German Electronics Legend Goes Bust

April 14, 2003

Germany's Grundig, one of Europe's best-known consumer electronics makers, has filed for bankruptcy.

The move follows the failure of rescue talks with two potential partners, Taiwan's Sampo and Turkish Beko.

Grundig, founded in 1945 and a key participant in Germany's post-war revival, had been struggling for years.

In 1996, it was spun off by parent company Philips, but failed to get its finances in order.

There is no news yet on the fate of the company's plants - including two in Germany, and one each in Portugal and Austria - or its 3,500 staff.

Slimming down

Grundig's high-quality but premium-priced TVs, VCRs, radios and other equipment was expensive to produce and uncompetitive in a market increasingly focused on price.

The company tried to cut costs by consolidating some of its production, and outsourcing some assembly to cheaper countries such as Hungary and Turkey.

In the meantime, it has slimmed down radically, shrinking from almost 40,000 staff in the late 1980s.

In 2001, the latest year for which it has published figures, it made a loss of 150m euros (£103m; $161m) on turnover of 1.5bn euros.

Off and on

At the beginning of this year, Grundig announced that its future had been secured by a partnership deal with Sampo, a large home-appliance manufacturer.

But it said recently that talks with the Taiwanese firm had "gone quiet".

Grundig then turned to Beko, which mainly makes fridges, but was evidently taken by surprise when the Turkish company pulled out last week.

The two firms said that their contact had been "full of promise", but not enough to warrant a purchase of the ailing German company.

http://news.bbc.co.uk/2/hi/business/2945815.stm