Tough Choices at KTM, As Temporary Production Halt Planned

To say that things haven't been looking great over at KTM for a minute is a bit of an understatement.

Earlier this week, parent company Pierer Mobility released a short notice about restructuring on its investor relations website that spelled out the need to find a "three-digit million" amount of bridge financing (presumably in Euros, though no currency was specified). Since it mentioned ongoing discussions with major shareholder Pierer Bajaj AG, it's reasonable to think that talks of upping its stake in the company, or even buying it out entirely, could be on the table.

But the Pierer Mobility adhoc announcement of November 12, 2024 also stated, "Against the backdrop of a challenging economic environment, an even more far-reaching operational restructuring is being driven forward with the aim of reducing inventories at both KTM AG and the dealer level to an economically sustainable level by significantly reducing production volumes. Furthermore, overheads are also to be significantly reduced once again." The emphasis here is mine, but words are all Pierer's.

Just two days later, Austrian business publication Oberösterreichische Nachrichten spoke to Stefan Pierer himself, and learned more about what steps the company is taking to "significantly reduc[e] production volumes."

Very specifically, it seems that the company will halt production at the Mattighofen factory for two months, running from January to February of 2025.

This will affect approximately 1,000 employees, in addition to the 300 or so who will be laid off entirely as the company switches from having two shifts on the factory floor to one. While additional layoffs were already discussed as early as August 2024, this is the first time the plans for a temporary production halt have been made public.

Now, if you're like me, you probably immediately wondered how those 1,000 employees who will suddenly be sent home for all of January and February feel about not getting paid for two months. Supposedly, the plan is to continue paying those employees for a 30 hour workweek, which represents a reduction in pay rather than no pay at all. 

Presumably, since no group is a monolith, some might welcome extra time to spend doing things outside of work. But while some pay is better than no pay at all, the overall feeling of uncertainty and shifting sand as related to your employer isn't exactly confidence-inspiring.

As anyone who's ever budgeted anything can tell you, expecting one amount but suddenly experiencing a sharp decrease will throw all your careful planning out the window. Maybe you have money saved, but also, maybe you don't.

Sudden family emergencies can happen at any time, to anyone. And the added stress of not knowing how much you're going to be paid for what's supposed to be your full-time job only compounds the stress, no matter whether you're paid in dollars, pounds, or Euros.

Pierer says these moves are intended to right-size the amount of product the company has on hand, and that they're only part of its "far-reaching restructuring plans" intended to right the good ship Pierer Mobility and turn its fortunes around. But beyond that, it's important not to lose sight of the fact that once again, this upheaval will affect the lives of a whole lot of the company's employees.

What other twists and turns does the company have up its sleeve to get itself back on the right track? Stay tuned for future developments as they arise.