologies fund in 2006 if they have not been distributed.
Program officials can point to some success stories, however. In Bochum, 15 newly founded biomedical companies created about 1,000 new jobs.
Another 5,000 are expected to be added in a new biomedical business park -- a glimmer of hope in a city where 4,500 auto industry workers are currently fearing for their jobs following the news that General Motors will make drastic cuts at its German subsidiary, Opel.