The German niche automobile and car parts manufacturer, Karmann, has filed for bankruptcy protection. But, management insists that the company is still economically viable.
A classic 1971 Karmann Ghia convertible
Management for the convertible specialist filed papers for receivership on Wednesday at an Osnabrueck district court saying the company faced bankruptcy due to financial obligations related to an employee social plan worked out with the trade union.
Representatives for the metalworkers' union said Karmann was planning to cut 1,340 jobs because of a lack of clients amid the global slump in demand for cars.
The loss of business, the company said, was making it impossible to finance planned layoffs as part of a company restructuring to cope with the global economic downturn.
The union said the essential reason for the financial shortfall was the shutdown of the car assembly unit.
Karmann also used to do assembly work for Renault, Volkswagen and Mercedes, which have all been hit by the crisis, and will now focus on building car parts, the company said.
Karmann said the company was still economically viable and practically free of debt. Court receivership, a statement said, would allow the company to revamp its business model and save as many jobs as possible.