It is time to talk of local heroes: John Eisenhammer hears a heresy that is saving German jobs

THERE is something off-key about Winfried Hoffmann's office. For a man whose ambition it is to turn Germany's biggest computer manufacturer into Europe's biggest, the room is provocatively low-tech.

'Actually, I cannot stand computers. I have never felt at ease using them,' the 49 year-old head of Aquarius Systems International admitted.

He tapped his breast pocket: 'I do from time to time manage to use a calculator.' The off-handedness is misleading, however. For behind it lies the determination of a man who, with 30 years in the computer business, believes he has the 'spirit and vision' to take on the big international names.

'It is time to talk again of local heroes in the computer world. The days when PC producers could dominate through size, covering vast international markets from the centre, have gone,' Mr Hoffmann said at ASI's headquarters in Bad Homburg just outside Frankfurt.

When Aquarius began producing PCs at Sommerda in eastern Germany in 1990, Mr Hoffmann knew many thought he was seeking to do the computer equivalent of defying the laws of nature.

High-cost Europe, and especially Germany, could not hope to compete with the Far East, the conventional wisdom went. 'It is wrong,' Mr Hoffmann said. 'Extreme flexibility and just-in-time are more important than wages in determining overall costs.'

The price fluctuation risk for key components such as boards, controllers and hard disks is too high, he said. 'One needs to buy in at the last minute, and produce at the last minute.'

Mr Hoffmann likens PCs to vegetables - they have a very short shelf life. 'We should not see ourselves as manufacturers but as logistic managers, shifting goods as rapidly as possible, reacting immediately to changing demands.'

The problem with producing PCs in the Far East for the European market, he explained, is that the goods spend eight weeks being shipped. But the price of key components can change 20 or 30 per cent in a day. 'If you have 5,000 machines swinging in a ship on the high seas, it can mean a loss of dollars 500,000. That sort of setback cannot be made up for by wage costs.'

The experience of being caught out by plunging component prices led Mr Hoffmann and his fellow Aquarius founder, 47-year-old Rolf Wiehe, to abandon their original plan in 1989 of setting up a distribution business for PCs made in Taiwan, and to go into production themselves.

Their success, in miserable market conditions, has been impressive. Turnover more than doubled last year to reach just over DM500m. Despite plummeting PC prices, the company returned a small profit of DM5m. It expects turnover this year to rise to around DM750m.

In late summer, production will begin at a purpose-built factory ('Europe's biggest PC plant', according to Mr Hoffmann), currently under construction at Sommerda, with a capacity of 600,000 units a year. DM40m has been invested in it.

'We buy all our key components from companies like Intel by the week, like sliced bread,' Mr Hoffman said. Producing at the heart of one's retail market is not just essential for avoiding long shipment times, but also for being able to react immediately to client demands.

'In 10 days we can turn out 1,000 to 3,000 additional PCs for a client, to individual specification and design,' Mr Hoffmann said. 'In the current situation, whoever is most flexible wins.'

In his view, too many of the big producers have failed to adapt to the demystification of PCs. 'Quality and innovation today come not from the producers but the suppliers such as Intel and Microsoft. They set the prices, not the producers. We trade in consumer goods, just like TVs or videos.' The demystification is one reason why Aquarius thinks it wrong to cling to an own-brand name. Only 30 per cent of ASI production now carries its own label; the rest is produced mainly for the in-house names of large discount and mail- order firms.

'Consumers increasingly realise the contents of PCs are similar. What they want is a partner and service.'

At Sommerda, ASI found a large reservoir of engineers and production staff from the former Robotron electronics Kombinat: 12,000 trained people needed jobs. Under such conditions, Germany's rigid regulations on working hours have been bent.

'We have three shifts, 24 hours a day, Christmas Eve, New Year's Eve. Productivity is high and, so far at least, the trade unions are quiet,' Mr Hoffmann said.

For building the factory - offering 500 jobs, ASI will be a big employer in the area - the company received substantial investment aids.

Asked about the future, Mr Hoffmann managed to mix ebullience and caution.

'We aim to be number one in Europe, but growth must be carefully financed. I cannot talk in terms of five to 10 years. In this business, one to two years is the limit. Our new factory could just as well build fridges, TVs or car parts. In three years, we could be doing anything.'

(Photographs omitted)