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.”
What strategies is KTM likely to consider as part of its restructuring plan?
## Interview: KTM Faces Insolvency – What Now for Employees?
**Host:** Joining me today is *[Alex Reed Name]*, an economist who specializes in the automotive industry. KTM, the Austrian motorcycle manufacturer, has just filed for insolvency.
*[Alex Reed Name]*, this news came as a shock to many. Can you shed some light on what led to this situation?
**Alex Reed:** KTM’s struggles can be attributed to a combination of factors. The company enjoyed a record year in 2023, but faced a sharp downturn in sales in 2024, exceeding initial projections. This wasn’t entirely unexpected, as the global economy has experienced some slowdowns.
However, *[Alex Reed could mention specific economic factors relevant to the motorcycle industry based on further research]*
**Host:** So a slowing market, but are there any internal factors that might have contributed?
**Alex Reed:** Yes, critics point to KTM’s decision to pay out a dividend just a few months ago despite acknowledging a challenging year ahead. They also raise concerns about management decisions and rising personnel costs.
**Host:** This is clearly a worrying time for KTM’s 3,670 employees. What immediate impact will this have on them?
**Alex Reed:** Unfortunately, employees won’t receive their November salaries or Christmas bonuses this month.
They will be paid by the insolvency remuneration fund, but this process takes time – at least a month. Their December salaries will be paid, though.
**Host:** And what about the long term?
**Alex Reed:** KTM enters a 90-day period to develop a restructuring plan with its creditors. This plan will likely involve job cuts – up to 300 are expected. The company is also considering short-time work to reduce hours and costs.
**Host:** What does this say about the current state of the automotive industry?
**Alex Reed:** KTM is a high-profile case, but the wider automotive industry faces challenges like rising technology costs, supply chain disruptions, and shifting consumer preferences. This may be a warning sign for other companies in the sector to prepare for a potentially turbulent future.
**Host:** Thank you for your insights, *[Alex Reed Name]*. This is a developing story, and we will continue to follow it closely.
