A car myth of trouble: Recaro in bankruptcy

The famous manufacturer of quality car seats Recaro from Kirchheim unter Teck has filed for insolvency at Esslingen Local Court due to financial difficulties. On Monday, the local court ordered provisional self-administration and appointed Stuttgart-based lawyer Holger Blümle as provisional administrator. Blümle is to examine the economic situation of Recaro Automotive GmbH and monitor the management. The international consulting firm Baker Tilly is providing legal support for the proceedings.

The company cites extreme price increases, market changes and the loss of a major order as the reasons for the insolvency. On the other hand, the insolvency substitute benefits guarantee the employees’ pay. The employees were comprehensively informed at a works meeting. Despite the proceedings, production will continue in order to fulfill orders and new inquiries. The shareholders support the restructuring, which only affects Recaro Automotive GmbH in Germany.
Recaro wants to be back on sound footing soon.

Recaro plans to emerge economically stronger from the insolvency proceedings. Cooperation with employees, suppliers and customers is to be intensified in order to get back on a sound financial footing soon. In fact by now the auto and auto parts industry is in crisis in Germany, unable to recover, partly because this nation is no longer globally competitive, with high energy and labor costs.

The IG Metall trade union expressed its surprise at the insolvency application. According to the union, the more than 200 employees had contributed to the economic stabilization of the company over the years by waiving and deferring wages. About 200 workers are at risk of losing their jobs in the first phase of insolvency

Frank Bokowits, head of the works council, also expressed his disappointment at the management’s actions. IG Metall is calling for a transparent dialog between the management, the administrator and the employees. Alessandro Lieb, head of IG Metall in Esslingen, emphasized the need to examine all options to secure jobs and find a sustainable solution. A meeting with representatives of the workforce is planned to discuss the next steps.