Birthplace of the Nutcracker Seeks New Recruits

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"They were adorned with candles to symbolize the miners' hunger for light in the winter season when they saw little daylight," said Auerbach. "The products were always made to suit the prevailing styles of the time and customers' wishes. Without such change, the industry would have died," said Auerbach.

Wooden Parts for V2 Rocket

That may account for the sector's resilience. It survived the two world wars and was conscripted into war production under the Nazis, when its workshops had to make stools for bunkers, handles for hand grenades, ammunition boxes and even, surprisingly, parts for the V2 rocket.

Then came communism, when state authorities nationalized many businesses and exported virtually all the industry's output to the West to obtain hard currency. The deprived East Germans came from far and wide and spent hours queuing outside Seiffen's only two craft shops to get the meager supply allocated to them, locals recall. Today, the streets are lined with nutcracker shops, ready to be inundated by thousands of tourists in the weeks leading up to Christmas.

After reunification in 1990, craftsmen were suddenly forced to go back out into the big wide world to find their customers.

Ringo Müller, 42, remembers travelling up and down Germany in the 1990s to make contact with retailers. The owner of one of the oldest family-owned woodcraft firms in Seiffen, Müller Kleinkunst aus dem Erzgebirge, has established a reputation for innovation ever since he invented the first electrically illuminated wooden arch as part of his master craftsman's diploma in 1996.

"The market is completely satiated," says Müller, whose great-grandfather set up the business in 1899. "The challenge for businesses in our industry is to make products that hit a market niche and suit customers' tastes, and that have something innovative about them to attract younger buyers."

Müller enlisted the help of the Technical University in Chemnitz to develop a music box that has traditional figurines on top, but high-tech electronics inside.

It can play a limitless array of songs and fairytales and be used year-round, for example, as an alarm clock. One model features Dresden's famous Frauenkirche, or Church of Our Lady, destroyed in the bombing of the city and rebuilt after unification. It plays a recording of the church bells and organ and can be programmed to chime on the hour.

"Some people who saw it in our shop were so moved by it that they had tears in their eyes," said Müller.

Kitsch and Modern Designs

Erzgebirge firms are resorting to various ways to find new markets. Some are trying to diversify away from Christmas and make products with year-round appeal. Others have gone for the tacky option, trying to crack overseas markets with Harry Potter figures and nutcrackers in the shape of Uncle Sam, cowboys and Indians. One firm even came up with a "Patriot Santa" after the 9/11 attacks.

Other firms again are opting for simpler, less fussy designs and modern themes, such as Smoking Men holding cellphones, to appeal to younger buyers.

"We've learned in the last 50 years that you've got to move with the times without giving up your values," says Uhlmann. "I'm basically upbeat about our outlook. We've got centuries of experience, and customers will continue to like what we make."

Ringo Müller says firms could improve their earnings if they cooperated more. "There's so much potential for cooperation that we don't tap into in Seiffen," he said. "For example, every firm would be better off if we got together to purchase wood. We'd have more clout in negotiations."

Müller said he would be overjoyed if his daughter, now 10, were to follow in his footsteps one day. "I'd never force her to, though," he adds. "If the young generation says it wants to lead a different life, one has to accept it."

In the meantime, it's up to the aging artisans of Seiffen to keep on chiseling, hammering and painting.

Hermann Nestler, after all, has plenty of wood left. Does he really intend to hang up his tools for good next year? "He'll never stop, he always says he will, but he never does," says Karin, his wife.

At which he smiles.

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