Word: telefunken
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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...
...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 in August...
...that AEG-Telefunken is in receivership, a court-appointed appraiser will determine whether it can pay the legal minimum of 40% of its debts within 18 months and still remain in business. The Bonn government, which in the past has helped arrange mergers between troubled companies in the steel and automobile industries, has promised additional aid. Even if part of the firm survives, however, at least 20,000 jobs will be lost and dozens of factories either sold or shut down...
Many West German bankers and businessmen hope that the collapse of AEG-Telefunken will act as a spur for their country. They have long complained that high wages, low investment and excessive government regulation have sapped their country's economic strength. West Germany will need to return to bold innovation and good management if it hopes to succeed in high-technology growth industries of the 1980s. Those were the very areas where AEG-Telefunken failed...