German fan firm faces chill of recession

By Tanya Beckett
BBC Business presenter

Mr Beilke's company is based in one of German's manufacturing hubs

Hans Jochen Beilke, the boss of EBM Papst, is trying to make sense of a 40% drop in orders for his company's products that seemed to happen almost overnight.

"We had a trade fair in May of last year, which seemed to go all right, then things turned bad very shortly after that," he said.

EBM Papst, which is based in one of Germany's industrial heartlands, describes itself as the world leader in mechanical air movement.

Based in the southern state of Baden Wurttemberg, it makes fans for all sorts of electrical appliances, from computers to supermarket roofs.

The motto is: "If you can't see it but you can feel it, it's doing its job".

It is not just the products that keep a low profile - the name is also hardly well-known - but EBM Papst employs 10,000 people worldwide and before the recession was turning over a billion euros ($1.4bn; £880m) annually.

Customers range from heating engineering firms to the car industry.

Silent space

The company sits at the ultra-high-tech end of German manufacturing and counts carmakers Mercedes, Porsche and Audi among its industrial neighbours.

But EBM Papst along with these other export-driven firms has been thrown into turmoil by the global downturn.

I want to hold on to my workers and not have to retrain them when orders return Hans Jochen Beilke, head of EBM Papst

The German economy is so dependent on selling its goods abroad that the collapse of these markets has led many forecasters to expect its GDP to contract by a staggering 6% this year.

The reality for workers is pretty stark.

Those that make products enhancing energy efficiency are still keeping their machines buzzing away. Customers are still ready to invest money to make long-term savings.

But open the door to the facility next door and you could be confronted by an eerie silence: 20,000 sq m (215,000 sq ft) of space sits empty one or two days a week as employees stay at home to absorb the slackening off of demand.

This is an unnerving time for people who can normally count on a high level of job security.

But even in the eye of this economic storm, there is a sense of there being a solid plan.

Loyal workers

Facility manager Thomas Kozok says there is a clear system for making sure that workers gets a fair deal.

"We use up some of the overtime that they have accrued and also claim money from the state to compensate them for some of loss of pay."

The carefully thought-out approach is already showing signs of paying off: workers say they trust the company and want to stay.

The firm is a leader in mechanical air movement

"I have been here 15 years and would really encourage my children to work here too," one said.

"We have faith in what we are doing here... our fortunes will soon turn around," said another.

But like many companies in this region, the fortunes of EBM Papst overshadow those of the local small communities, which lie scattered around them.

Thankfully, they have so far been largely cushioned from the full impact of the recession, owing to the decision of the state to step in and compensate workers for two-thirds of the money they lose by staying at home.

The move has played a key part in keeping the company afloat.

Uncertainty

"I notice more from people's moods than from what they put in their basket, that they are worried," said the local baker, Mrs Gabrella.

"But what we do here in this region is the best of its kind in the world, so when the recovery comes we will be well positioned to benefit."

The quiet confidence is echoed throughout the region and is shared by EBM Papst.

Mr Beilke says: "I want to hold on to my workers and not have to retrain them when orders return. We place a great deal of value on their loyalty."

But the uncertainty of when and how the recovery will come still lingers here and later he adds: "We can continue with the current measure until October, then if there is no improvement, we have to think again."

Perhaps though after all Mr Beilke will not have to.

German exports have showed an unexpected improvement for the first time in half a year, so perhaps EBM Papst has already navigated the worst of the storm.