Covid-19 KSM Castings Group: Protective Shielding Process in Germany
The German automotive market is particularly affected by the effects of the corona pandemic, with sharp declines in demand and production. KSM Castings Group GmbH intends to take account of these market changes and restructure itself as part of a protective shielding process.
"We have recently been on a clear growth path in Germany. Then Corona arrived. We will have to adjust to a changed market after Corona," says Dr. Zhihua Zhu, CEO of KSM Castings Group. "That's why we will now position our company with the possibilities offered by the protective shielding process in such a way that we will again be sustainably competitive even under the new market conditions. Our shareholder supports the restructuring course we have taken and has promised his support.”
The protective shielding process does not affect the automotive supplier’s operating business. The production and delivery of components to automobile manufacturers and OEM partners continue without restrictions.
German Automotive Market Slumps
According to the German Association of the Automotive Industry (VDA), passenger car production in Germany fell by 44 % in the first five months of 2020 compared to the same period last year. According to the Association, a recovery is not yet in sight. This market slump also has a direct impact on automotive suppliers based in Germany, such as KSM Castings, which can only be partially offset by measures such as short-time working.
Only protective shield in Germany
KSM Castings Group GmbH has around 2,350 employees in Germany and the Czech Republic and generated sales of 360 million euros in 2019. Only for the German production sites of KSM Castings Group GmbH, the protective shielding process was applied for. The "Schutzschirmverfahren" is a special form of insolvency in self-administration, in which the existing management develops a reorganization or restructuring plan. It is only applied if the company has a fundamental prospect of successful restructuring and is not insolvent.
The management under the leadership of CEO Dr. Zhihua Zhu will develop a concrete restructuring plan together with the restructuring and insolvency experts in the next few weeks. The extent to which the personnel capacities of the production sites in Germany will also have to be adjusted has not yet been determined at this time.