[Leica] Leica - paragraph 92

[nathan.wajsman at planet.nl (nathan.wajsman@planet.nl)]

As painful as Leica's current travails are for those of us who have an 
attachment to the brand and the history and tradition associated with 
it (and I count myself in that category), throwing German taxpayer 
money at the company will not solve the problem and would anyway 
contravene EU rules. There are very few cases where state aid has been 
a success, in the sense of helping a company survive a temporary 
problem and then stand on its own again. The only case I can think of 
were the Chrysler loan guarantees in the 1980s--the company survived 
and repaid the loans ahead of schedule, but they also had new 
management that was prepared to do a painful restructuring and new 
products that were successful in the market. In virtually every other 
case state aid is just money down the drain.

Leica is a commercial enterprise in a capitalist economy. It is the 
nature of such an economy that a company that cannot make a profit 
eventually goes bankrupt. The movement of manufacturing jobs to low-
cost locations has been taking place everywhere in the rich world, and 
yet countries like the US, the UK, the Netherlands or Scandinavia have 
managed to replace the lost jobs and have unemployment rates well into 
the single digits. Countries like France, Germany, Spain, Italy, which 
have a long tradition for state aid to ailing enterprises, lots of 
labour market and other regulations, and general state meddling in the 
economy, all have unemployment rates in double digits. There is a 
connection here. And note that the low-unemployment countries include 
not just the perfidious Anglo-Saxons but also Continental countries  
which have maintained a welfare state and a high level of solidarity. 
This is indeed the direction that the German government is taking, 
with the Hartz (sp) labour market reforms as an initial step. 

Leica will survive in some form, but not as a part of a handbag 
marketer--the Hermes investment has given the company nothing except 
some cash to allow it to operate for a bit longer. What Leica needs is 
to be bought by someone like Canon, Sony et. al., in other words a 
company that is successful in the photo business and can provide Leica 
with some economies of scale, access to technology that Leica needs 
etc. This is how the boutique car brands like Saab and Jaguar have 
survived until now. They still face difficult times, but without the 
investments by GM and Ford, respectively, they would surely be gone by 
now.

Nathan

Nathan Wajsman
Almere, Netherlands
http://www.nathanfoto.com
http://www.fotosevilla.com
Print sales: http://www.photodeluge.com
Image licensing: http://www.alamy.com/search-results.asp?qt=wajsman

----- Oorspronkelijk bericht -----
Van: douglas.sharp@gmx.de
Datum: zaterdag, februari 19, 2005 1:29 am
Onderwerp: [Leica] Leica - paragraph 92


> As to German companies buying Leica stock to rescue the company, 
> why didn't
> they do it at the time of the Hermes transaction?
> Unfortunately, Leica is neither in the Black Forest or any other 
> part of
> Bavaria or the state of Baden-W?rtemmberg, which, as high-tech 
> industrialareas would be very pleased to offer state subsidies for 
> an ailing company
> of Leicas reputation. The state of Hessen (where Solms and Wetzlar 
> are)isjust not as rich, and help from Berlin is just as unlikely.
> The present economic situation in Germany is that hardly any 
> companies are
> investing in German production sites at all, in fact if the unions 
> demand a
> pay rise the management threatens to move elsewhere,usually the 
> new member
> states of the European Union, or even farther afield, most of the 
> telephonehotlines are already located in the UK or even India.
> Even suffering from the 14th day of a 5 day collect and return repair
> service for Fujitsu-Siemans computers located in the wilds of the 
> ex-GDR,
> salaries there are around 30% lower than in the rest of Germany! and
> unemployment is running at around 20% too.
> On the cards at the moment are for example massive lay offs 
> planned at
> GM-Opel(up to 10,000) Deutsche Bank (6,400 although their profits 
> are the
> highest in their history), one of the largest building contractors 
> Walterbauhas gone bust and the best bits have been grabbed by the 
> Austrian Strabag
> concern.VW has just announced lousy figures for the last quarter 
> and are
> reducing workers benefits across the board.
> At the same time CEOs salaries have risen, on average,by 240% in 
> the last
> couple of years, workers salaries by 2.4%. If it wasn't verboten 
> there would
> have been a national strike here ages ago.
> 
> Leica has been promising "Jam tomorrow" for too long now, they 
> didn't just
> miss the boat, they lost the map telling them where to find the 
> water and
> were always too proud to ask the way.
> Douglas
>