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.
More on the topic
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.”
How will KTM’s insolvency affect its employees, especially in terms of their salaries and job security?
## Interview with [Expert Name], Economist on KTM’s Insolvency
**Interviewer:** Thank you for joining us today to discuss the news regarding KTM’s impending insolvency. This news has certainly come as a shock to many, given KTM’s history and success in recent years. What are your thoughts on the situation?
**Expert:** It is indeed surprising brittle seeing an international brand like KTM enter insolvency procedures. While the official statement mentions “major challenges” requiring a “pit stop,” the reality is often more complex. A combination of factors likely contributed to this situation, including external pressures like rising inflation and supply chain disruptions, as well as potentially internal management decisions that ultimately may have proven unsustainable.
**Interviewer:** We’ve heard reports that some employees are worried about their jobs and are unsure about whether they will receive their November salaries and Christmas bonus. Can you shed any light on this situation?
**Expert:** It appears there’ll be a delay in these payments as KTM navigates through the legal process of restructuring. The novella insolvency remuneration fund will likely step in to cover these wages, but it could potentially be a month before employees receive them. This is understandably a stressful time for those impacted, particularly during the holiday season.
**Interviewer:** We’ve also seen criticism from the union, blaming management decisions, specifically highlighting the dividend paid out in April and questioning the logic behind that move considering the current financial state. What is your take on this?
**Expert:** The question of the dividend payout is a valid one. While the company argues it was from previous profits, it does raise concerns about the prioritization of shareholder returns over the long-term stability of the company. The timing does seem unfortunate, particularly if the company was facing financial challenges.
**Interviewer:** Looking ahead, what do you foresee for KTM and its 3,670 employees?
**Expert:** KTM faces a critical 90-day window to negotiate a restructuring plan with its creditors. The success of this plan will depend on several factors, including finding ways to cut costs, potentially through internal restructuring or job reductions, as well as securing investor confidence to refinance its operations. It will be a challenging period for KTM, and the ultimate outcome remains uncertain.
**Interviewer:** Thank you for sharing your insights with us today. We wish KTM and its employees all the best as they navigate through this difficult time.
**End interview.**
