Communication to the commission on application EGF/2009/013 DE/Karmann received from Germany for a financial contribution from the European Globalisation Adjustment Fund
Date: 2009-11-30
Institutions: European Commission
Subjects: EU employment policy, European Globalisation Adjustment Fund, Germany, dismissal, globalisation, integration into employment, motor vehicle industry

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.11.2009 
SEC(2009)1619 final 

COMMUNICATION TO THE COMMISSION 

on application EGF/2009/013 DE/Karmann received from Germany for 
a financial contribution from the European Globalisation Adjustment Fund 

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COMMUNICATION TO THE COMMISSION 

on application EGF/2009/013 DE/Karmann received from Germany for 
a financial contribution from the European Globalisation Adjustment Fund 

Germany submitted application EGF/2009/013 DE/Karmann for a financial contribution from 
the European Globalisation Adjustment Fund (hereinafter "EGF"), following the redundancies 
in the enterprise Karmann.  

1. 

2. 

The  application  was  presented  to  the  Commission  on  13  August  2009  and 
supplemented by additional information up to 23 October 2009. 

The application meets the conditions for deploying the EGF as set out in Article 2(a) 
of Regulation (EC) No 1927/2006 of the European Parliament and of the Council of 
20  December  2006  on  establishing  the  European  Globalisation  Adjustment  Fund1 
and  was  submitted  within  the  deadline  of  10  weeks  referred  to  in  Article  5  of  that 
Regulation. 

SUMMARY OF THE APPLICATION AND ANALYSIS 

(a)  Analysis  of  the  link  between  the  redundancies  and  structural  changes  in  world 
trade patterns: 

3. 

The  application  relates  to  2 476  redundancies  in  different  parts  of  the  Karmann 
group, of which 1 618 occurred during the reference period , 803 before the reference 
period and 55 after the reference period 

In  order  to  establish  the  link  between  the  redundancies  and  structural  changes  in 
world trade patterns, Germany argues that the automotive manufacturing industry in 
the EU has been seriously impacted by a change in world trade patterns, in particular 
a significant reduction of the EU market share. The application cites2 a reduction in 
EU market share (in terms of the numbers of cars produced) from 32,1 % in 2000 to 
25,8 %  in  2008,  to  the  advantage  of  the  BRIC  countries  (Brazil,  Russia,  India  and 
China), the market share of which increased from 8,9 % in 2000 to 21,2 % in 2008.  

4. 

5. 

The  German  authorities  further  argue  that  the  impact  of  the  structural  changes  in 
world trade has been exacerbated by the global financial and economic crisis and the 
ensuing reduction in demand for motor vehicles since the second half of 2008. 

In  conclusion,  it  is  the  opinion  of  the  Commission  services  that  the  2 476 
redundancies  in  Karmann  can  be  linked,  as  required  by  Articles  1  and  2  of 
Regulation (EC) No 1927/2006, to structural changes in world trade patterns, which 
have led to a significant reduction of the EU market share in the production of motor 
cars. 

1 
2 

OJ L 48 of 22.2.2008, p. 82 
Price Waterhouse Coopers Automotive Institute, AUTOFACTS Q2/2009 

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6. 

7. 

8. 

9. 

10. 

(b) Demonstration of the number of redundancies : 

Germany submitted this application under the intervention criteria of Article 2(a) of 
Regulation  (EC)  No  1927/2006,  which  requires  at  least  500  redundancies  over  a 
four-month  period  in  an  enterprise  in  a  Member  State,  including  workers  made 
redundant in its suppliers or downstream producers. The application cites a total of 
1 618 redundancies during the period of reference (from 1 July 2009 to 31 July 2009) 
in Karmann. These redundancies were calculated in accordance with the provisions 
of the 2nd indent of paragraph 2 of Article 2 of Regulation (EC) No 1927/2006. 

It  is  the  opinion  of  the  Commission  services  that  the  total  number  of  job  losses  in 
Karmann  during  the  reference  period  is  sufficient  to  comply  with  the  criteria  of 
Article 2(a) of Regulation (EC) No 1927/2006. 

(c) Explanation of the unforeseen nature of those redundancies: 

The  German  authorities  argue  that  the  redundancies  were  unforeseen  for  the 
following reasons. Firstly, there has been a recent change in manufacturing strategy 
of  the  big  car  manufacturers,  who  now  seek  to  reintegrate  the  production  of  small 
series  into  their  own  production  lines,  whereas  these  series  were  previously 
outsourced  to  manufacturers  such  as  Karmann,  specialised  in  small  series  of  so-
called 'niche car'3 models. Secondly, the dissociation between Chrysler and Daimler 
in 2007 caused the phase-out of the production of the Chrysler Crossfire, earlier than 
planned.  Thirdly,  the  failure  in  2008  to  find  a  new  investor  in  Karmann,  despite 
intensive  and  promising  negotiations  with  potential  investors,  forced  Karmann  to 
take more drastic measures. Finally, the financial and economic crisis impacted also 
the  profitable  parts  of  the  enterprise,  such  as  the  tool-making  activities  and  the 
manufacturing of roof systems for cabriolet cars. 

(d)  Identification  of  the  dismissing  enterprises,  suppliers  or  downstream  producers, 
sectors, and the categories of workers to be targeted: 

The  application  concerns  2 476  redundancies  in  two  companies  of  Karmann.  1 618 
redundancies  occurred  in  Wilhelm  Karman  GmbH,  with  registered  office  in 
Osnabrück  and  858  redundancies  in  Karmann-Rheine  GmbH  &  Co.KG  with 
registered  office  in  Rheine.  Of  these  2 476  redundancies  1 618  occurred  during  the 
reference period, 803 before the reference period and a further 55 after the reference 
period. Of these 2 476 redundant workers 1 793 are targeted for assistance.  

Of the 1 793 workers targeted for assistance 92,4 % are male and 7,6 % female. 96 % 
are EU citizens and 4 % are non-EU citizens. 80,0 % belong to the 25 to 54 years age 
group, 19,5 % are between 55 and 64 years of age and 0,5 % belong to the 15 to 24 
years  age  group.  0f  the  1 793  workers  targeted  for  assistance  12,2 %  have  a  long 
standing health problem or disability. In terms of professional categories4, 61,5 % are 
'craft  and  related  trades  workers',  18,6 %  belong  to  the  category  'elementary 
occupations',  8,6 %  are  'plant  and  machine  operators  and  assemblers',  6,9 %  are 
'clerks,  2,1  %  belong  to  the  category  'technicians  and  associated  non-technical 

3 

4 

Karmann  produced  inter  alia  the  A4  Cabriolet  for  Audi,  the  Crossfire  for  Chrysler,  the  SLK  for 
Mercedes. 
Categories based on the International Standard Classification of Occupations, 1 digit, (ISCO-88) 

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professions',  1,1 %  are  'service  workers  and  shop  and  market  sales  workers',  0,6 % 
belong to the category 'professionals' and another 0,6 % are 'skilled agricultural and 
fishery workers'. 

(e) Description of the territory concerned and its authorities and stakeholders: 

11. 

The  territories  concerned  by  the  redundancies  are  the  cities  of  Osnabrück  and 
Rheine, were the companies are located. At NUTS II level, the regions concerned are 
Weser-Ems and Münster. 

12. 

The  main  responsible  authorities  are  the  Osnabrück,  Nordhorn  and  Rheine  Labour 
offices, the central office of the Federal Employment Office, the regional directorate 
of  the  Federal  Employment  office  in  North  Rhine  Westphalia  and  Niedersachsen-
Bremen,  the  Ministry  for  Labour,  Health  and  Social  Affairs  of  North  Rhine 
Westphalia and the Ministry for Economy, Labour and Transport of Niedersachsen. 
Other  stakeholders  are  the  administrative  office  of  IG  Metall  in  Rheine  and 
Osnabrück, the insolvency administrator Ottmar Hermann and the transfer company 
Schaffer Success Projekt Rheine/Osnabrück GmbH & Co. KG. 

(f)  Expected  impact  of  the  redundancies  as  regards  local,  regional  or  national 
employment: 

The applicant states that the redundant workers fall within the responsibility of three 
local employment offices: Osnabrück and Nordhorn in Niedersachsen and Rheine in 
North Rhine Westphalia. The German authorities argue that although in these three 
areas the unemployment rate is currently below the German average, the number of 
unemployed  persons  has  increased  above  the  German  average  (an  average  increase 
between June 2008 and June 2009 of 8 % for Germany, against an increase of 18,2 % 
in  Rheine,  19,4 %  in  Osnabrück  and  27,3 %  in  Nordhorn.  It  is  expected  that  the 
workers  made  redundant  by  Karmann  will  lead  to  a  further  6,5 %  increase  in  the 
number of unemployed in the areas managed by the three local employment offices. 
Moreover, the number of job vacancies has decreased significantly as a consequence 
of the financial and economic crisis. Between June 2008 and June 2009 the number 
of job vacancies decreased by 36,5 % in Osnabrück and by 67,1 % in Rheine. 

13. 

In  conclusion,  in  these  circumstances,  the  redundancies  can  be  seen  to  have  a 
significantly negative effect on the local and regional economy. 

(g) Co-ordinated package of personalised services to be funded and a breakdown of 
its  estimated  costs,  including  its  complementarity  with  actions  funded  by  the 
Structural Funds: 

14. 

The following types of measures are proposed, all of which combine to form a co-
ordinated  package  of  personalised  services  aimed  at  re-integrating  the  workers  into 
the labour market.  

–  Short-time allowance: This is intended to secure the livelihoods of workers who 
opt to enter into the transfer company5. For the purposes of the EGF application, 

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As already explained in SEC(2007)1142 on application EGF/2007/003 DE/BenQ a transfer company is 
an instrument provided for under German law which can be put in place in case of restructuring with 

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the  short-time  allowance  can  only  be  included  for  periods  within  which  the 
dismissed  workers  are  actively  participating  in  active  labour  market  policy 
measures that are provided within the framework of the transfer company. 

–  Basic  qualification:  This  measure  aims  to  improve  the  employability  of  migrant 
and low-skilled workers. It includes a German-language course targeting workers 
with a migrant background and a vocational training followed by six weeks' work 
experience placement in the areas of metal or storage/logistics. 

–  Group  qualifications:  These  target  workers  with  a  basic  vocational  knowledge, 
and  provides  them  with  up-to-date  know-how  and  specific  technical  knowledge 
that would enhance their chances of re-integration into the labour market. These 
include,  for  example,  cutting  techniques,  driving  licenses,  quality  management, 
machine operations, forklift driving licence. 

–  Specific  individual  qualifications:  These  make  it  possible  to  develop  individual 

competences and skills, which are necessary to acquire some specific jobs. 

–  Management  of  qualifications:  This  covers  the  identification  and  electronic 
registration  of  the  qualification  needs  of  all  workers  targeted  for  assistance,  the 
creation of a database with the supply from regional training providers, as well as 
the  interconnection  of  both  databases  in  order  to  determine  tailor-made 
qualifications. 

to  enhance 

the  empowerment  of 

–  Workshops/peer  groups:  This  aims  to  offer  special  coaching  in  small  groups  in 
order 
the  dismissed  workers.  Besides 
participation  in  the  activities  in  workshops,  dismissed  workers  with  a  specific 
vocational background will also be given the opportunity to visit job fairs where 
they can directly contact potential employers. It is also planned to organise sector 
or theme specific fairs within the transfer company. 

–  Counselling for business start-up: Besides the classical courses for those wishing 
to  set  up  businesses,  the  measure  also  provides  for  an  eight-week  intensive 
seminar and a coach to guide the participants during the whole process of setting 
up a business. 

–  Support  for  international  job  applications:  This  measure  aims  firstly  to  offer  the 
possibility to a limited number of workers of preparing to apply for jobs abroad in 
co-operation with Eures, including language preparation and cross-border visits to 
enterprises  in  a  neighbouring  country.  A  second  target  group  for  this  measure 
consists of workers with a migrant background who wish to return to their country 
of origin and set up a business there; this involves in-depth advice on the relevant 
situation pertaining in their country. 

–  Placement research: Placement researchers interface with potential employers and 
identify  on  the  basis  of  specific  job  vacancies  the  most  suitable  candidates  and 
possible further job specific training needs. 

ensuing job losses. The transfer company makes it possible to prepare in a structured manner redundant 
workers for a new job through coaching, qualification and placement activities. 

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15. 

16. 

Actions 

–  Mentoring  and  support,  in  particular  aftercare  in  case  of  unemployment:  This 
measure provides support for workers who do not find a new job upon termination 
of the transfer company. In order to ensure continuity in placement activities, they 
will retain the same mentoring network as in the transfer company. 

The administrative expenditure,  which is included in the application, in accordance 
with  Article  3  of  Regulation  (EC)  No  1927/2006,  covers  preparatory  activities, 
management, information and publicity and control activities. 

The personalised services that are part of the co-ordinated package presented by the 
German  authorities  are  active  labour  market  measures  falling  within  the  eligible 
actions  as  defined  in  Article  3  of  Regulation  (EC)  No  1927/2006.  The  German 
authorities  estimate  the  total  costs  of  these  services  at  EUR  9  137 449  and  the 
administrative expenditure at EUR 400 000 (= 4,2 % of the total amount). The total 
contribution requested from the EGF is EUR 6 199 341 (65 % of the total costs).  

Estimated 
number of 
workers 
targeted 

Estimated cost 
per worker 
targeted 
(in EUR) 

Total costs 
(EGF and 
national 
cofinancing) 
(in EUR) 

Personalised services (first paragraph of Article 3 of Regulation (EC) No 1927/2006) 

Short-time allowance 
('Transferkurzarbeitergeld') 

Basic qualification 
('Grundlagenqualifizierung') 

Individual qualification 
('Einzelqualifizierung') 

Group qualification 
('Gruppenqualifizierung') 

Qualification management 
('Qualifizierungsmanagement') 

Peer groups / workshops 

Counselling for business start-up 
('Existenzgründerberatung') 

International job applications 
('Internationale Bewerbungen') 

1 793

2 775 

4 975 575

214

48

239

501

547

42

300

2 934 

627 876

3 844 

184 512

3 905 

933 295

651 

326 151

558 

305 226

3 367 

141 414

317 

95 100

Placement research ('Stellenresearch') 

Aftercare in case of unemployment 
('Nachbetreuung Erwerbslosigkeit') 

225

1 275

1 022 

229 950

1 034 

1 318 350

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Sub total personalised services 

9 137 449

Technical assistance for implementing EGF (third paragraph of Article 3 of regulation (EC) 
No 1927/2006) 

Sub total technical assistance 

Total estimated costs 

EGF contribution (65 % of total costs) 

400 000

9 537 449

6 199 341

17. 

18. 

19. 

As  regards  the  complementarity  with  actions  funded  by  the  Structural  Funds,  the 
application distinguishes between the EGF package and the initial package of active 
labour market measures. The initial package for Karmann Rheine GmbH & Co. KG 
comprises, besides the creation of a transfer company, ESF funding provided by the 
Land  North  Rhine  Westphalia  for  additional  placement  and  counselling  activities. 
For Wilhelm Karmann GmbH, ESF funding is provided by the Land Niedersachsen 
for additional placement and counselling activities. In addition, Federal ESF funding 
is  made  available  to  provide  time-limited,  certified  qualifications,  such  as  basic 
qualifications 
language  course,  basic  qualification  metal),  group 
qualifications and individual qualifications. 

(German 

In  order  to  ensure  complementarity  with  other  measures  at  national,  regional  and 
local  level,  the  EGF  package  of  active  labour  market  measures  has  been  entirely 
conceived as a complement to the initial package described above.  

The  measure  concerning  international  job  applications  will  be  carried  out  in  co-
operation with the Eures Centre of the Federal Labour Office. 

(h) Date(s) on which the personalised services to the affected workers were started or 
are planned to start: 

Germany started the personalised services to the affected workers included in the co-
ordinated package proposed for co-financing to the EGF, on 1 February 2009. This 
date therefore represents the beginning of the period of eligibility for any assistance 
that might be awarded from the EGF (first paragraph of Article 11 of Regulation(EC) 
No 1927/2006). 

(i) Procedures for consulting the social partners: 

Following the announcements of staff reductions in Karmann the federal Ministry for 
Labour and Social Affairs initiated discussions on the package of measures and the 
possibility  of  EGF  support  with  the  social  partners.  Representatives  of  the  Federal 
Employment Office, from the trade union IG Metall and from the regional Ministries 
for  Employment  also  participated  in  the  discussions.  A  final  consultation  with  all 
parties  concerned  took  place  in  July  2009  at  the  Federal  Ministry  for  Labour  and 
Social  Affairs,  during  which  common  agreement  was  reached  on  the  package  of 
measures. 

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20. 

The  German  authorities  confirmed  that  the  requirements  laid  down  in  national  and 
Community legislation concerning collective redundancies had been complied with. 

(j) Information on actions that are mandatory by virtue of national law or pursuant to 
collective agreements 

21. 

As regards the fulfilment of the criteria set out in Article 6 of Regulation (EC) No 
1927/2006, the German authorities in their application:  

•  confirmed that the financial contribution from the EGF does not replace measures 
which are the responsibility of companies by virtue of national law or collective 
agreements; 

•  demonstrated that the actions provide support for individual workers and are not 

to be used for restructuring companies or sectors; 

•  confirmed that the eligible actions referred to under points 14 to 16 above do not 

receive assistance from other Community financial instruments. 

22. 

Management and control systems  

Germany  has  informed  the  Commission  that  the  financial  contribution  will  be 
managed  and  controlled  by  the  following  bodies  inside  the  Federal  Ministry  for 
Labour and Social Affairs ('Bundesministerium für Arbeit and Soziales'): VI Gruppe 
Soziales Europa as managing authority and Referat Zb2 as audit authority. 

CONCLUSION 

23. 

In  conclusion,  for  the  reasons  set  out  above,  it  is  proposed  to  accept  application 
EGF/2009/013  DE/Karmann  submitted  by  Germany  relating  to  the  redundancies  in 
Karmann,  as  evidence  has  been  provided  that  these  redundancies  result  from 
structural  changes  in  world  trade  patterns  which  have  led  to  a  serious  economic 
disruption,  affecting  the  regional  or  local  economy.  A  co-ordinated  package  of 
eligible  personalised  services  has  been  proposed.  Therefore,  it  is  proposed  to 
mobilise the EGF in response to the German application. 

FINANCING 

The  total  annual  budget  available  for  the  EGF  is  EUR  500  million.  So  far,  five  cases  have 
been accepted for funding in 2009, and a further six cases have been proposed for funding to 
the Budgetary Authority, amounting to a total of EUR 53 039 047. 

Article 12 (6) of Regulation (EC) No. 1927/2006 states that on 1 September of each year, at 
least EUR 125 million should remain available in order to cover any needs arising until the 
end of the year. 

After deduction of the amounts already accepted or proposed for commitment, an amount of 
EUR 446 960 953 remains available. 

It is proposed to deploy EUR 6 199 341 from the EGF. 

THE COMMISSION IS THEREFORE INVITED TO: 

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–  conclude  that  the  conditions  for  a  financial  contribution  from  the  EGF  in  response  to 

application EGF/2009/013 DE/Karmann submitted by Germany are met; 

–  submit  to  the  budgetary  authority  a  proposal  to  authorise  commitment  appropriations 
corresponding  to  EUR  6  199  341,  as  specified  in  point  16,  as  well  as  a  request  for  the 
transfer  of  this  amount  in  commitment  appropriations  to  budget  line  04.0501  (European 
Globalisation Adjustment Fund) in accordance with Article 12 (3) of Regulation (EC) No 
1927/2006; 

–  authorise the transfer of the identical amount in payment appropriations from budget line 
04.0217  (European  Social  Fund  (ESF)  –  convergence)  to  budget  line  04.0501  (European 
Globalisation Adjustment Fund).  

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