Trabis' troubled legacy: Volkswagen has revitalised the old East German car industry. But familiar problems persist, reports Tim Jackson

THREE years ago, Petra Franz worked at a huge factory in East Germany that turned out Trabants by the million. The Trabant was a terrible car; it had been introduced just after the war as a short-term way of getting the car industry of a once-proud nation back on its feet. But the exigencies of communist rule were such that the Trabi never went away.

Its ugly shape and the foul smoke of its two-stroke engine became a symbol of industrialisation, East German-style. As the factory's press officer, Ms Franz had little to do. 'The basic rule was never to tell anyone anything,' she recalls.

Today she does the same job in the same factory. But instead of producing Trabis, the factory near Zwickau makes shiny new Volkswagen Golfs, complete with metallic paint and carefully labelled biodegradable bumpers. Two years after the Federal Republic won control of East Germany in an uncontested takeover bid, the factory is a symbol of the successes - and the failures - of German unification.

Volkswagen and the Treuhand, the government agency responsible for selling off the old East German nationalised industries, struck an innovative deal. They agreed that the West German carmaker (which, counting in its Audi brands, is also Europe's biggest) would build a brand-new factory on the site. In the meantime a transitional company in which VW would take a stake of more than 12 per cent would put together VW Polos from kits in the old one next door.

Next month, the transitional factory's 2,400 workers will raise their production from 280 to 400 cars a day. And the eventual aim is that they should make 1,200 a day - not merely bolting them together from kits sent over from the Volkswagen nerve centre just across what used to be the border with West Germany, but actually pressing the body panels too.

Once the new factory is fully on stream, the idea is that it should use technology as advanced as any in the Volkswagen empire, and working methods that can stand comparison with Japan. That will be no mean feat: on average, west European car makers are only half as efficient as Japanese car makers. The old Trabi factory was less than half as efficient again.

So the firm realised it had a challenge before it started. It began by shipping 400 of the workers from the old factory across the border to Wolfsburg to learn how the parent company thinks cars should be made. Some 28 expatriate managers were sent east to run things at Zwickau: at their head was Gerd Heuss, an international specialist who had previously run Volkswagen manufacturing operations in Yugoslavia, and at Changchun in China.

The scene that greeted the managers when they arrived was every bit as desolate as in the poorest developing country. There were no decent roads, nor houses for the 'expatriates', as they call themselves, to live in. Phone calls back to head office had to be made by sending someone to a telephone box across the former East-West border.

All those problems are now clearly solved. A walk around the management building and the factory floor shows the evidence of the massive investments that the German government and Volkswagen itself have put in. There are newly surfaced roads and new glass-fibre phone cables. Obedient secretaries in the offices produce speedy cost calculations from spreadsheets run on Compaq computers. The body-shop in what is to be known as the Mosel 2 plant already has 123 robots, and will eventually have twice as many.

Even the devastated East German environment has been given its due attention. The company had felled some 600 trees in order to make way for its greenfield factory; in return, it is in the process of planting 6,000 more to replace them. Landscape gardeners are working on ways to prevent the factory from looking like an eyesore from the local village. And the old dirty lignite power station that generated the plant's electricity is being replaced with a new gas system.

But it is the psychological, rather than the physical, scars of communism that are proving hard to heal. Mr Heuss admits that Volkswagen made a mistake when it started by hiring back the old Trabant workers. They had such an attitude problem that the firm soon realised it was better off employing those who had no bad habits to unlearn.

It has made tremendous efforts to earn the loyalty of its new workers. A shiny new cafeteria serves solid, good quality German grub; a special team of eight people has been recruited to do nothing more than keep the workers informed of developments in the world car industry and in Volkswagen itself. 'We regularly look under the skirts of other car makers,' Mr Heuss explains. Every Monday night, the office computer pulls out from the personnel records the names of 20 factory workers, and Mr Heuss and his colleagues have an informal dinner with them.

The latest western-style production methods are already in place. Quality controllers walk up and down the aisles, but workers on the assembly line are urged to do their best to turn out only perfect products, and to stop the line if for some reason they cannot. The entire factory is divided into Japanese-style teams, with the teams being responsible for the quality of their own stage of the production process. Volkswagen pays a separate educational institute to improve its workers' skills.

Most revolutionary of all is the fact that the factory has only nine suppliers, each of which makes just-in-time deliveries to the door so that not more than a few hours of stocks need be carried. In short, Mr Heuss says, 'we're the playground of the whole concern'.

Even though the workers here are paid only slightly less than their western German counterparts, the results in terms of productivity are proving slow to come through. Asked about the factory's quality record, Mr Heuss says: 'I have to be polite; it's not so bad.' But he refuses to talk about defects per car, or to say how the plant measures up to other VW installations. The impression of only slowly rising productivity is borne out on the factory floor. Here, occasional groups of workers sit around chatting as the line glides forward; in a Japanese plant, all would be briskly at work, with only seconds to spare until the next job.

For the workers, one thing has been a surprise. They had heard a lot about western individualism. But according to Petra Franz, the choices of capitalism have made life in general more bureaucratic.

And inside the factory, the emphasis is on team-work - back to what they were used to under communism. 'In the old days,' she says, 'we had to produce cars under lousy conditions. We'd have to work weekends to catch up. Now we have modern machinery . . . but there's less need to be creative.'

(Photographs omitted)