Germany's broken heartland: The mighty mills of the Ruhr are running down, and tens of thousands of steel jobs are being lost. Can the 'foundry of the Reich' recast itself in a new mould? John Eisenhammer reports from devastated Duisburg

The working practices flourishing in Duisburg's Businesspark Niederrhein should be the envy of every lean- production-hungry German manager. Highly flexible hours, flat hierarchies, simple techniques and close client orientation are model management school stuff. But the likes of Heisse Uschi (Hot Uschi) and her fellow workers, who use the business park to purvey their wares, are not quite what the city fathers had in mind when they recently pumped DM63m ( pounds 26m) into creating the 400,000 sq m site for 'first-class offices with future-oriented businesses'. In the past two years, not a single company has been signed up. The newly laid roads, arty street lighting and landscaping - the prostitutes have it all to themselves.

Yet Duisburg desperately needs new companies and the jobs they would bring. Once this city of 500,000, situated at the heart of the Ruhr, historical centre of German heavy industry, called itself the 'capital of Europe's steel industry'. Now it is on the edge of crisis. 'The situation is worse now than it ever was in the Seventies and Eighties,' says Ekkehard Schulz, chairman of Germany's giant steel producer, Thyssen Stahl. The industry association talks of 40,000 steel jobs being cut. Across the Ruhr, between 75,000 and 100,000 jobs all told are in danger of being lost over the next two years - more than in any previous recession - because of the effects of the crisis in steel and coal mining. Heinz Kriwet, the head of the Thyssen group, has even gone so far as to threaten pulling out of steel production altogether unless conditions improve dramatically.

Such pronouncements roll across the Ruhr like thunder. In Duisburg, where unemployment is already 13 per cent, the sound is almost deafening. Over 40 per cent of Germany's steel is produced there - the heart of the city still beats to the rhythm of forge and foundry. But that beat will soon be fainter. Krupp's blast furnace at Rheinhausen is to be shut down 'as quickly as possible', the company announced last Tuesday. In the mid-Sixties the steel mill employed 18,000; last week the sentence of closure was handed to the remaining 2,000.

Haemorrhaging losses, the steel giant could not wait for the European Community share- out of cuts. It said it had to take now a 'measure necessary for survival'. Already one German steel company, Klockner-Werke, overcome by the crisis, has had to seek protection from its creditors. Krupp, also heavily indebted, is trying desperately to avoid similar ignominy. Together with the imminent closure of Krupp's Industrial Technology works and the announced losses at Thyssen, the end of Rheinhausen means around 7,000 steel jobs are about to vanish in Duisburg.

The city has been through so many crises in steel and coal over the past 30 years it should be hardened to tragedy. But this time is different. Massive public aid did much to soften the blows in the past - with generous social payments, stimulus for new industry and improvements in infrastructure. Today, there is less time and money in hard-pressed Bonn for the agony of the Ruhr and Duisburg. Virtually every spare mark and most of the government's efforts at industrial regeneration are directed towards keeping the struggling east afloat. The recent decision to pump substantial funds into transforming eastern Germany's only big steel producer, the ageing Eko plant at Eisenhuttenstadt, into a hi-tech mini-mill, highlights the shift in priorities under the government's new programme to preserve core industries in the East. At a time when all of Western Europe is seeking cutbacks in capacity, Eko's gain will be the Ruhr's loss, in jobs and money.

Duisburg is trying to attract companies, but it is an uphill struggle. 'We have 15 per cent investment subsidy here, which used to be worth a lot,' says the city's mayor, Josef Krings. 'But when firms can now get up to 50 per cent subsidies in the East, who is going to come here?' The answer is reflected in the bleak stretches of the Niederrhein business park.

'It has always been a race against time here. Suddenly the clock is ticking much faster,' says Mr Krings. 'The important thing is that people do not give up hope.'

He says this with little conviction. On the floor of his office at city hall lies a large, somewhat browned chunk of steel rail from Krupp. It jars in contrast with the heavy wood panelling that cloaks the room, testimony to the grand days when Duisburg lay at the core of Germany's industrial powerhouse. The mayor put the rail there four years ago, as a symbol of triumph and hope. It had been carried all the way to Bonn, to the Chancellery, to talks sparked off by the last steel crisis in Duisburg, in 1988. That was the first time Krupp sought to close down the Rheinhausen works. The steelworkers took to the streets en masse. The politicians panicked; the company gave way. At the talks in Bonn there were pledges of many new jobs, and a new future. 'It was a time of breakthrough, a time of great energy and solidarity. Everywhere there was a spirit that Duisburg was taking off - we called it Duisburg 2000,' says the mayor. He stares blankly at the length of rail. 'Now, it is all falling apart, the successes are disappearing. Who wants to talk of Duisburg 2000 when they are trying to cling to tomorrow?'

The columns of helmeted protesters have again taken to the streets, by day besieging the headquarters of the steel corporations and the government buildings of North Rhine-Westphalia state; by night winding in torchlit marches through Duisburg, Dortmund and other Ruhr cities. But the flames seem paler this time. 'It is not like 1988. Then there was real anger, now there is a great emptiness, people feel they are aiming at nothing,' says Willy Bernarding, the IG Metall union's chief officer in Duisburg.

Inside the Zum Reichsadler, the local bar of the steelworkers from the condemned Krupp- Rheinhausen mill, the air is thick with the odour of yellow-pea soup and sausage. Hope is a currency not much traded over the counter in here. 'What future?' growls Jurgen Kubner, one hand grasping a schnapps, the other a deep glass of beer. 'Last time they cut jobs, in 1987, Krupp promised plenty of new jobs. We have not seen one of them.' There are slow nods round the table. Resignation, not bitterness, lines the faces in the gloom. The demons swirling up in the cigarette smoke are the heavily state-aided steel companies in Italy and Spain, and the East Europeans. 'We should not be losing our jobs; what about those firms in Italy which have not made money for years and are kept alive on state handouts?' says one man. 'The East Europeans are selling finished steel at prices we pay for scrap. This must be stopped before it finishes us all off,' says another.

Predictably, many see protectionism as the only answer. 'We produce steel for DM650 a ton. The Russians are selling it at DM65, such is their desperation for foreign currency. This is not the market, it is madness,' says Manfred Siebierski, who sits on Thyssen Stahl's supervisory board as the senior worker representative. Reeling under the combined weight of the German recession and the slump in world steel demand, Thyssen's steel division, Germany's most efficient, is running up losses of DM100m a month. 'If this continues much longer, we are heading for catastrophe,' says Mr Siebierski. First the company announced early this year it would cut 7,000 steel jobs across the group's Ruhr operations, then the number became 10,000, and now within the company it is recognised the total will be nearer 12,000. For Duisburg, where Thyssen employs 30,000 steelworkers, the news could hardly be worse.

'We are sitting on a social powderkeg,' says Gunter Niel, senior union official at Krupp-Rheinhausen.

'We all know large-scale job losses are coming,' says Mr Siebierski. 'The question for the Ruhr and Duisburg is how quickly. The politicians must realise they have to buy time.' Mayor Krings also foresees great risks. 'If the losses come as a sudden blow, then they will produce a sudden social impact, and finally a political one. We are not a radical region here, but the far right is waiting.'

Travelling across Duisburg's Bridge of Solidarity, so named in the last great campaign against steel closures in 1987, the slow death of the region's once-proud heavy industry is plain to see. There spreads out a towering industrial landscape blighted by decline and decay. The copper works used to employ 4,000, now there are 300. Thyssen's small Niederrhein steelworks had 3,500 workers, now there are 800. The copper tubing company, which once employed more than 1,000, has closed.

For Detlev Birnstiel, head of Duisburg's Business Development Corporation, this is not a prospect to be contemplated for long. He is the city's paid-up purveyor of hope and optimism. His is not the world of mineheads and blast-furnaces, but of micro-electronics, services and university-industry partnerships. 'There is a great danger of people talking this place into the ground,' he says. 'Duisburg has changed dramatically; it is people's attitudes, the image, that has to catch up.'

The newly inaugurated building which houses the BDC is a magnificent futuristic vessel, seemingly ready to plough through these prejudices. Designed by Sir Norman Foster, it is in the style of a ship, its hull entirely of glass. It stands at the entrance to what will be a science park.

Since 1990 Duisburg is officially a service city, as the proportion employed in industry has slipped below half, Mr Birnstiel says. 'It used to be a city with two legs, steel and coal. Now it is a millipede,' he enthuses, citing the harbour - the world's biggest inland terminal - and the new free port ('our flagship of structural change'), which has created 380 jobs. The BDC has helped create 6,000 new jobs over the past four years, and secured about twice that number. During the same period, however, about 20,000 jobs were lost in the traditional industries. 'We have not been able to keep pace with the decline, it is true,' Mr Birnstiel says. 'But there is an important process of structural transformation going on, however slow and difficult.'

Since the early Sixties, the number of people employed in coal-mining in the Ruhr region has declined from 500,000 to 90,000, and would be lower still were it not for continued hefty subsidies from Bonn. The numbers employed in steel - the Ruhr still accounts for two-thirds of Germany's production - have dwindled from 220,000 to around 110,000. Once two-thirds of all those employed in the region's industry worked in coal or steel; now the proportion has dropped to under a third.

Duisburg, where one in five jobs is still provided by the steel industry, has become the exception rather than the rule. In another classic Ruhr city, Dortmund, where Krupp has just announced it is cutting a further 2,400 jobs, one in 17 workers are in steel. This steady decimation of the traditional industries means that the symbol of the modern Ruhr, if not quite yet Sir Norman Foster's crystal vessel, is the bland frontage of countless small and medium-sized firms rather than the hulking metal shapes of mineheads and blast-furnaces.

The sheer concentration of the large cities in the region, such as Essen, Dortmund and Duisburg, centred on the confluence of the Rhine and Ruhr rivers, ensures it will remain a German industrial heartland. But a drive through it would surprise the unprepared visitor. Massive efforts have gone into greening and beautification. The abundant wealth of Eighties West Germany brought smart shopping precincts, pedestrian zones and extensive public facilities.

Yet while the reality has shifted from the 'foundry of the Reich', Chancellor Helmut Kohl seems to think it has gone much further than it actually has. Recently, he enthused how the Ruhr was on the verge of becoming one of Europe's 'premium regions'. The structural changes have been less far-reaching than the politicians claim.

As traditional heavy industry is hit harder than ever, much of the service sector and small industry is suffering from the large steel and coal lay-offs. And as traditional jobs vanish, not enough new industries are springing up to take up the slack.

'Against the 600,000 jobs lost in coal, steel and related industries in the Ruhr over the last 30 years, the compensatory job creation in other sectors has been well below expectations,' says Heinz Schrumpf of the RWI economic research institute in Essen. It would be 'wrong to assume that structural policies have provided a lasting solution to the region's problems'.

Rather, the Ruhr has been out of step with developments in the rest of western Germany. While jobs were lost far more quickly in the Ruhr, job creation proved much slower than the national average. 'The service sector, which is still largely carried by the state, was largely bypassed by the strong growth in the Eighties,' Mr Schrumpf says.

The real miracle of West Germany's economic growth in the Eighties was that despite the massive influx of people - ethnic Germans from Eastern Europe and then from East Germany, after the Berlin Wall fell - unemployment actually fell. Between 1982 and last year, around 4 million new jobs were created in western Germany. The state of North Rhine-Westphalia was no exception - during the Eighties the number of jobs there grew by 12.5 per cent - pretty much the national average.

But in the Ruhr, the number of jobs available declined by 2.5 per cent. The legacy of coal and steel proved a heavy one, even for such a powerful economy as West Germany's. The Ruhr's negative image as a rust-belt was, and still is, a dissuasive factor. 'People see it as a region with a low quality of life, lacking culture,' Mr Schrumpf says.

There was also a lack of available space, due to the concentration of the cities and the fact that it takes a long time and lots of money to reclaim closed steelworks and coal-mines for other uses, he says. And finally, the Ruhr suffered from the one-dimensional qualifications of its workforce. Companies came in looking to set up specialised machine-tool making, for example, and just could not get the specialised workers they needed. For that they tended to go south, to Baden-Wurttemberg or Bavaria. As a consequence, private sector services also grew at rates well below the national average. The strength of services in the Ruhr, in cities such as Duisburg, has much to do with the founding of five new universities in the Seventies.

Those who lost jobs in steel and coal found it hard to get new employment. That the jobless rate in the region did not rise above 20 per cent is less to do with job creation than the fact that during the same 25-year period, about 500,000 left the Ruhr. Now the exodus is about to swell again. 'What do you expect the younger ones to do?' says Willy Bernarding of IG Metall. 'They will leave, as so many did before. You cannot live off dreams and the promises of empty business parks.'

In the early evening, the city centre is empty, as if the exodus had already occurred. A freezing wind swirls round the mounds of paving- stones waiting to be relaid in the spacious pedestrian area of the Niederrhein business park. 'It all looks so fine, for the moment,' Mr Bernarding says. 'But in just a few months, all these years of success are being made kaputt.'

(Photograph omitted)