German car supplier is insolvent: all employees laid off

The crisis in the automobile and mechanical engineering industries proves fatal for the Erwin Lutz spring factory. The automotive supplier has to file for bankruptcy.

Eningen unter Achalm – The automotive industry is in a major crisis. VW is in crisis and other manufacturers and premium brands in Germany are also not experiencing their best times. While the wave of bankruptcies in Germany is also catching up with other companies such as an insolvent real estate group, a 200-year-old traditional company or one of the “largest oven construction companies in Germany” from Bavaria, automotive suppliers are also suffering from the crisis.

Specifically, after various bankruptcies of automotive suppliers in Bavaria and Hesse this year, the company in question is the Erwin Lutz spring factory based in Eningen unter Achalm near Reutlingen in Baden-Württemberg.

German car supplier is insolvent: Federnfabrik Erwin Lutz initiates insolvency proceedings

As, among others, swp.de and gea.de We report with approval that the supplier for the automotive and mechanical engineering industries has filed an application for the opening of insolvency proceedings at the Tübingen District Court. As can be seen from the insolvency announcements, the application was already accepted by the District Court on August 9th and the Reutlingen lawyer Jürgen Sulz was appointed as the provisional administrator of the insolvency.

The spring factory in Eningen, founded in 1966 by Erwin Lutz, previously an authorized officer at the Reutlingen hygiene products wholesaler Vogt, specializes in the manufacture of technical springs and bent parts. The insolvent automotive supplier’s product range includes various types of springs such as compression springs, tension springs, torsion springs, wire bent parts and special components such as leaf springs and magazine springs. Such components are used in the automotive industry and mechanical engineering, among others, both of which are currently struggling. This is also underlined by the insolvencies of another automotive supplier, a traditional supplier to the automotive industry, and the renewed insolvency of a German world market leader in mechanical engineering.

German car supplier has to file for bankruptcy: All employees were previously given notice

The reason for the insolvency of the Federnfabrik Erwin Lutz is apparently due to the current difficulties in the industry. “The Federnfabrik Lutz company is struggling with a significant drop in sales,” the administrator explained the reasons for the insolvency of the automotive supplier when asked by Southwest Press (SWP). At the request of the Reutlinger General Advertiser (GEA) explained Sulz. “Customers from the automotive and mechanical engineering industries have not been calling much recently because of large framework agreements.”

The automotive supplier with a history spanning almost 60 years had already had to announce bad news to its workforce. The lawyer from Reutlingen confirmed in the SWPthat even before the application for the opening of insolvency proceedings was made, a decision had been taken to close the factory and all 20 employees had received their notices of termination.

Car supplier from Baden-Württemberg is insolvent: Employees receive wages via insolvency money

Even if the factory of the insolvent automotive supplier from Baden-Württemberg is announced, operations are currently being continued as part of the insolvency application process. “The employees receive their wages via the insolvency allowance. “This has already been pre-financed for the months of July and August 2024 and paid out to the employees,” explains Sulz at the SWP.

According to the provisional insolvency administrator, the spring factory, which had previously been managed by the heirs of Erwin Lutz, including the company premises, was sold in mid-2022. As can be seen from the imprint on the homepage, the company has so far been represented by Tobias Ulrich and Tanja Knörzer.

After the insolvency of the automotive supplier Erwin Lutz: Give up or start again?

Since all previous employees have been laid off, it is likely that the spring factory in Eningen will either be completely liquidated or completely restarted through the insolvency proceedings. However, the administrator has not yet made any statements about the future plans for the insolvent automotive supplier.

However, the latest insolvency is part of a trend that has been clearly noticeable since the beginning of the year, especially in Germany. According to a recent analysis by the Falkensteg management consultancy, which IPPEN.MEDIA The number of major bankruptcies rose by 41 percent in the first half of 2024 compared to the same period last year. Things are not necessarily going better internationally either. Even a well-known motorsport empire is insolvent and has over a billion in debt.

Insolvency of the automotive supplier is not an isolated case in Germany: “Rescue is becoming increasingly complex”

“Rescuing companies from insolvency is becoming increasingly complex. High interest rates make the acquisition of insolvent companies more expensive or unattractive. “In addition, uncertain sales due to the general economic situation deter potential investors,” explains expert Jonas Eckhardt, partner at the Falkensteg management consultancy.

Eckhardt predicts that this trend will continue in the long term and that there will be further bankruptcies, such as at a traditional company, a leading grill supplier, an industry leader with 585 employees or a well-known bratwurst manufacturer: “Many companies have to change in order to be able to survive in the dynamics of international trade.”