Word: aeg
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...AEG-Telefunken was the very symbol of the postwar West German Wirtschaftswunder. When the giant company began to rebuild in the late 1940s, it found that the destruction of battle and the loss of property in East Germany had wiped out more than 90% of its factories. But a combination of hard work and a buoyant economy helped AEG-Telefunken to restore itself and become the second largest electronics manufacturer in West Germany after Siemens. In 1981, it employed 120,000 workers worldwide and had sales of $6.6 billion...
Thus it was a jolt last week when AEG-Telefunken declared that it was insolvent and could not pay its bills. The unpaid debts amounted to $3.5 billion. In addition to being the largest corporate casualty in West Germany since 1945, the collapse of AEG-Telefunken symbolized the problems now facing the country that first gave birth to economic miracles. As the Frankfurter Allgemeine Zeitung candidly observed in a front-page obituary for the company: "This marks the end of all illusions...
West German commentators last week were comparing the current economic troubles with the country's 1931 banking crisis, when the German stock market was forced to shut down. Some officials saw the failure of AEG-Telefunken as proof that West German companies, which had once been among the leaders in high technology, were now falling behind American and Japanese firms. Said Andreas von Bülow, Minister of Research and Technology: "At the moment we are clearly behind our rivals, and if the applications in industry of microelectronics are not considerably speeded up, our technological standing will soon...
...problems of AEG-Telefunken, though, say as much about the shortcomings of one company's management and planning as they do about the changing fortunes of one of the world's great industrialized powers. After prospering in the high-growth years of the 1950s and 1960s, the giant company in recent years failed to keep pace with developments in new products and manufacturing and steadily fell behind other electronics manufacturers, especially in the U.S. and Japan. Although it was a pioneer in developing a commercially successful tape recorder in the 1930s, AEG-Telefunken eventually lost its lead...
...credit guarantees, bank loan write-offs and new bank credits amounting to $470 million. Events, though, were rapidly running against the troubled colossus. In June, President Ronald Reagan suddenly broadened the U.S. embargo on sales of American products for the planned Euro-Soviet gas pipeline, endangering a $260 million AEG-Telefunken contract to deliver to the Soviets 47 gas turbines that are being built under a U.S. license. Durr's ambitious program to restructure the company, called AEG '83, was stillborn when trade unions blocked the elimination of some 20,000 jobs. A British electronics firm early...