April 7, 2008 / 12:26 AM / in 10 years

Polish investors revive east German town

LOECKNITZ, Germany (Reuters) - For years, Germans from the town of Loecknitz drove across the Polish border to buy cheap cigarettes and alcohol. Today, Poles like Marcin Baryliszyn go the opposite way to set up firms and build homes.

<p>A German federal policeman (R) and a Polish border guard are reflected in a mirror as they check ID documents at the German-Polish border checkpoint in the German town of Ahlbeck-Swinemuende, some 200 kms (124 miles) north east of Berlin in this December 13, 2007 file photo. REUTERS/Fabrizio Bensch/Files</p>

Baryliszyn is one of several dozen Polish entrepreneurs who have set up in Loecknitz, providing a boost to the 3,000-strong town near the border in one of Germany’s poorest regions.

“It’s quite astonishing. A few years ago, people said once Poland joined the European Union, Germans would rush to Poland to buy everything up. But it turned out quite differently,” Baryliszyn said. “Cheap property is a key factor.”

At first glance, Loecknitz looks like many other East German towns: almost one in four people is unemployed, discount shops line its streets and the far-right National Democratic Party (NPD) scored 18 percent in a recent election.

But unlike many bleak towns in the former communist East, where birth rates have slumped and apartments stand empty because jobless workers have moved to wealthier western states, dozens of brightly painted family homes have mushroomed in Loecknitz and it now needs a bigger kindergarten.

Like Baryliszyn, many investors and Polish buyers come from the booming port city of Szczecin, Poland’s seventh largest city, which is less than a 30-minute drive away from Loecknitz.

Since May 2004, when Poland became the biggest ex-communist European Union member, the jobless rate in Szczecin has dropped from above 16 percent to 6.6 percent in January 2008 -- less than a third of the current rate in Loecknitz.

“Szczecin is our trump card,” said Lothar Meistring, the mayor of Loecknitz, where estate agents say property prices are up to 20 percent cheaper than in the Polish city.

“(To many Poles), Loecknitz is the gateway to the western world,” Meistring said, sitting in his office next to a Polish hairdresser and close to a real estate agency, which has offers advertised in both Polish and German.

Some 200 Poles have moved to Loecknitz over the past few years, and 40 firms have been set up, the mayor said.

Although most of the newly created firms were one-man businesses and only a handful of direct jobs had been created, Meistring said each Pole who built a factory or home helped boost local firms, shops and schools.

“Our population is growing ... We have to build a new kindergarten. Not just because of Polish children, but partially due to them. We have had record births recently,” he said.

“MADE IN GERMANY”

Szczecin Mayor Piotr Krzystek said it was a trend among young people to try their luck in Germany.

“Those (regions close to the border) have recently been deserted (by many Germans), so some Poles are attracted by German incentives to launch businesses there,” he said.

Depopulation is a persistent problem in east Germany. Data show 136,000 people from the east moved to western German states in 2006, with only 82,000 Germans going the opposite way.

Officials say the population of west Germany is set to shrink by 14 percent between 2006 and 2050, while it is set to decrease by 31 percent in the east.

Baryliszyn’s company Fleischmannschaft, which makes seasoning for meat and fish, employs some 130 staff at Polish sites. In a few weeks, it will start producing in a new factory in Loecknitz and employ four Polish and two German workers.

Although wages were still more expensive than in Poland, cheaper property prices and an expected marketing advantage would make the 1 million euro ($1.6 million) investment worthwhile, said Baryliszyn, who manages the German site.

“The label ‘Made in Germany’ is very important to clients, both in Eastern Europe and the West,” he said, sitting in a sparsely-furnished new office smelling of fresh paint.

Baryliszyn said he was still commuting to Szczecin until production at the German factory started, when he would think about moving to Loecknitz, where grey communist-era high-rise apartments mix with bright homes decked with solar panels.

Polish insurance broker Mariusz Kimla said the short distance to his Szczecin office had convinced him to build a two-storey home for him and his wife in the German town.

“I wouldn’t get much for my money in Poland,” Kimla said.

The biggest ex-communist economy in the European Union has enjoyed a four-year housing boom during which many Poles bought their first homes and took out their first mortgages thanks to cheaper credit. House prices jumped by 50 percent in 2006.

The Polish economy grew by 6.5 percent last year, compared to growth of 2.5 percent in Germany, Europe’s largest economy. Poland’s 8 percent jobless rate compares with 7.4 percent in Germany, although the rate is much higher in East Germany.

“I advise other Poles to do the same. We can contribute to making this place more lively,” the 30-year-old Kimla said of Loecknitz, which is some 130 km (80 miles) northeast of Berlin and is surrounded by forests, lakes and wind turbines.

NEO-NAZI PROBLEM?

But both Poles and Germans say Poles have not always received the warmest of welcomes.

A few weeks ago, several Polish people in Loecknitz had their car windows smashed, and some NPD supporters parade around town in T-Shirts with the slogan “Loecknitz must remain German” or distributing flyers reading “Close the border.”

“Many people say the Poles are now getting all benefits and subsidies without having paid into the system,” said Jens Fiedler, 41, who like many in the region is unemployed in winter and does farming jobs in the summer. “I would be very happy to work for a Pole. Unemployment is a huge problem here.”

Mayor Meistring says a handful of “problem citizens” were damaging the reputation of the majority in Loecknitz who welcomed their Polish neighbors.

Polish investors received the same help or subsidies as German firms, he said, adding even the most critical far-right supporters were benefiting from the Polish newcomers.

“One of the leading NPD officials, a tiler, is renovating a house owned by a Pole at the moment. How ironic is that?”

But Meistring admitted the boost from Polish investors had limits for a region where gross domestic product per capita is only half the level of some west German states.

“Szczecin isn’t capable of saving the entire east German border area. The entire region is too weak,” he said. “But what we are seeing is a straw to hang on to. We must be patient.”

(For a video report on this story, please double-click on

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Additional reporting by Gabriela Baczynska in Warsaw; Editing by Clar Ni Chonghaile

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