Nearly three decades since German reunification, new business, low living costs and a fast-rising football team have seen the eastern city of Leipzig go from bust to boom. Andrew Eames reports.
For a decade or so after the demise of East Germany, the steadily depopulating city of Leipzig had little to celebrate in terms of economics, and even less to be proud of on the football field, a crucial ingredient in the self-esteem of any German city. But then, in 2009, the Red Bull corporation came knocking, and RB Leipzig was born.
At that stage, the new team had to start out in the lowly fifth tier of the German leagues, but its rise since then has been as meteoric as it has been disapproved of by the country’s footballing traditionalists, who dislike its corporate origins.
Last season it entered the Bundesliga, the equivalent of the Premier League, and ended up finishing an astonishing second, even threatening mighty Bayern Munich. So next year it will be playing in the Champions League, the first club in former East Germany to get to such giddy heights.
Footballing success has been a huge morale boost for a city that had struggled A reunification, and its rise has been matched by a shift in the city’s economic status, too. From having lost almost 100,000 inhabitants during the difficult post-GDR transitional decade of the 1990s, Leipzig is now the fastest-growing city in Germany, attracting 15,000 new residents every year. It has gone from bust to boom.
There are several engines behind that growth. New industry, e-commerce and arts have encamped here, encouraged by low rents and room to grow, earning the city the label of the “new Berlin”. And they are bringing with them increasing tourism as well.
Leading the way in Leipzig’s business regeneration are four brands that could hardly be better known – DHL, Amazon, BMW and Porsche. DHL, employing 5,000 staff, moved its European distribution hub here from Brussels in 2008, partly because Leipzig’s user-friendly airport allows 24-hour operation. (From the UK, only Ryanair flies to Leipzig, from London Stansted three times a week, but there are numerous options to nearby Berlin, which is only a 75-minute train journey away.)
Amazon, employing 12,000 people, came here for similar logistical reasons, after the reunified country opened new autobahns around the city; the traffic jams that blight the road network in western Germany are virtually unheard of around here.
BMW, employing 5,300 workers, is focusing its electric car development on a new factory, and Porsche is now producing some two-thirds of its cars in its new Leipzig plant.
Porsche’s marketing manager, Thomas Lenck, acknowledges that it was a risk choosing Leipzig as a manufacturing base back in 2002. But the company, which is headquartered in Stuttgart, needed room to expand, and it particularly wanted to create a test circuit where customers could get the full Porsche experience.
“We believe that customers need to feel the car perform,” Lenck says. So everyone who comes here to pick up a brand new vehicle can take to the track – the curves of which emulate Formula One courses around the world – either as driver or passenger, to get to grips with the controls and capabilities of their model. The track and its adjoining customer centre also function as a successful standalone business, hosting more than 500 corporate events a year.
For Porsche, with a strong handmade element in production, the human side of the story was always going to be important. Initially, the company had to run a homecoming campaign to attract the right kind of workers back to the city, but now that word of mouth has got out about Leipzig’s quality of life and low costs, recent growth has been very fast – from 800 workers in 2011 to 4,500 today.
“We’ve only got a leaving rate of 1 per cent,” Lenck says, “so something must be right. The city is the perfect size, big enough to be international and to have lots of activities, and small enough to be 20 minutes from anywhere.”
While Porsche and the other new companies are located on the city’s fringes, a lot of the original Leipzig heavy manufacturing – printworks, foundries and huge cotton mills – was a short tram ride west of the centre in the Plagwitz area of the city. Here, giant warehouses and factories still loom, but their brickwork has been beautifully repointed and their new workers are more likely to have man-buns than mullets.
For example, some 350 people work for e-commerce pioneer Spreadshirt, whose offices are sited in a former truck factory, with obligatory ping-pong tables and Playstations. Spreadshirt’s core business lies in generating T-shirts bearing customers’ own messages and designs, for which it is the market leader in Europe. Its Leipzig-based chief executive is Brit Philip Rooke and its operating language is English, although his team also includes 20 different nationalities to manage its 18 national websites.
With a turnover of €106 million, and a year-on-year growth rate of 15-20 per cent, you might think that recruiting the right kind of multilingual designers and IT experts would be an issue for a Leipzig-based company. Not so, says Rooke, an unconventional executive who camps out in what is effectively a glorified garden shed during the week, joining his wife in their Berlin home at the weekends.
“When I arrived in 2009, very few people knew of Leipzig. Now it is a hip place to be for people who are tired of Berlin,” he says. “And I know of several British-based companies nosing around here with a Brexit relocation in mind.”
Just down the road from Spreadshirt, past a couple of the sort of artist-based squats that were common in Berlin before property prices shot up (per-sqm rental is €7 per month in Leipzig, and approaching €20 in the capital), is the Spinnerei. Once the largest cotton mill in Europe, employing 2,000 people, today it is a huge, rambling workspace with dozens of start-ups and about 100 artist studios. One of these is occupied by Neo Rauch, a big name in the international arts scene. Some of the rooms here have been converted to boutique accommodation, and many of the artists participate in open days, attracting tourists.
It is tourists and business travellers who are adding the cream to Leipzig’s post-reunification cake. Visitor numbers have risen steadily, from 2.1 million overnights ten years ago to 2.9 million last year, according to Andreas Hachmeister, chief operating officer of Interhotels, a company with several big-brand hotels (such as Westin and Radisson Blu) in the region.
In one respect, however, Leipzig will always struggle to produce numbers that match those of its pre-reunification days. Back then, it was a trade show centre, hosting huge consumer fairs displaying goods from the west. These days, those goods are freely available throughout the city.
Meanwhile, the Messe and the beautifully renovated art deco Kongresshalle are concentrating on the meeting and conference market – with the addition of functions for the new big-hitters of DHL, Amazon, Porsche and BMW. Leipzig, it seems, is once again a place where the big corporations like to see and be seen.
WHAT TO SEE
For anyone with a little spare time available to explore, there are three key areas to visit. Leipzig’s historic heart, surrounded by a ring road jangling with trams, is easily walked and busy with street musicians and students on bicycles (German chancellor Angela Merkel studied physics here when it was still the GDR). It is particularly known for its 30-odd interior courtyard arcades, some lined with shops, some with quiet cafes.
West of the centre, the repurposed factory district, Plagwitz, laced with canals that are now given over to leisure boating, is also worth seeing, particularly along main thoroughfare Karl-Heine Strasse, with its feng shui shops and vegetarian kebabs. Just south of town is the New Lakeland, where former open-caste coalmines have been converted to beach and watersport destinations.
In town, business travellers often frequent the Westin’s 27th-floor restaurant, Falco (falco-leipzig.de), which has two Michelin stars. For a real bargain business lunch, however, nothing can touch the value of the Panorama Tower restaurant (panorama-leipzig.de), which
offers a three-course lunch for a mere €12 as well as fantastic views from the 29th floor.