Market Focus : Rocket-Makers Retool for Peace : Germans who once created weapons are learning to make money by dismantling them.

For nearly three centuries, the region that today is marked on the political map as the German state of Brandenburg has stood in constant readiness for war.

In the 18th Century, these pine-covered flatlands were the parade ground of Prussian military might; during the Nazi rearmament of the 1930s, they became the command and control center for Hitler’s Wehrmacht. During the Cold War, when 350,000 Soviet troops, advisers and their dependents occupied East Germany, a full 200,000 of them were stationed in present-day Brandenburg, setting up the state as a sure-fire nuclear ground zero if war broke out between the superpowers.

Today, the last Russian garrison troops are gone from eastern Germany, and Brandenburg has set about the immense task of undoing its war economy.

“It’s really a break with the past,” says Roland Vogt, the Brandenburg official in charge of defense conversion. He calls the state’s vast, newly vacated military real estate “a sea of sadness”--an expanse of decrepit barracks, ammunition-strewn training fields, tumbledown Soviet officers’ quarters, and empty tank ranges, all surrounded by tall barbed-wire-topped fences marked “mortal danger.”

Vogt’s job, as he puts it, is “to create some islands” in this sea.

One such island-in-the-making is Pinnow, population 900, a farming village near the German-Polish border. It was here, during the Cold War, that 1,600 specialists built the Konkurs, an advanced anti-tank missile, and maintained the radar guidance systems used in various other Warsaw Pact missiles and rockets.

Today, thanks to western German investment and the prodding of socially conscious bureaucrats, Pinnow’s rocket workers are engaged in the useful task of dismantling all those same rockets, extracting the propellant and safely burning it off in a 2,200-degree incinerator. Pinnow’s transformation from warmonger to peacemaker isn’t complete yet, but when it is, the village may prove one of Brandenburg’s defense-conversion success stories.

“They’re doing a job which is really necessary,” says Joern Broemmelhoerster, an economist with the Bonn International Center for Conversion. “We never had the facilities to destroy these weapons before.”

What happened to Pinnow’s elite rocket works is much like what happened to, say, Southern California’s Lockheed Corp. or Hughes Aircraft Co., only more so. When the Cold War ended, not only did the factory’s orders dry up, but the government that had nurtured the plant vanished.

To make matters worse, East Germany’s central planners had sited the rocket works smack in the middle of nowhere.

“Pinnow is in one of the poorest regions in Germany,” Broemmelhoerster notes. “Without the factory, there is nothing to do there except farm. When the Cold War ended, there were all of these highly trained people there, and nothing for them to do.”

Meanwhile, far to the south, near Germany’s border with Austria, a private company called Buck Inpar was having difficulties of its own with the end of the Cold War. Buck, a pyrotechnics concern, had busied itself throughout the Iron Curtain years making smoke grenades, flares and other battlefield incendiary devices. Now it too suddenly found its engineers standing around with their hands in their pockets.

“Buck was looking for opportunities,” manager Werner Scherer says. “The only opportunity we could see was in the weapons-disposal business.”

At first glance, Pinnow seemed a perfect acquisition target for Buck, for the treaty governing the Red Army pullout from Germany called for the government-financed dismantling of 300,000-odd tons of East German munitions. Pinnow had the site and the people to do the job; Buck had the private capital and know-how to refit the rocket plant, and the government, of course, would provide the raw materials--the rockets.

But in the end, it wasn’t quite so simple. While Germany has nothing compared to President Clinton’s Technology Reinvestment Program--the plan for shepherding America’s defense contractors into peaceful manufacturing markets--it does have a powerful federal agency charged with privatizing East Germany’s old industrial stock. This organization, the Treuhandanstalt, tries to see to it that the investors preserve as many jobs and components of the eastern industrial stock as possible.

And the Treuhandanstalt was not willing to let Buck take over the Pinnow rocket works unless it would put the whole, sprawling factory grounds to use, to guarantee at least 750 jobs through the end of 1995, and to invest at least 50 million marks, or about $35 million.

In the end, Buck decided that rocket-dismantling in Pinnow looked like a good enough business proposition to justify taking on a number of experimental, non-pyrotechnic sidelines.

So today, in addition to dismantling the rockets, Buck is churning out prefabricated buildings, storm windows and hospital beds, as well as developing clean-up systems for polluted soil and water, and operating a nascent hazardous-waste transport concern. It has also become a partner in a hairdressing school.

Today, Buck employs not just the 750 villagers that it promised, but 1,400. The same technicians who used to put together rockets and radar systems have been retrained to build molds, pour concrete and operate state-of-the-art computer design equipment. And the weapons-dismantling division, having just finished its share of the Warsaw Pact rockets, now receives orders from NATO to incinerate small-caliber ammunition.

The only problem in sight is that the profitable segments of the factory are still connected, in one way or another, to the military--the weapons dismantling project and the house-construction business. Buck’s prefabricated houses have a ready-made market at the German Defense Ministry because Germany is obliged by treaty to provide housing for the returning Russian troops and officers who until last August occupied eastern Germany.

Can such a state of affairs be considered an authentic “defense conversion?”

Yes, over time, says Vogt, the Brandenburg defense-conversion official. He argues that, far from perpetuating dependency on bureaucratic largess, Pinnow’s current diet of military contracts will simply tide it through to the day when it can find markets for its other products.

More on Transition

* Reprints of “Russians Leave Germany Minus Fond Farewells,” Walsh’s June 26 look at the humbling departure from eastern Germany of the once-great Red Army, are available by fax or mail from Times on Demand. Call 808-8463 and enter *8630. Order item No. 6010. $1.95.

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