In virtually every industry, there are a select number of brands that become famous household names, and the first choice for those wanting the absolute best.
When you buy a bottle of painkillers for a headache, you take either ibuprofen or acetaminophen, but you ask for a bottle of Advil or Tylenol at the pharmacy.
If someone asks you to Xerox a document, you know to look for a copy machine, and if someone asks you to talk on Zoom; then you might know that the meeting is happening virtually.
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If you have ever sat in the seat of a commercial airliner or behind the wheel of a car, chances are, you sat in a seat made by a German company Recaro.
In the world of aftermarket car customization and racing, Recaro is often seen as the gold standard in seats. Its designs have been the first choice for brands like Ford, Chevrolet, BMW, and Porsche, making drivers feel like racing drivers on their daily commutes.
Recaro
Trouble for Recaro leads to surprising bankruptcy
In late July of this year, reports from the British auto publication Autocar and the German business news magazine Wirtschaftswoche reported that Recaro's automotive division had filed for bankruptcy.
While the Recaro name is most known for its automotive seats, its automotive division is wholly separate from the Recaro company.
The whole Recaro Group consists of separate companies that independently manufacture seating solutions. In addition to automotive seats, Recaro Group companies also make seats for commercial airplanes, passenger rail lines, and office furniture.
In June 2011, the automotive seats division was sold to Johnson Controls, which held the rights to market Recaro seats until 2016 when automotive seat specialists Adient purchased it. However, in 2020, the legendary car seat maker was acquired from Adient by a Michigan-based private equity firm called Raven Acquisitions and was split apart from the rest of the Recaro Group.
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Private equity firms are often criticized for their management methods. Companies taken in by private equity are usually drawn to the immediate cash injection used to buy a controlling stake and take the company private.
The problem is that after the sale happens, firms have total control of what happens inside the company without disclosing any of the financial information shared during an earnings report. Companies risk being virtually gutted by said firms without that kind of accountability.
The bankruptcy news surprised Recaro's 215 unionized workers. Alessandro Lieb, the managing director of the IG Metall union, told Wirtschaftswoche that Recaro management did not indicate any signs of a potential crisis during its most recent meetings and that Recaro employees themselves took steps to ensure the company's financial stability, including waiving pay raises and benefits to ensure the company's health.
"Today we - the workforce, the works council, and I - have to admit: It was not enough," Lieb said, translated from German "We expect that all options will be exhausted to secure jobs and find a sustainable solution."
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Auto parts maker to relaunch Recaro
In a statement issued on Dec. 4, Italian auto parts supplier Proma Group announced that it signed an investment agreement with Recaro to return the company to the market as early as January 2025.
According to its website, the Proma Group is a firm that specializes in "the development and fabrication of seat structures and mechanisms, body assemblies, and front-end suspension crossbeams," which it makes in 25 plants located on three continents, by 5,000 employees, and supported by over 30 international patents.
Recaro's new Italian owners said in its release that many original employees in the Sales and Technology departments in Recaro's Stuttgart, Germany offices will be retained to ensure a seamless transition and to meet customer needs.
However, come January, production of seats for OEM customers such as Ineos, Subaru, and Ford will move from Germany to Italy while its aftermarket seats will return to the market.
"Our investment in RECARO Automotive will strengthen our ability to deliver a premium seating product, while embracing the most cutting-edge innovations in the automotive sector," said Proma Group CEO Luca Pino.
"The RECARO name is renowned throughout the world as a benchmark of German industrial technology, and Proma Group, a symbol of Italian manufacturing excellence, is excited about the future and the quality that will be expressed in the automotive market thanks to the union of two first-class companies."
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