Ktm Comes Back From the Brink

KTM comes back from the brink

THE LAST FEW MONTHS HAVE been tough for tiny KTM, one of Europe's most illustrious, but financially hard-pressed, producers of motorcycles. But company spokesmen now say KTM has a new lease on life and will continue building its line of dirtbikes under new ownership.

Following a bankruptcy filing late last year, the so-called Sportmotorcycle division of the company was purchased from KTM Austria, the parent concern, by the motorcycle division’s five largest European distributors, a Swiss investment group and members of the KTM Sportmotorcycle management team. The result is a new company named KTM Sportmotorcycle GesmbH-International, which resumed motorcycle production following the Christmas holidays.

Founded in 1953 in Mattighofen, in northern Austria, by partners Kronreif and Trunkenpolz (the KTM name is derived from the first letter of those two names, and the first letter of the company’s home town), the firm had been controlled by members of the Trunkenpolz family. Through them the company, which previously produced only motorcycles, bicycles and mopeds, was diversified into production of radiators and oil coolers for twoand fourwheeled use. The capital investment required by this diversification is what brought the small company to its knees, according to observers.

The radiator business never became profitable, and the company was late in developing its line of mountain bikes, finally getting them

into production at a time when European sales of such pedalpowered machines had fallen into decline.

Meanwhile, the late Erich Trunkenpolz, who died last year, had sold a 51-percent interest in the company to an Austrian investment trust called GIT Trust Holding, controlled by Dr. Josef Taus, an Austrian politician. According to observers, Taus took over control of the company in May of 1989 and immediately installed his own hand-picked, but inexperienced, management staff. Observers claim that it was this staff’s inexperience, combined with the company’s huge debt load, that led to the declaration of bankruptcy in December.

Production was halted following that declaration, and various salvation schemes were floated, including cash injections from the local government, and a buy-out by the Italian Piaggio-Gilera Group. Ultimately, an Austrian court approved the sale of the company’s motorcycle division, the only segment of the operation which appears to promise a profitable future, to the consortium which now controls it.

None of this should have any lasting effect on the affairs of KTM America, according to spokesman Scot Hardin.

“Some restructuring will take place in order to meet the goals of the new parent company, but delivery of parts, services and complete motorcycles to dealers and their customers will continue at the company’s present standards,” Hardin said.

Alan Cathcart