As of: 09/30/2021 8:09 am
Many people have lost their belongings in the flood areas. Now some have to fear for their jobs. Because not all companies will survive the consequences of the flood – despite government aid.
The grief was palpable on every corner of the company when managing director Theodor Scherer had to deliver the bad news. The traditional company Auto Heinen in Bad Münstereifel has to close its doors. 280 employees will lose their jobs as a result. “That was a very sad event with tears and what goes with it,” says Scherer. “There are people there who have lost their house, they have lost their car, now they have lost their job, they are just doing badly. I am very affected.”
Corona and flood were too much of a burden
First came Corona, then the flood. Now it seems that the auto parts supplier cannot be saved. Die-cast aluminum parts were produced in the plant, for example for vehicle transmissions. As a result of the corona pandemic, sales fell by 30 percent in July. Because many automobile manufacturers had not ordered due to the lack of chips. Then the tide came. The entire production hall was full of water and mud. We haven’t worked here for eight weeks – and now probably never again.
“If it had only been water, we might have been able to save a few more machines,” says commercial manager Harald Brand. But there was very fine dirt in the water, “it’s like sandpaper, it breaks the machines”. The damage amounts to around 50 million euros. The company must therefore invest heavily in order to be able to start again. According to Brand, that is not possible in such a difficult market environment.
Federal government wants to prevent bankruptcies
The federal government has made decisions to prevent a wave of bankruptcies in the flood regions. As an immediate measure, she had set up bankruptcy protection. Companies that have the prospect of a reorganization are exempt from filing for bankruptcy until the end of January 2022 if the reason for insolvency is over-indebtedness or insolvency. This suspension of the obligation to file for insolvency could be extended again by the Federal Ministry of Justice until April by means of an ordinance.
“So far we have not seen a significant increase in corporate insolvencies in the flood areas. This is not only due to the temporary suspension of the obligation to file for insolvency, but also to the financial aid promised,” said Christoph Niering, chairman of the professional association of insolvency administrators and administrators in Germany.
Companies are hesitant to get financial aid
Nonetheless, companies are growing impatient as the financial aid promised is only being made available hesitantly, said Niering. Applications have only been possible since September 17th. There is still a long way to go before the funds are disbursed and ultimately the company is rebuilt and reopened. “It is not yet foreseeable whether everyone will be able to overcome this long dry spell financially and in some cases also emotionally. Because lasting recovery also requires renewed encouragement from customers and guests in the tourism sector,” said Niering.
The Chamber of Commerce and Industry found that companies are very willing to overcome the crisis. “After the clean-up work, they plan the restart with the help. It is clear, however, that this path will be difficult. The sometimes massive destruction of the infrastructure makes it clear that the reconstruction will take a long time,” reports the chief executive of the NRW Chamber of Commerce, Ralf Mittelstädt .
In addition, the corona crisis consumed the reserves in many companies. “Older entrepreneurs in particular are now faced with the difficult decision of starting from scratch or stopping the business. In the regions, it is now necessary to organize rebuilding quickly and easily in order to secure the structure,” said Mittelstädt.
Politics has to weigh up
Klaus Wohlrabe, macroeconomist at the Ifo Institute, sees a difficult deliberation process for politics. “On the one hand, you want to help quickly and unbureaucratically. On the other hand, you naturally also want to check what the needs of the companies actually are and provide help accordingly,” he says. “It would be nonsense to help companies whose business model is probably no longer sustainable, not even after they have been set up. It is better to encourage start-ups,” said Wohlrabe. Liquidity and investment aid should be provided where there are good opportunities. Generous depreciation options should also be granted, according to the recommendation from the Ifo Institute.
At Auto Heinen in Bad Münstereifel, the management team is now busy placing the employees in other companies. “We tapped into our network in order to find companies with personnel requirements, and in some cases we were also approached,” says the commercial director of Brand. It is now important to help the employees in this difficult situation as well as possible.