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On the leafy outskirts of Bremen, beside the high-rise university, there is a building which sums up the renaissance of this rugged industrial port. From a distance, it looks like a church spire or a minaret. In fact it’s the zero gravity tower of University of Bremen’s Centre of Space Technology and Microgravity, which conducts scientific tests for the city’s thriving aerospace industry. The Bremen based firm EADS Astrium built the new Columbus module for the International Space Station. It builds key components for Airbus here. Not bad going for a city with only 550,000 inhabitants (the 10th largest in Germany), whose core industry used to be shipbuilding.

A generation ago Bremen’s federal government realised that its old industries were dying. They decided to try something new, and the area that they decided to focus on was science. They built a new university and the new Technology Park beside it. Today the university has shaken off its old reputation as a hotbed of radical student politics to become one of Germany’s elite academic institutions. Meanwhile, the Technology Park has become home to over 300 companies, employing more than 6,000 people. In 2005 the government gave Bremen the grand title of Germany’s first City of Science.

One company that epitomises this sea change is OHB Technology, which makes the SAR-Lupe satellite for the German military. In 1981 OHB’s trade was nautical hydraulics. It employed five people. Now its trade is satellite and space technology, it employs 800. Its total revenue in 2001 was €15m. Three years later it was €114m, and it is still a family business. Christa Fuchs took over the firm in 1982, and transformed it. Her husband, Professor Manfred Fuchs, is in charge of space technology. Their son, Marco, is the CEO.

“Our basic difference is that we’re not coming from the old state-owned aerospace industry,” says Marco, 44, over coffee at OHB’s head office in Bremen’s technology park. “We are one of the few start-up companies in this industry, and it’s proving to be a viable industry. We’re profitable, we’re making money and we’re growing. In that respect, we’re more like an entrepreneurial company than a traditional company.”

As he says, this isn’t an industry where you’d expect a family-run firm to be a significant player. “Aerospace is on a shortlist of industries that the city is really focusing on, so we get support – not financial support – but political support. People want us to be successful.” Bremen’s relatively cheap cost of living also helps. “Bremen is a rather low-cost area, in terms of salaries and housing – in terms of everything. We have a competitive advantage compared to bigger cities like Munich, Frankfurt or Hamburg.”

Ask any local entrepreneur why Bremen has been so adaptable, and the first thing they mention is its compact size. It’s easier to build strong business relationships when “face time” is so easy to arrange. This natural intimacy has been enhanced by intelligent town planning. It’s no accident that eads, which builds Airbus, is right beside the airport, or that the Technology Park is right beside the university. Proximity has encouraged entrepreneurs and academics to share research and resources. Here, both sides feel like they’re playing for the same team.

Born in 1958, Professor Stefan Rill personifies this close relationship between business and academia. In 1996, while teaching at Bremen’s University of Applied Sciences, he co-founded CeBeNetwork, which specialises in IT and computer-aided engineering. In 2003 CeBeNetwork employed 51 people. Turnover was €5m. Two years later turnover had jumped to €37 million and the workforce was 200 strong. Before Stefan set up CeBeNetwork he worked for Airbus. Now it’s his major customer.

“Everybody knows everybody,” he says over coffee in one of Bremen’s cosy cafés. “People rely on personal relationships. People make business with people, and not with companies.” With offices in France and the UK, and business units all over Europe, CeBeNetwork is a global player, but Stefan still appreciates the value of Bremen as a local base.

Bremen’s manageable size also goes a long way to helping entrepreneurs cultivate links with politicians. “We’re 200m from the Rathaus,” says Carsten Meyer-Heder, founder of Neusta, over another cup of coffee in his city centre office (maybe it’s all the caffeine that makes Bremen run on time). “I can speak with the government. I can tell them my problems and what I need.”

Meyer-Heder, 45, founded Neusta, a software firm, in 1992. His clients include Airbus and TUI. He has 100 employees – nearly all of them from Bremen. With such a good university on his doorstep, he has no trouble finding staff from the local area. “Our strategy is that we want to grow to up to 200 people in the next three years, and we want to stay here in Bremen.” His home is five minutes’ walk away.

With its docks and shipyards, Bremen always used to be a left-wing city, but during the past decade it’s been governed by a left-right coalition – the conservative Christian Democrats and the social democratic SPD. Between them, they have struck a happy compromise between state support and laissez faire.

“This change of mind happened when the coalition started,” confirms Gerhard Schneider, aerospace coordinator for the Bremen Federal Government. “A big coalition was very healthy for the industrial environment.” Bremen’s government offers help to young companies – everything from office space to funding.

We meet at Bremen Airport, a 10-minute tram ride from the city centre. Aged 66, Schneider can remember when this busy aerodrome was one small building. Now it’s the centre of a new business district, Bremen’s Airport-City. “City of air and space travel”, reads a sign in the airport foyer, above a model of the Spacelab, built by EADS Astrium, just across the road. Industries like EADS may look new, but they’re the latest link in a long tradition of local commerce and innovation. “Bremen is very open-minded,” says Schneider. “Look at the emblem of Bremen; it’s a key.”

Bremen’s main players have always been merchants rather than aristocrats. Culturally as well as geographically, the city is closer to Amsterdam than Berlin. And although Bremen is in Germany, it’s also a place apart. Bizarrely, it’s one of the 16 states that make up the Bundesrepublik, and although it’s the smallest, it has exactly the same status as far bigger states such as Bavaria. All the big local decisions (taxation, investment, infrastructure) are made here in the city.

The roots of Bremen’s autonomy run deep. Long before it became part of Germany, only 135 years ago, it was an independent city state, built on free trade instead of conquest. It was always run by its citizens. It never had a king. With all the state institutions you’d expect to find in a proper capital, you can see why its inhabitants are so fond of this miniature metropolis. It’s like a cross between a big city and a small market town.

Without any inland hinterland to sustain it, Bremen always had to look out towards the wider world, and it’s still an outward looking place today. As a member of the Hanseatic League (a medieval Common Market, comprising most of the big ports between Gdansk and Amsterdam) its closest links have always been with other seaports. A thousand years ago these business-minded burghers were already sailing as far afield as Spain and Finland – not in search of colonies, but new markets. A thousand years on, it’s a natural progression to be setting sail for outer space. So, what’s the downside? At around 13.5 per cent, unemployment is the highest in western Germany. Not many head offices are based here, which means lots of business trips, and the workforce in hi-tech industries is relatively small. EADS, which built the Spacelab, has 900 employees here. Airbus employs 3,500, but that’s still dwarfed by Bremen’s biggest employer, DaimlerChrysler. Its 16,000 workers make 250,000 vehicles a year.

However, Bremen isn’t just relying on new industry. It’s regenerating its older industries too. Bremerhaven, 65km downstream, is one of the world’s biggest seaports. Containerisation means these docks only employ a fraction of their former workforce, but with western European container traffic set to double in the next seven years, Bremen’s government plans to spend €800 million during the next 10 years developing this harbour – the largest port construction project in Europe.

With specialist shipbuilders such as Lürssen taking shipbuilding into the 21st century, Bremen is striving to combine Hanseatic know-how with new ideas, and the place where a lot of these new ideas begin is its university. Within a generation, Bremen has become a fertile seedbed for fresh scientific thinking. “It doesn’t mean that you have a direct payback,” says Gerold Wefer, 63, professor of geology at Bremen University and the brains behind Marum, its pioneering ocean research programme. “It’s more the development of science and education that’s important, and this is our future – that we’re always a bit ahead of, let’s say, China or India, if we want to sell our products on the world market and keep our living standard.”

The best illustration of this is the Universum Science Centre, just down the road from Marum. Built by local architect Thomas Klumpp, it’s Bremen’s new science centre. “The concept is that you become a researcher,” says Dr Tobias Wolff, the museum’s manager, as he shows me around this hands-on exhibition. “You always have a feeling that you can do something with science here.”

Inside, Bremen’s next generation of scientists are conducting experiments, testing the limits of earth, sea and space. They take no notice as we walk past. Some of them are five years old.

Get around

Bremen is only 95km from Hamburg and 122km from Hanover (both less than an hour away by train) but its ease of access to foreign cities is what makes it so attractive as an international business centre. With more foreign flights now landing here, that access is becoming even easier. From April, Ryanair starts flying to London Stansted, Oslo, Barcelona, Murcia, Pisa, Verona, Riga, Malaga, Venice, Dublin and Tampere. You can fly to London (Luton) with EasyJet, and there are regular flights to two of Europe’s biggest hubs, Frankfurt (328km) and Amsterdam (276km), with onward connections worldwide. The flat terrain is perfect for cycling and the local tram service is superb.

Movers and shakers

Not every innovator in Bremen is making satellites or software. Thomas Hundt, 46, is the master brewer at Schüttinger, a micro brewery in a bierkeller behind Bremen’s main square. It looks ancient, but it’s actually only been here since 1990. “Compared to Beck’s, we’re just a drop,” he says over a clean, crisp beer in this back alley bar. But unlike Bremen’s most famous brewery, his beer is brewed in the place where people drink it, and every batch is a bit different, unlike mass-produced beer. “It’s fresh,” he says, as he pours me a glass. “No chemicals. Just water, malt, hops and yeast.” It helps that local business rates are so low – €12,000 a month for this bar, and the restaurant next door. “It’s very cheap,” he says. In Hamburg it would be double.

“People in Bremen want quality beers,” says Hundt, but his customers aren’t only locals. When Chelsea came here to play Werder Bremen, this bar was full of British football fans. “You’re not earning as much money as in a big brewery, and if it doesn’t work, you lose your job,” he says, “but I’m happy because I’m my own boss.” Like all the best bosses, he makes it all sound so simple. “Some things are simple,” he says.

Home time

Real estate in Bremen can be half the price of nearby Hamburg. Houses start at around €150,000 for 100 sq m, big enough for a family of four. “Most of my employees live in their own houses,” says Carsten Meyer-Heder of Neusta. “That’s not possible in Hamburg, because it’s too expensive.” Renting is cheaper, too. You can rent a 60 sq m apartment (a decent size for a couple) from about €500 a month, or a family-sized apartment for about €800. “We have 90 sq m and pay €660,’ says Hund. “In Hamburg, you’d pay double.”

Live the life

Despite its industrial heritage, Bremen is a surprisingly green city. The riverbank is tranquil, and the wooded Burgerpark is reminiscent of Central Park. The most fashionable place to eat is Hudson Loftrestaurant & Club, a converted warehouse in Überseestadt. Another warehouse houses the local art college, and an atmospheric harbour museum.

As befits a proper capital, Bremen has a splendid art gallery. The Kunsthalle holds a fine collection of old masters, plus some stunning paintings by German Expressionists such as Max Beckmann and Ludwig Kirchner. It’s a historic city, too, though thankfully the Old Town is still a place where people live and work, rather than a Brothers Grimm theme park.

The medieval Altstadt took a battering in the Second World War, but a lot of antique architecture has survived, including the flamboyant town hall – a Unesco World Heritage Site and a reminder of Bremen’s entrepreneurial flair.

A favourite local landmark is the Weserstadion, home to Werder Bremen football club. Despite tight resources, they’re one of Germany’s top teams and a fitting symbol for a city that has always punched above its weight. Werder’s role in promoting Bremen’s profile has been estimated as the equivalent of €60m in advertising a year.

For visitors, the smartest place to stay is the palatial Park Hotel in Burgerpark, but hip young professionals flock to the Überfluss, Bremen’s first boutique hotel. With chairs by Charles Eames and lighting by Tom Dixon, it’s smart yet understated, and only a few minutes walk from the heart of town. Doubles are a steal at €184 a night. For longer stays, the Aparthaus next door has suave, spacious studio apartments from €87 per night. Eating out is also good value. You can have a three course-meal (with wine) for €30.

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