Austria probably still has to prepare for some bankruptcies, including major ones. This is not only affecting the economy in the Alpine Republic, but a fundamental transformation is now taking place across Europe.
“We are only at the beginning of the development,” said Gerhard Weinhofer, head of the creditor protection association Creditreform, about KTM’s bankruptcy, which is expected to be announced on Friday. When it comes to bankruptcies, the Signa bankruptcy “obscured a lot”, ie it obscured the view of the many medium-sized bankruptcies. There have already been around 5,000 company bankruptcies, almost a quarter more than in 2023.
“Austria is heading for a new record year for corporate bankruptcies. The reason is a toxic mix of declining exports, collapsing domestic consumption and high costs. High labor costs per unit of product, high material and energy costs in combination with excessive regulations are making it difficult for more and more companies to be successful in Austria,” says Weinhofer with concern.
Economics is “always psychology”
Especially in Upper Austria, other companies are likely to be affected by the KTM problems, Weinhofer said in an interview with the APA. “I believe KTM will bring one or two suppliers along.” Because even if this bankruptcy were to happen quickly, in early 2025, the company would still have two years to pay. The suppliers would have to be patient before they get their money. Moreover, “economics is always psychology” – so if a leading company like KTM in the Innviertel goes bankrupt, it could have enormous consequences.
Austria “shot itself in the foot”
Statistically, Upper Austria is still doing relatively well after nine months, Weinhofer said, referring to the final figures for the period. But Austria has “unfortunately shot itself in the foot with its energy and wage policy,” points out the insolvency expert, referring to the relatively high KV contracts. “I believe that the Austrians need to wake up to the KTM at the latest – we are no longer on the island of the blessed where the state can fix everything.” An active location policy is now needed, which is also a mandate for the coalition negotiators. Austria is losing a lot of time due to the drawn-out coalition negotiations.
The former location advantage with well-educated workers is increasingly disappearing. “Digitalization now makes it possible to produce decent quality at lower costs in India and China.” Making matters worse in Austria, unit labor costs have risen well above average recently. The industry is highly dependent on the German car industry, which is in “real crisis”. “Austria is riding the wave of the German economy – for better or for worse,” Weinhofer said.
With 9.5 bankruptcies per 1,000 companies, Upper Austria is still doing relatively well compared to Austria after the first nine months of the year, and the increase compared to the same period last year was only slightly above the Austrian figure of 26.8 percent. average. The highest number of bankruptcies took place in Vienna, with 22 per 1,000 companies, and the highest increase took place in Burgenland with 60 percent, according to figures from Creditreform.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
