What happens next for the 3,670 employees affected by the impending insolvency of the motorcycle manufacturer KTM and two subsidiaries? They are worried about their jobs, and from Monday there will be company meetings with experts from the Chamber of Labor.
KTM no longer pays the salaries and wages for November as well as the Christmas bonus. Until the restructuring process is opened, it is not legally possible for KTM to pay this out, says spokesman Hans Lang. There is no comment on whether this will benefit the ailing company.
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Business KTM: From bankruptcy in 1991 to bankruptcy in 2024
The insolvency remuneration fund will step in and the employees will get the money from there. According to the Chamber of Labor, the processing will take at least a month. So the Christmas bonus comes after Christmas.
Criticism of the union
Wolfgang Gerstmayr, managing director of the GPA union, emphasized on Wednesday that the fund is financed from additional wage costs and criticized: “KTM boss Stefan Pierer, of all people, has repeatedly raised the mood against additional wage costs in the past. Now the public sector should step in for his company , although serious management errors are most likely responsible for this situation.”
Things are different when it comes to December wages and salaries. KTM will pay this again – not at the end of December, but next week, i.e. in the first week of December. The aim is to “soften hardship cases,” says Lang.
From January onwards, wages and salaries should be paid as normal or to the extent of the 30 hours to which working hours are reduced (internal short-time work). As reported, up to 300 additional jobs are to be cut. What other measures are to be taken will ultimately be included in the restructuring plan, which KTM must agree on with the creditors within 90 days.
Critical voices accuse KTM of having paid out a dividend in April. It was 50 cents per share. The year before it was two euros. The payout ratio fell from around 40 to 21 percent. Lang defends the dividend: “It was paid out for the past financial year and was significantly reduced despite the record year of 2023 because it was foreseeable that 2024 would be more demanding.” However, the slump in sales of this magnitude was not to be expected.
When asked how much of the bankruptcy was due to adverse circumstances and how much was due to management errors, Lang said: “A lot has been done right in recent years, but not everything.” He points to external factors: personnel costs have increased by 125 million euros within three years. “And this for a company that has a 96 percent export quota.”
**Host:**
Welcome back to the show. Today we’re diving into the recent news about motorcycle manufacturer KTM and their
impending insolvency. Joining us to shed some light on the situation is [Guest Name], a business expert with years of experience following the automotive industry. Welcome to the show.
**Guest:**
Thanks for having me! It’s a complex situation, and I’m happy to share what I know.
**Host:**
Let’s start with the basics. What led to KTM filing for self-administered insolvency?
**Guest:**
KTM spokesperson Hans Lang cites a very challenging business environment and a decline in sales [1]. While the details are still emerging, it seems that a combination of factors, including rising personnel costs and
possibly strategic missteps, have contributed to the company’s current financial distress.
**Host:**
This news will undoubtedly impact the 3,670 employees at KTM and its subsidiaries. Can you talk about what this means for them?
**Guest:**
It’s certainly a worrying time for KTM’s workforce. As of now, November salaries and the Christmas bonus haven’t been paid. There will be company meetings with the Chamber of Labor to provide information and support. [1]
**Host:**
What happens next for these employees?
**Guest:**
The insolvency remuneration fund will step in to ensure the employees receive their due wages. However, there will be a slight delay,
as the processing typically takes at least a month. KTM, though, will pay December salaries in early December. [1]
**Host:**
There’s also been talk of potential job cuts. What can you tell me about that?
**Guest:**
Unfortunately, it seems likely that job losses are on the horizon. Reports suggest that up to 300 positions could be affected.
The exact number will depend on the restructuring plan KTM develops in concert with its creditors.
**Host:**
We’ve heard criticism from unions about KTM’s decision to pay dividends earlier this year, especially given the company’s current situation. What’s your take on that?
**Guest:**
This is a common dilemma faced by companies in distress. While the dividend payouts were smaller this year compared to the previous year, they are still seen by some as insensitive given the looming insolvency and the potential impact on employees.
[1] KTM’s spokesperson defends the dividend by explaining that it was based on the previous year’s performance and wasn’t
predictive of the current downturn in sales.
**Host:**
Hard to say, but thank you for explaining the complex issues surrounding this situation. We wish the best for KTM employees during this difficult period.
**Guest:**
Thank you for having me. I hope things work out for the best for everyone involved.
