KTM, the Austrian motorcycle manufacturer, is facing insolvency and will apply for restructuring in accordance with the Austrian Insolvency Act.
The company announced on November 26 that it would file the necessary papers to the commercial court in Linz (Upper Austria) by November 29.
KTM is Europe’s biggest producer of motorbikes, ahead of BMW. The company is suffering as Europe’s deep economic crisis has eradicated demand for its products while personnel and energy costs are rising.
According to Austrian news outlet DerStandard, KTM needs short-term financing of several hundred million euros to stave off collapse. With no such funds forthcoming, the court procedure became a necessity. KTM now has 90 days to agree on a restructuring plan with its creditors.
The firm also announced it would stop production in January 2025 to reduce inventories until March 2025 when output would resume albeit at a lower rate.
“We have grown to become Europe’s largest motorcycle manufacturer. Now we are taking a pit stop for the future,” Stefan Pierer, CEO and majority owner of KTM, said on the company’s website on November 26.
The announcement was bad news for KTM’s 6,000 employees, of whom 5,000 work in Austria, primarily at the main plant in Mattighofen, 40km north of Salzburg.
The company said it would pay December salaries but not the Christmas bonus, an additional monthly salary all Austrian employees receive from their employers. More than 700 KTM staff are set to lose their jobs, even if bankruptcy can be avoided, news outlet ORF.at said on November 15.
KTM’s history goes back 90 years to 1934 when Hans Trunkenpolz started a car repair shop in Mattighofen called “Kraftfahrzeuge Trunkenpolz Mattighofen” (KTM). The motorbike division was taken over by Stefan Pierer in 1991. In 2023, KTM sold 280,000 motorcycles worldwide.
In addition to the lay-offs at the company there are other signs that Austria’s manufacturing sector is in trouble.
On November 27, German car parts manufacturer Schaeffler announced it would close its plant in Berndorf (Lower Austria) with 450 employees to be axed. On November 21, the Liebherr Group announced it had to reduce working hours at its wheel bearings plant in Bischofshofen (Salzburg).
Austria is dead last out of the 27 European Union member states in terms of economic growth. Between 2019 and 2024 real gross domestic product per capita shrunk by 1.7 per cent while in countries such as Ireland, Greece and Hungary saw double-digit growth.
