Famous German seat maker Recaro Automotive has just declared bankruptcy in its hometown of Kirchheim unter Teck.

The district court in nearby Esslingen has ordered preliminary self-administration and appointed Stuttgart-based attorney Holger Blümle as the provisional administrator to assess Recaro Automotive GmbH’s financial situation and oversee its management.

German law allows for special proceedings in the form of self-administration, where the debtor manages the business under the supervision of a trustee.

Powerful German union IG Metall was taken by surprise and seemingly didn’t know about the insolvency beforehand.

“The workforce and we were not informed about this step and learned about it through the Internet,” said Alessandro Lieb, head of IG Metall in Esslingen, to German newspaper SZ. “What this means for the 215 employees in Kirchheim unter Teck is unclear.”

For years, employees have made concessions to keep the company economically stable, forgoing special payments and enduring delays in wage increases, Lieb explained.

“Our colleagues have made significant sacrifices to support the company,” stated works council chairman Frank Bokowits to SZ.

The workforce was deeply troubled by the news of the insolvency, and many employees who might lose their jobs will face difficulties finding new employment.

“We are disappointed and feel let down by the management,” said Bokowits.

He accused management of making numerous poor decisions and failing, leaving uncertainty about whether employees would receive their outstanding wages.

IG Metall demands transparent communication with the management and the appointed administrator.

“We expect all possibilities to be exhausted to secure as many jobs as possible and find a sustainable solution,” said Lieb. A meeting with employee representatives is planned in the coming days to discuss the next steps.

Recaro Automotive is one of the world’s leading manufacturers of car seats, and produces chairs for everyone (Aston Martin, BMW, Ford, Lamborghini, Mercedes-Benz and Volkswagen). The company also manufactures seats for player benches in football stadiums.

Since 2020, the company has been owned by the American investment firm Raven Acquisition LLC.

The Recaro brand still belongs to the Stuttgart-based Recaro Group, which only licenses the brand and no longer has a stake in the now-insolvent company.

The Recaro Group includes Recaro Aircraft Seating in Schwäbisch Hall, Recaro Gaming in Stuttgart, and Recaro Rail in Grodzisk Wielkopolski, Poland. These entities are not affected by the insolvency.

Recaro Automotive, however, is only the latest name in a growing list of German companies to run into difficulties. Parts maker ZF recently announced job cuts of around 11,000 to 14,000 in Germany alone; auto supplier Continental is due to cut 7,150 jobs worldwide by 2025; and the automotive components section of multinational giant Bosch also seems to be struggling.

At least, the latter has avoided job losses for now, but even giants like VW are increasingly looking elsewhere. Volkswagen is restructuring its plants and is planning to set up more production sites in Eastern Europe.

The reasons for Germany’s increasing industrial struggles appear to be twofold. On the one hand, the shift to electric cars has simplified things, and where fewer parts are needed, fewer humans are required to make them.

On the other hand, the German government’s disastrous energy and economic policies have led to a cost explosion for the manufacturing sector, with no relief in sight. Europe’s former powerhouse is in trouble, and Recaro is just the latest symptom of its problems.