Exactly a year after taking over the Siemens mobile phone division and immediately after expiry of the employment guarantee for the workforce, hand set manufacturer BenQ (Taipei / Taiwan; www.benq.com) has withdrawn funding for its German subsidiary BenQ Mobile (Munich / Germany; www.benq.de). The company´s head office justified the decision on grounds of "inadequate sales and margin growth in the Christmas business." Research, development and production are to be permanently relocated to Asia. Some 3,000 of the business´s 8,000 worldwide employees will lose their jobs. All three German sites – at Munich, Bocholt and Kamp-Lintfort – will be affected, along with a plant in Brazil.

BenQ Mobile Deutschland has filed an insolvency petition in a Munich district court, and Martin Prager of the law firm Pluta (Munich / Germany; www.pluta.net) has been appointed provisional insolvency administrator. At his first press conference, Prager said he was confident that operations in Germany could be continued at least until the end of this year. According to reports, insolvency funds are sufficient to last three months.

The deterioration of the former Siemens brand´s world market share has continued since the BenQ takeover. While all other mobile phone brands have achieved – in some cases, quite significant – growth since 2003, the market share of BenQ/Siemens has shrunk from nearly 10% to just over 3%, according to the estimate for 2006.

BenQ claims to have injected EUR 840m in capital in an attempt to turn the business around – a mission that apparently has not been accomplished. Siemens contributed around EUR 320m to sweeten the deal for the new owner. In June, BenQ Mobile Deutschland said it wanted to cut 500 jobs. A short time later, rumours that the Taiwanese parent planned to sell the production facilities and have the phones manufactured on a contract basis began making the rounds.

Market observers have since been saying openly that the decision to kill off the mobile phone offshoot was made some time ago, by Siemens, but the German company preferred to let someone else do the "dirty work." Through the takeover, Siemens saved on severance payments to employees, and BenQ gained access to the European phone manufacturing market through the acquisition of the brand name.

Suppliers feel the repercussions
Suppliers in the plastics industry have begun to feel the first repercussions of the possible collapse of BenQ/Siemens. Injection moulder Perlos (Vantaa / Finland; www.perlos.com), for example, has said it might face a payment shortfall of EUR 30m. Balda (Bad Oeynhausen / Germany; www.balda.de), which had already announced weaker results for first half 2006, published a profit warning saying its sales target of EUR 450-460m for this year will not be reached, and that pretax earnings also will be below expectations. Instead of the projected EUR 46-68m, Balda said its net result will be closer to EUR 20m. The possible insolvency of BenQ in Germany would not have any further effect on Balda´s financial situation, however, a spokeswoman told PIE. Although Balda is cooperating with BenQ on a number of joint projects in Asia, she said the company is not a major customer in Germany.