Government Tells German Rail to Stay in Berlin

After leaving Frankfurt in 1994 and settling into a new skyscraper in Berlin, Deutsche Bahn (DB) head Helmut Mehdorn this week said he wants to move the headquarters, along with over 1,000 jobs, to Hamburg.

Mehdorn, who would like to see state-owned DB become a private company within two to three years, is battling the city of Berlin to demonstrate the company's independence from the federal government.

DB would also like to invest in the Hamburg harbor operator as well as Hamburg Hochbahn, a company that operates local transport in the northern port city, a deal that Hamburg Mayor Ole von Beust said would have to be accompanied by DB's relocation.

DB move doesn't fit "structural policy"

While Transport Minister Wolfgang Tiefensee said the government would welcome DB's investment in the Hamburg harbor and Hochbahn projects, the government, which took office last week, would not approve Mehdorn's relocation plans.

"Moving the company headquarters to Hamburg is not acceptable for reasons of structural policy," Tiefensee said Tuesday. "We want to persuade small and large companies to establish and keep their headquarters in eastern Germany."

A possible compromise may be for DB to move its logistics center to Hamburg while keeping the rest of the company in Berlin. DB is the largest company in the area with some 20,000 employees in the capital and the surrounding region.

Battle for jobs in Berlin

DB isn't the only company turning its back on Berlin. Electronics giants Samsung and JVC decided to close their doors in the capital, while both electronics giant Siemens and telecommunications company Deutsche Telekom said they would be cutting jobs in the city.

"We thought we had got out of the doldrums, but the bleeding seems to continue," Dieter Pienkny of the German Trade Union Federation told the DPA news agency.

The end of the Cold War put a stop to the subsidies companies received for operating in West Berlin, and the number of industrial jobs shrunk from 260,000 in 1991 to 102,000 in 2005.

Berlin's government has tried, with some success, to make up for the losses by attracting media companies and tourist trade to the city. The German arm of the music company Universal came from Hamburg; Coca-Cola's Germany branch moved from Essen; MTV decided Berlin was a better fit than Munich; and Sony Deutschland announced earlier this month that it would be leaving Cologne for the capital.

The new jobs are desperately needed in Berlin. The city had the highest state unemployment rate in the country at 18.1 percent in October.