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.”
How many jobs does KTM anticipate cutting as part of its restructuring plan?
## Interview with Stefan Lang, KTM Spokesperson
**Host:** Welcome to the show, Mr. Lang. KTM is facing challenging times with an impending insolvency. What can you tell us about the situation affecting the 3,670 employees?
**Lang:** The situation is undoubtedly difficult, and our employees are understandably worried. We haven’t been able to pay November salaries and the Christmas bonus due to legal restrictions related to the restructuring process which hasn’t officially begun yet.
**Host:** How is KTM addressing these immediate concerns about employee wages?
**Lang:** We are relying on the insolvency fund, which will provide financial support to the employees. The processing may take a month, delaying the Christmas bonus until after the holidays. However, we will bring forward December salaries to next week to alleviate some hardship.
**Host:** What’s the longer-term outlook for the employees?
**Lang:** We are aiming to resume regular salary payments from January onwards, though potentially reduced to 30 hours a week due to planned internal short-time work. Unfortunately, we anticipate cutting up to 300 jobs as part of the restructuring plan, which we are developing with our creditors. This plan needs to be finalized within 90 days.
**Host:** There’s mounting criticism regarding KTM’s decision to pay dividends earlier this year while facing financial difficulties.
**Host(cont.):** Critics argue that the dividend payout contradicts the company’s financial health. What’s your response?
**Lang:** The dividend was for the previous financial year, a record year for us, and it was significantly reduced. This decision was made because we foresaw a more challenging 2024, though we couldn’t predict the extent of the slump in sales.
**Host:** Ultimately, what factors contributed to KTM’s current situation: macroeconomic challenges or internal decisions?
**Lang:** We’ve made significant strides in recent years, but it’s clear that not everything went according to plan. While external factors like rising personnel costs played a role, we also recognize there are areas where we could have done better.
**Host:** Thank you for your time today, Mr. Lang. We wish you and KTM the best as you navigate this complex situation.