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, 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 employee salaries and job security in the short term?
**Interviewer:**
We are here today to discuss the unfolding news surrounding the motorcycle manufacturer KTM, which has filed for insolvency. Let me turn to our Alex Reed today, Hans Lang, spokesperson for KTM. Hans, thank you for being with us.
First, many people are concerned about KTM’s 3,670 employees. What does this insolvency mean for them, specifically regarding their jobs and salaries for November?
**Hans Lang:**
Thank you for having me, it’s a difficult situation indeed. The insolvency does mean there will be some challenges for our employees. Unfortunately, we are unable to pay November’s salaries and the Christmas bonus immediately due to legal restrictions regarding the restructuring process.
**Interviewer:**
So, will employees receive these payments eventually, and when can they expect that?
**Hans Lang:**
Yes, the insolvency remuneration fund will ensure that employees receive those outstanding payments. It might take about a month for the processing by the Chamber of Labor, so the Christmas bonus will be delayed.
**Interviewer:**
There have also been reports from the GPA union, criticizing the company, especially given a dividend payout earlier this year. Could you address those concerns?
**Hans Lang:**
The dividend payout in April was for the past financial year, significantly reduced from the previous year because we could foresee 2024 being a more challenging year. While we were expecting some decline, the magnitude of the sales slump was not anticipated.
**Interviewer:**
What about the future for KTM? What kind of restructuring plan are you looking at, and what does it mean for jobs?
**Hans Lang:**
We are working closely with creditors to develop a restructuring plan within the next 90 days. This plan will inevitably involve difficult decisions, possibly including a reduction of up to 300 jobs.
**Interviewer:**
how much of this situation do you attribute to external factors versus internal management decisions?
**Hans Lang:**
While we have made progress in recent years, it’s not been without challenges. External factors such as sharp increases in personnel costs have significantly impacted us. These costs have risen by 125 million euros over the past three years alone.
**Interviewer:**
Thank you, Hans Lang, for shedding some light on this complex situation. It remains a challenging time for KTM and its employees. We will continue to follow developments closely.
