Last Karmann leaves factory as firm folds

Sports car manufacturer Karmann has produced its last vehicle, which left its factory on Monday, amid a row between management and unions over the reasons for its insolvency.

Last Karmann leaves factory as firm folds
Photo: DPA

The specialist firm, most famous for its Karmann Ghias, has made more than 3.3 million convertibles for larger companies since 1949, but the recent collapse of the auto market sealed its fate.

It went bust last week and has had to switch its focus to car parts production in order to stay in business, although there is confidence that a restructuring can save it.

“We could no longer avoid shutting down the vehicle assembly line because auto manufacturers’ strategies have changed,” the company’s administrator Ottmar Hermann said.

More than 2,000 people work for the firm, based in Osnabrück, but relations between management and unions has been seriously damaged by recent events.

According to the Financial Times Deutschland on Monday, a row has broken out over why the company collapsed, with management naming the social provision for workers as the decisive factor.

A company spokesman told the FTD that 2,240 workers had been given their notices, and that the agreed social plan to help them was going to be cancelled, as there was no money to pay for it.

Hartmut Riemann, of the IG Metall union said: “It is outrageous that the insolvency should be blamed on the social plan costs, when they are not even paying severance pay.”

He said the company had not even ensured that full wages would be paid during the workers’ period of notice.

A company spokesman told the FTD that it had spent nearly a year trying to find a buyer for all or part of the firm.

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German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.


With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.