Germany: The locomotive builder has filed for insolvency at the court in Syke, Lower Saxony.
Despite a full order book, the company claims it will not be able to meet its financial obligations from next year, including paying the wages of 95 employees. Recent measures, such as reducing the working week to 29 hours and cutting wages, have not produced the desired results. As a further remedy, the management is considering selling the company with all its contracts.
Founded almost a century ago, in 1930, Schöma specialises in the production and upgrading of tunnel and shunting locomotives and track machines. To date, the company has delivered more than 7,100 rail vehicles.
This is not the first major bankruptcy to hit the German rail sector recently. In 2023, bogie manufacturer Transtec F&E Vetschau closed its doors after experiencing financial difficulties due to supply chain disruptions and rising steel and energy prices.
Other negative factors include geopolitics and the impact of the EU’s own sanctions against Russia. All this puts the German economy at risk, and the government has just downgraded the GDP performance forecast. Compared to 2023, it is expected to fall by 0.2%, continuing the decline seen in 2022.
The depressive economic situation is obviously affecting rail transport. In the first half of 2024, the national operator Deutsche Bahn reported an operating loss of €1.2 bln, while its debt increased from €14 bln to more than €34 bln since 2016. During the presentation of its half-yearly report, the operator’s CFO Levin Holle announced plans to reduce its workforce by around 30,000 jobs over the next five years.
The rail industry is hotly debating the adoption of the German federal budget for 2025, as Deutsche Bahn is to receive a €4.5 bln for equity capital next year instead of infrastructure subsidies. Two national associations, the Association of German Transport Companies (VDV) and the German Railway Industry Association (VDB), have criticised such a change in approach to fund allocation.
While VDV predicts bankruptcy of operators, VDB has highlighted the uncertainty over long-term investment and called for the creation of a railway fund to provide annual funding. Previously, the association has stressed that rising energy and material prices as well as bottlenecks in the supply chain pose a serious threat to the very existence of the country’s railway industry.
