It is a cold, misty night and all is quiet in the village of Seiffen, tucked in a valley in the remote Ore Mountains, a former mining region in Saxony, southeastern Germany. The toymakers have put down their tools and are snoring in their beds. In dozens of workshops up and down the main street, neat ranks of nutcrackers, some finished, some still waiting to be painted or have their hats fitted, stand in the darkness.
If this were a Walt Disney film, they'd all come alive and start marching around now. It's not hard to imagine. After all, Seiffen has helped to cast a Christmas spell on homes around the world for the last 150 years.
The nutcracker was invented here around 1890. So was the "Räuchermann" or "Smoking Man," a wooden figure in various designs -- often a miner or a woodsman -- who billows incense through his mouth from a candle in his belly. The wooden rotating pyramid driven by the heat of candles also comes from here. So do intricately painted angels, snowmen and Santa Clauses. And the choirboys grouped around the distinctive round church modelled on the baroque one that stands on a little hill overlooking -- Seiffen.
This village, population 4,000, is the heart of the woodworking industry in the Ore Mountains, or Erzgebirge, which in Germany is synonymous with high quality Christmas woodcraft. Of the 2,000 artisans who make the famous figures in this region, around half live in and around Seiffen. It is a veritable cottage industry, ranging from backroom workshops to medium-sized companies employing over 100 people.
Craftsman Hermann Nestler, 74, works on his own and specializes in assembling decorative, wooden arches called "Schwibbögen" -- another typical ornament seen on window ledges around Germany at Christmas.
"I've fitted this light to illuminate the church clock," says Nestler, lifting a little replica of the Seiffen church fitted to the base of his arch and showing a tiny bulb attached to a stiff wire that reaches up to behind the semi-transparent clock face.
The craftsman looks a bit like a Räuchermann himself, with his beard and friendly, weather-beaten demeanor. He explains his products with quiet, contented pride.
"It's fun. I'm a pensioner and it gives me something to do," says Nestler in his showroom, surrounded by glass cases of illuminated arches that cost up to 290 ($377). But Nestler is starting to wind down his business. He produced 200 arches this year, a fraction of his peak output of 1,000 in 1998, and plans to make even fewer in 2013. "Next year, I'm just going to going to use up the materials I've got left," he says.
That's the main problem this industry faces. It has survived wars, economic crises and four decades of communist regulation. It's not even especially worried about cheap Chinese-made replicas flooding the world market -- the difference in quality is still glaringly obvious. But the aging artisans can't find enough young apprentices to replace them.
A Tough Nut to Crack
"The lack of new skilled workers to keep production going is our main problem in the medium- and long-term future," Dieter Uhlmann, director of the Association of Erzgebirge Artisans and Toymakers, told SPIEGEL ONLINE. "It's partly demographic. Many young people left this region after reunification. But we also have relatively low wages compared with other sectors because our profits tend to be low."
An Erzgebirge toymaker is in his mid-to-late fifties on average, said Uhlmann. "It's getting critical."
The average hourly wage is around 8.50, and some businesses pay as little as 4.50 so that they can undercut rivals on prices, said Uhlmann.
"You have to love this job to do it. We've been trying to attract apprentices by pointing out that the profession of wooden toymaker is a very attractive, very varied and offers an outlet for one's creativity. We've seen some improvement in numbers, but it's still not enough."
Profits in the sector are low because the work is labor-intensive and hence costly, and manufacturers have to keep the products affordable. They're 70 to 80 percent handmade, and a decent-sized Räuchermann will set you back 50 to 70. A nutcracker costs even more.
They are built to last. One doesn't really need a new nutcracker every year. If anything, the passage of time makes them more appealing. It adds to their aura of tradition.
Firms have to earn enough in the three months leading up to Christmas to keep them going through most of the next year. Some lay off workers in January and let them go on the dole, but that's risky because competitors may snap them up. "You can't get good replacements," said Uhlmann.
Seiffen has some 130 woodcraft firms. The whole sector generates annual revenue of 100 million, and around 20 percent of its output is exported. That figure understates the appeal of the "Made in Erzgebirge" brand to foreign buyers, however, because many tourists buy the products in shops around the country throughout the year.
How It All Began
One might think this industry, spread across wooded hills and valleys often cut off by snow in winter, was provincial and inward-looking. But the Erzgebirge craftsmen and women are canny. They were making toys for faraway markets two centuries ago.
They started making a living from carpentry when the mining sector went into decline here in the 17th century. At first, they made everyday objects like chairs and plates, before branching out to toys in the early 18th century. They began exporting toys to Britain and the US 100 years later, selling wooden animals and soldiers, toys one could roll along the floor and collectible items like miniature figurines in matchboxes.
"The modern idea of a family Christmas didn't become established until the first half of the 19th century, and Erzgebirge families developed their own forms of wooden decoration at that time," said Konrad Auerbach, director of the Seiffen Toy Museum. "At first, they were intended just to decorate their own homes. They only started selling these ornaments after 1900."
Many of the designs were based on the region's mining tradition. Nutcrackers, Räuchermänner and candleholders were often carved in traditional mining costume, and the wooden arches represented the entrances to mining tunnels.
"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.