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May 2001

Tight Spot

Elbow to elbow in Munich

Yes, says Christian Ude, there are those notorious Munich haters among us who constantly grumble about how horrible it is here—self-indulgent and conventional, distinctly uncosmopolitan and utterly provincial. In fact, they claim they have wanted to move for some time now, to Berlin, Hamburg or the like, but still “happen” to be here. Munich’s Mayor, Christian Ude, does not greet such outrageous comments with a grimace, but rather with a smile, discernible in the deep lines to the left and right of his mustache. “I can comfort Munich haters a little: they will not increase the level of misery in the city by leaving. We are thankful for every vacated apartment,” guffaws the Mayor, almost slapping his thigh—here, in his office overlooking bustling Marienplatz. No, the city is not wasting away. Quite to the contrary, everyone wants to move to Munich, especially businesses, entrepreneurs and global players in the hi-tech arena. The city is experiencing its biggest boom in decades, which is why Ude’s woes are another mayor’s blessings: “It used to be the main concern of the Mayor to lure businesses. Pretty soon, I’ll have the problem that everyone is coming!”

Why is this a problem? Because the necessary accommodation is lacking, because even the most wretched holes-in-the-wall are fetching outrageous sums of money and because one hundred or more applicants are showing up to view the same apartment. But Social Democrat Ude would rather speak of success and of Munich’s new and prosperous era, which comes easy to the Mayor, given the fact that the CSU predicted the city’s deterioration in the hands of the red-green coalition when Ude was elected in 1993. As long as a decline does not occur, Ude can continue to concede generously that it is, afterall, not only his doing that, of all the cities in Germany, Munich has taken the lead in almost every area of growth. Of course, praise is also due to the Bavarian State Ministry, and the cooperation of the Minister of the Ecomony, Otto Wiesheu (CSU), is magnificent. Wiesheu, on the other hand, attributes the boom to the wisdom of Bavarian politics since Franz Josef Strauss’ time: “We hedged our bets on future technologies early on—the result being that the Munich of today is ranked fourth, with London, among international centers of technology.”

The city has also had the great fortune of not being burdened with dying industries. Such crises—in the coal, shipbuilding and steel industries—has always been the bane of other cities. Meanwhile, information and communications technologies companies have branched out in Munich: 18,000 businesses with 260,000 employees work in the Bavarian capital and its outskirts. Apple, Compaq, IBM, Sun, Lotus, Intel, Microsoft—everyone is here. So, too, is the media: 11,500 companies, 128,000 employees. The city is the largest publishing center after New York. Rounding off the program are the life sciences: biotechnology and pharmaceutical companies thrive like laboratory mold spores. Such young upstarts as GPC, MediGene or MorphoSys have grown quickly to become leaders in the biotechnology industry. On average, Munich boasts 500 new job openings every week.

Perhaps even Duke Henry the Lion played a part in the boom, for, after greedily collecting taxes “apud Munichen,” he had a bridge built over the Isar and the competing bridge of Bishop Otto of Freising torched. Barbarossa was forced to step in and, after a tug of war, the city of Munich was finally founded, in 1158.

Munich is a city so blessed in its location that mere geography is a selling point: the Upper Bavarian lakes, the nearby Alps, the short distance to Italy. In business circles these are all highly effective elements with which to recruit qualified personnel. Anywhere else, the commercial tax is half as much, and office rent markedly cheaper. But what IT expert would be willing to move to some tepid spot or Teutonic forest when Munich beckons. The lovely Bavarian countryside is the city’s number one selling point: recently, the story of a young gene technologist was going around. When he asked for a higher salary during an interview at a Munich company, he was bruskly turned down with the argument: “What more do you want? In addition, you get the mountains, the lakes and the beer gardens for free!”

This was so convincing, that the young man moved to the Isar city immediately—like so many others, such as Karlheinz Tovar. Yet he is not here for the mountains and the lakes, not even for the formidable conductors, the opera, the theater, the galleries and all the other reassuring cultural luxury goods of Munich—where art is positively celebrated, often opulently and usually free of scandal. No, the 41-year-old biologist Tovar was drawn to the city for its worms. He gave up his well-endowed post at a pharmaceutical concern in Frankfurt, left his home behind and sent for his wife and children later in order to participate in a scheme hatched by Munich University professor Ralf Baumeister to revolutionize the search for new remedies for such diseases as Alzheimer’s and Parkinson’s. “To be part of that was incredibly exciting for me,” says Tovar. “This is where the biotechnology companies of the future are being founded. Someone has an idea, and we say ‘Poof, we’ll do it now!’” This is how quickly it happens for people like Tovar. Founded two years ago, the biotech company EleGene is headed straight for the stock market—35 scientists work here, and it is growing. Two American biologists were recently hired. Colleagues helped in the apartment search. Within one week, it was taken care of—almost record time in Munich.

Tovar rushes through the laboratory. Young people busy themselves with genetic copies, others fit a robot with puzzling plastic forms and, on the monitor of a computer microscope, a worm wriggles in the light of a laser beam. “Caenorhabditis elegans,” explains Tovar—the name of the worm. All the worms here go by that name. There are millions—some are in deep freeze, at -80° C. “Their biochemistry is similar to that of humans.” For this reason, they have been chosen as the test animals. Poor worms—turned into Alzheimer or Parkinson patients, fed with thousands of substances, in the hope of finding a cure. “Later, these medicines will relieve, heal or stop the disease,” says Tovar. And, the process is quick: the robot tests 96 different substances, simultaneously, on 10,000 worms. A “winner” is seldom seen. Can mice also be used? “No, impossible.”

The EleGene laboratory is housed in a shiny metal building in the Innovations- und Gründerzentrum Biotechnologie (IZB) in the suburb of Martinsried. Within view of the towering Grosshadern University Clinic stand the new buildings for the departments of chemistry and pharmaceutics, the Genetics Center and the Max-Planck-Institut for biochemistry and neurobiology. “This is where the largest biotechnology park in Europe should stand,” said Edmund Stoiber of the complex.

Indeed the State of Bavaria has spent hundreds of millions on it. One of the favorite projects is the IZB, in which young researchers are given the capital to act as founders of their own companies—22 such firms have already been established. “The Munich biotechnology scene is the most important one in Germany,” says Horst Domdey, top manager at BioM AG, a company that manages to bring together industry, research, the financial world and start-up businesses. “A gold-panner’s atmosphere is at the IZB,” says Domdey. “Many of these businesses are in search of gold nuggets.”

“I always hear the same thing from these businesses,” says Mayor Ude. “We need highly qualified and highly motivated personnel, and they are already in Munich—thanks to the high schools and thanks to the competition that is also here. The people I can recruit and the businesses I can cooperate with are all here.” But it’s still not enough—despite the presence of the Munich University, the Technical University, technical schools, the army university and Max-Planck-Institut. Some 30,000 positions have been posted —the actual figure is around 90,000. The unemployment rate is at about four percent.

Ten years ago, people talked about Munich’s imminent decline. It was thought that Berlin would draw the most important businesses. This is yet another prognosis about which Ude grins. Even Siemens remained in Munich, though it was close to returning to its old headquarters. About 1994, says Ude, “I was sure that we were on our way up.” Huge inner-city spaces were free back then, because the post office and the rail service moved to various other locations. Another blessing was how the positive effects of Munich’s new airport at Erdinger Moos—which was opened in 1992 and has since rapidly expanded—unfolded. Results were good, not only because it became the site of high-tech centers of the highest stature, but because Munich was finally given the chance to regroup. The old airport was now free for the convention center and the old convention center could now be used for housing and commercial properties. “The city suddenly had potential again,” says Ude. “The new open spaces afforded an incredible new dynamic.”

About a year ago, Rolf Matzner, 34, and Christian Czech, 31, thought about leaving Munich. San Francisco would have been a prestigious address for their newly founded Syntion AG. But then they stayed in Munich—where they had studied electro and information technology—two up-and-coming, picture perfect IT guys, whose chatting about the company is as casual as their clothing. And, the duo stands to strike it rich: their idea that has resulted in the reduction of online waiting times through the use of Java programming is a hit. Cellular phone users can now make online stock transactions much more quickly, and, therefore, save money.

“There are millions of good ideas,” says Czech. “But how can I market them in a way that will convince investors?” The young Internet businessmen chose to go with a network of experienced industry professionals—known in the jargon of the New Economy as “Business Angels”—but they could just as well have made use of the venture capital market, proving Minister Wiesheu’s assertion that Munich is “the pinnacle of the venture capital scene.” Czech, Matzner and their partners currently employ a team of 25. They are very aware that the New Economy has become the talk of the town. Is this a reason to panic? “No, we are a technologies business of substance.” How businesses without substance have gone to the dogs can be observed in San Francisco these days. “There, overhead is two and three times higher, and the personnel is not as loyal,” says Matzner. In Munich, too, there is a “war for talent”—Czech calls this “hunting IT experts.”

Whoever can land an apartment during this war has won half the battle. Some companies have been forced to put their employees up in hotels. “Apartment wanted” ads grace tree trunks, electrical transformer boxes, street lamps. Some study obituaries because, after all, you never know when a vacancy might turn up. Almost any rent will be paid, because if there is one thing the cast of the New Economy has, it’s money. The average rent for a newish apartment per square meter is about DM 24. This is the only fact that could prove detrimental to the popular Mayor Ude’s reelection campaign in 2002. “The apartment crisis has a name: Christian Ude.” The slogan can be found on the campaign posters of the rivaling CSU, whose members are otherwise busy quarreling among themselves.

Ude counters: “The city’s only investors, especially the insurance companies, withdrew because there was more money to be made on the stock market and elsewhere. Also, there are new, effective city programs, but these will take time. That will be, perhaps, too late for retirees, young families, middle income individuals and lower-paid government workers who can barely afford to live in Munich. “Many profit from the boom,” says Ude. “But there are also entire groups that feel only the negative effects.” It will become more unpleasant for them in the city, one in which it is said Gemütlichkeit will never die. “I think the antics of the self-appointed ‘chic crowd’ have become overpowering and the inconsiderateness of those who are successful have turned Munich into one big “Elbow-genhausen.”

This article—entitled “Gründerzeit in Ellenbogenhausen”—originally appeared, in German, in the Süddeutsche Zeitung, on March 6, 2001. It has been modified slightly on account of space considerations. Wolfgang Görl is a journalist for the SZ. Translation by Liz Vannah.

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