It has neither train station nor cinema, but this Bavarian town has not been bypassed by globalisation. Ambition and leverage have brought it to its deepest crisis since World War II.

Herzogenaurach - called "Herzo" by many of its population of almost 23,000 - has a 120-year history in shoe-making. As home to sportswear makers Adidas and Puma, it came to terms decades ago with low-cost Asian rivals and shrinking payrolls.

Now its main remaining employer - bearing maker Schaeffler Group, which provides one in two of the town's jobs - is being blown apart by debt, brought on by an acquisitive move so badly timed it has sent town officials to Berlin for help.

The last time the town with its medieval city centre of timbered houses was in such dire straits was in 1929, the year the Great Depression began with the Wall Street crash. Its unemployment rate shot up to more than 80 percent.

"It wasn't through its own strength that the town got back on its feet," said Irene Lederer, who watches over the town's museum and archive.

In the 1930s Adolf Hitler's regime created jobs through public works such as building motorways across the country, which also boosted morale after the humiliation of defeat in World War I.

No-one is suggesting neo-Nazis will take over in the cobbled streets of Herzogenaurach, but people are worried about jobs.

German Hacker, the mayor, has never seen such a downswing. He has pencilled in a business tax shortfall of €3.7 million to his budget after record income of €37 million last year.

"Had you asked me half a year ago what would be a worst-case scenario, I would have said we can't go below 10 million. A worst-worst case scenario would have meant we go down to zero," he said.

"But negative 3.7 million? The computer software doesn't even take it."

Funerals will become more expensive, dog-licence fees have already gone up and the city's cleaning staff will be cut to fix the hole in the budget, said Mr Hacker, who used to do summer jobs at Mr Schaeffler when he was a student.

In February, 8,000 protesters staged the town's biggest ever protest march, calling on the government for help.

"This is about showing politicians in Berlin that we need them at the moment, so that everything will be alright again," said Anna Steurer, who has worked for Mr Schaeffler for 41 years.

The mess Berlin is being asked to help clear up originated last year in an audacious takeover bid by Mr Schaeffler for German automotive parts supplier Continental AG, which with annual sales of about €24 billion is almost three times bigger than the bearing maker.

The family-owned business wanted to regain its competitive edge by moving into vehicle electronics, as its bearings are no longer difficult for Asian companies to replicate at low cost.

But days before its cash offer expired, Continental issued a profit warning, knocking its stock; and investment bank Lehman Brothers went down, taking global financial markets with it.

The mess Berlin is being asked to help clear up originated last year in an audacious takeover bid by Schaeffler for German automotive parts supplier Continental AG, which with annual sales of about €24 billion is almost three times bigger than the bearing maker.

The family-owned business wanted to regain its competitive edge by moving into vehicle electronics, as its bearings are no longer difficult for Asian companies to replicate at low cost.

But days before its cash offer expired, Continental issued a profit warning, knocking its stock; and investment bank Lehman Brothers went down, taking global financial markets with it.

The company has already said it is prepared to give up a substantial stake to outside investors, but it may have to surrender majority control which could cost jobs.

That would see the company going the way of Adidas and Puma, which surrendered their independence to survive.

Adidas closed its production sites in Herzogenaurach in 1987. Puma followed in 1993 and by 1990, the founder families - who had wanted to keep jobs in Herzogenaurach - had withdrawn completely, handing over to foreign investors.

Puma is now owned by French retailer and Gucci owner PPR, and more than half Adidas shares are held by overseas investors.

When Puma and Adidas set up in the 1940s Herzogenaurach was home to all of their workers. Today they employ just under 10 per cent of each of their growing global workforces in the town.

The jobs lost from the sportswear firms were fewer than are affected today, said Dittmar Walz, 57, born in the town.

"It would be the downfall for Herzogenaurach, if Mr Schaeffler went bust. We can't survive only with Adidas and Puma," he said.

Mr Schaeffler employs about 11 per cent of its roughly 70,000 staff globally in Herzogenaurach and a loss of independence or a potential break-up could change this, fears the mayor.

"Stripping off assets would be a catastrophe... for the jobs here and a catastrophe for the German economy," said Mr Hacker. "This is less about my town, I almost have to speak for the whole of Germany here."

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