KTM to slash workforce by over 50%, MotoGP operations to be hit

Bajaj Auto has revealed plans to cut workforce by over 50% across several areas at KTM, including motorsport, as it inches closer to completing a takeover of the Austrian manufacturer.

Bajaj’s managing director Rajiv Bajaj stated in an interview that it intends to halve expenses across various departments in a move that will directly affect KTM and Tech3’s MotoGP teams.

“This is really low-hanging fruit. We observe an opportunity to reduce overheads by more than 50 per cent, including R&D, marketing (including racing), operations, and general administration,” Bajaj told CNBC TV18.

“The previous management has already reduced headcount from 6,000 to 4,000, which is still considered too high. 

“Interestingly, of these 4,000, only about 1,000 are blue-collar; 3,000 are white-collar, which is perplexing because the blue-collar employees make the motorcycles. 

“Future volume shifts will impact blue-collar employees relatively lightly; the issue will be with expensive white-collar headcount. 

“It reminds me of Mark Zuckerberg’s words about managers managing managers managing managers who manage the people who do the work. The management overhead and bureaucracy in this otherwise excellent organisation were astonishing.”

Rajiv Bajaj was outspoken in his criticism of KTM’s former management, though he stopped short of naming former majority shareholder Stefan Pierer, whom he largely holds responsible for the company’s financial collapse.

“We were all taken by surprise, most of the industry was quite shocked at how rapidly this developed,” he said. “My mind goes back almost 30 years to what my first management guru, Dr John Wallace, told me: the single biggest reason for corporate demise is corporate greed. I have really witnessed this play out at KTM over the last 12 months in particular.

“Broadly, I would say there were three types of greed.

“First, operational greed, best exemplified by what happened in the last couple of years when KTM Austria kept producing and overproducing, even though the spike in demand post-COVID had declined. As a result, KTM distributors and dealers worldwide were carrying over a year’s worth of inventory, which was preposterous.

“Second, what I would call strategic greed. Companies often get into businesses they have no business getting into. In the case of KTM Austria, the best example was getting into the bicycle business, specifically the electric bicycle business. 

“These two factors combined to take KTM to insolvency in a matter of months. 

“Now, you might say that Bajaj was part of it, and I would concede that yes, we were also part of what went wrong, but as a minority partner, we could not prevent this. 

“I can share that we did our best to resist it, so much so that it led eventually to the third kind of greed, which I may call governance greed, where certain decisions were taken either without our knowledge, without our information, or sometimes without following due process.”

Bajaj voiced confidence in KTM’s revamped management, as it charts its new course as a leaner and more efficient organisation.

“This is a problem not caused by 99% of KTM employees. This is a problem of the erstwhile top management of KTM, and most of them are gone,” he said.

“What we have now in place is a wonderful new team that I personally feel very confident about. 

“The entire team is already in place, barring one vacancy, which will be filled in the coming months. It’s a combination of some of our older colleagues, who are still very passionate and committed to KTM, particularly in areas like product planning, R&D, and legal, and some outstanding new colleagues, led by our new CFO and new CHRO.”

Although Bajaj has already injected several rounds of capital funding to keep KTM afloat and now effectively controls the Austrian manufacturer, the Indian conglomerate is still awaiting approval from the European Commission to formalise the takeover. 

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— The Motorsport.com Team