Insolvency Angers Workers

The news of the insolvency hit staff like a bolt from the blue, according to Wolfgang Mueller of the IG Metall trade union.

'This is worse than anything we could have expected. Morally the former owners Siemens are responsible for the disaster," Mueller told German news agency dpa.

It was no secret that all was not well at BenQ, Taiwan's largest mobile phone maker. The company, which produces projectors and digital music players as well, had also announced last week that it would halt production at its only factory in Taiwan.

After taking over the Siemens business last year, BenQ aimed to secure at least 10 percent of the world market, but at the last count this figure was just 3 percent.

Management was also not hopeful regarding the vital Christmas season.

Employees shocked and angered by news

Workers at the Munich headquarters, where 1,400 are employed, suspected bad news when they were called to an "All-hands-Meeting" Thursday. Nevertheless the news that the company was effectively bankrupt came as a shock to most of them.

"We are deeply hurt," workers' representatives on the board said. They said they had believed assurances from Taiwan that the company would be retained.

At the company's plant at Kamp-Lintfort there was anger and frustration. Many members of staff learnt of the company's pending insolvency over the radio as they were on their way into work.

"We already see ourselves in line at the employment office," one member of staff said at the gates to the plant. "Insolvency is the best thing for BenQ. Then they don't have to pay us a cent."

Trouble keeping up with the market

Siemens was unable to make a go of its mobile division, showing little aptitude for keeping up with consumer trends, such as color display and photography, where the company entered the market late.

BenQ aimed to change this, but relied largely on the original management.

"In reality, the problems simply continued," a sector analyst said.

The company's flexibility and speed in reacting to new developments still left much to be desired.

Siemens is no longer involved in the corporate group. New Siemens head Klaus Kleinfeld has promised that by early next year all divisions in the electrical group will have achieved ambitious profit margins.

New Siemens boss opted to drop mobile division

The mobile phone division had no chance of doing so and Kleinfeld took the logical, if drastic, step of complete disposal. Siemens has also disposed of other units or entered into partnerships with them.

The mobile phone division went to BenQ for a symbolic price, with the Taiwanese receiving millions from Siemens to sweeten the deal.

"We felt like an unwanted child," says one member of staff who has been with Siemens and BenQ for 39 years.

He said he sees it as a shame that Siemens did not have the courage and patience to revitalize its problematic units. Mueller also criticized the traditional German company of resorting to radical measures in order to fulfill short-term profit goals.

"BenQ staff is now paying for the failings of Siemens' management," he says.

Future production in Asia

A Siemens spokeswoman said the company was watching developments at BenQ. "We are very sorry to see this," she said.

BenQ aims to use the brand and the expertise of its former Siemens division, but the mobile phones themselves will in future be produced in Asia.

Many in Germany suspected when the Taiwanese bought the unit last year that they were only interested in the brand name and not in the relatively expensive German production facilities.

"They waited until the Siemens money was used up and then simply turned off the tap," a sector analyst says.