Austria picks up pieces of biggest post-war bankruptcy

VIENNA, March 20 Thu Mar 20, 2014 7:57am EDT

VIENNA, March 20 (Reuters) - In a vast warehouse in the small town of Trumau near Vienna, some of the remnants of Austria's biggest post-war bankruptcy are laid out in thousands of neatly arranged lots.

A handful of potential buyers pick over the piles of drills, saws, cables, buckets and pumps that are being auctioned off to make a few million euros for the creditors of Alpine Bau, a former unit of Spanish construction group FCC.

Thomas Prucha, a 42-year-old maintenance mechanic who spent half his life with the company until he was laid off last year, has signed up for a few weeks' work with the auction company and hopes to retrain as an electrical engineer after the sale.

"I don't want to stay in this industry. It's getting worse and worse paid compared with other jobs," said Prucha, who will get about nine months' wages as a payoff.

Prucha is one of around 4,900 construction workers in Austria who faced unemployment when FCC finally pulled the plug on Alpine last June, letting it file for insolvency with liabilities of up to 2.6 billion euros ($3.6 billion).

Nine months on, however, all but 365 of have found new employment, according to the Austrian Employment Service.

On a continent devastated by unemployment, the case demonstrates Austria's resilience to crisis - the Alpine republic has the lowest unemployment in the European Union, at 4.9 percent by the EU definition.

A long tradition of cooperation between labour and employers in Austria - mindful of how mass unemployment helped fuel the rise of fascism - places great importance on getting people into jobs and keeping them there.

When Alpine went bust, the government went into overdrive, coming up with a 1.5 billion euro stimulus package to create more construction jobs. In Spain, the news barely registered in an environment of 27 percent unemployment.

BANKRUPTCIES PEAK

Alpine was a victim of over-expansion in eastern Europe, especially Poland, where a bonanza of road and stadium building for the 2012 European football Championships turned into a legal nightmare that saw firms battling to get paid and dozens of Polish builders go out of business.

FCC, itself heavily indebted and struggling with high exposure to Spain's sick economy, took a hit of 289 million euros after tax.

The bankruptcy caused shockwaves in prosperous Austria, amplified by a national election campaign in which politicians saw a chance to make political capital out of the perceived abandonment of a national champion by its foreign owner.

The possibility of hundreds of subcontractors going out of business made national headlines, and the case almost doubled the volume of Austrian bankruptcies to 6.2 billion euros in 2013, its highest level since 1995.

But Hans-Georg Kantner, head of the KSV1870 creditor protection association, said many ex-Alpine employees were still working on the same construction sites as before - just with new bosses.

"The reality is that these building sites need to be finished and as long as the sponsors are interested they see to these buildings being completed and the workers on the building sites, the ones wearing the hard hats, keep the jobs," he said.

KSV1870 expects the number of Austrian bankruptcies, which lag economic recovery by six to nine months, to peak this year.

Austria's economy grew about 0.4 percent last year and is expected to grow by 1.5-1.7 percent this year.

And Kantner said only about 20 of Alpine's subcontractors in the end went under.

FOREIGN BUYERS

At the auction site, however, no Austrian construction firms were to be found buying up the cranes standing outside the warehouse, even though they are to be had for 10-20 percent of the price of a new one.

Mohammed Chamamit of Dubai-based Modern Emirates Heavy Cranes, on the other hand, is a regular customer of the auction house running the sale, Karner & Dechow.

"Alpine is certainly one of the biggest I've been to but I've been to others in Rotterdam, Hamburg, Trieste," he says as he supervises the loading of a crane into a container.

His firm will sell or rent the cranes to firms in the Gulf, where infrastructure construction is booming and preparations for the 2022 soccer World Cup in Qatar are in full swing.

Auctioneer Arndt Wernicke pointed to this side of his job to explain why he has remained in the business since 1996.

"The economy goes up, it goes down and it goes up again. It's always in flux," he said. "Of course people's lives are affected but there are also people buying - their companies are on the up."

($1 = 0.7180 Euros) (Additional reporting by Michael Shields; Editing by Mark Potter)