Loewe ‘Business As Normal’ As Plant Closed & 400+ Staff Sacked
Retailers of Loewe TV’s in the UK are being told it’s business as “normal” despite a German Court last night ordering the shutdown of Loewe’s TV plant in Europe.
The district court of Coburg in central Germany initiated insolvency procedures against the iconic German television manufacturer Loewe despite several European retailers still being supplied with stock.
In Australia Loewe TV distributor Indi Imports are claiming that they are still waiting on directions from the European operation.
ChannelNews understands that the Melbourne based Company has four containers of the European TV’s about to arrive.
The unlock key to Loewe’s future is UK based investment Company Riverrock who ChannelNews understands owns the Loewe name and IP for all of the Companies former developments as well as a new range of networked audio products which were set to be shown to UK dealers this week.
According to Loewe’s insolvency administrator Ruediger Weiss, only a core team of 10 to 15 employees are left in the current Company structure.
According to sources a new look Loewe operation complete with a new range of state-of-the-art European TV’s and top end audio range that will take on the likes of Bose, Sonos, Bowers and Wilkins and Harman Karden could be launched at IFA in Berlin in 2019.
According to Weiss “Loewe has been running a loss-making business for years,” with insiders claiming that the problem was German Unions and the high cost of employing German labour. The Unions were demanding shorter working weeks of only 32 hours and a guaranteed 5% increase each year on top of salaries that were already seen as being among the highest in Europe for a consumer electronics Company.
Weiss said, “everyone in the company agrees that the compensation structure is not appropriate.”
In order to cover Loewe’s former staff costs, the annual sales of the company would have to reach $243M. To become profitable, the German television manufacturer would need to generate sales of $298 million Vs the $194 million currently being generated.
By cutting out the high German labour costs moving the manufacturing to a robotic manufacturing plant in the Czech Republic Riverrock a major investor in Loewe and who have a reputation for restructuring struggling Companies believe they can turn Loewe around to be a major TV manufacturer in Europe and above all profitable a sourse said.
A former employee said “G Metall the feared German Union have had fierce clashes with Loewe management and when investors felt that there was no upside to their discussions the investors came to the conclusion that they would not put any more money into the Company resulting in the administrators being called in”.
Union official Johann Horn accuses the British investment company Riverrock who own the Loewe brand name of being behind the demise of Loewe.
kitchen manufacturer, Alno kitchens who Riverrock had a major investment, was placed into administration at the end of 2017 and after being temporarily shut down it was relaunched with a major reduction in employees and is today trading successfully.
Loewe Chief Executive Officer (CEO) Ralf Vogt said that the first quarter of 2019 had been tough and that sales targets were not met prior to the administrators being called in.
“As in the industry as a whole, our business is also being severely impacted by the continuing weakness of the television market,” he said.
Sources claim that a deal with the Unions could be worked out by mid-July and if this fails due to European holidays it will be October before negotiations can commence.
IG Metall has accused Riverrock of deliberately refusing to extend new loans to Loewe resulting in the collapse of the business and that they already have a plan in place to resurrect the Company.