Vehicle industry - MAN Steyr - state or not state?

Vehicles have been manufactured at the MAN plant in Steyr for over 100 years. This could end in 2023 after the workforce has spoken out against a takeover by investor Siegfried Wolf.

In view of the impending loss of 2.300 jobs, there is intense discussion in Austria about whether the state should step in in Steyr. In total, more than 8.000 jobs in the region shake if the plant is shut down, according to a study. In addition, there is a risk of losing a good billion euros in added value per year.

In the last few days, politicians have put forward various ideas on how the MAN plant in Steyr and thus the thousands of jobs could be saved. After the SPÖ announced a state entry at MAN on Saturday, the ÖVP and NEOS spoke out against it.

"If nobody wants it, the state cannot do it"

In an interview with the “Wiener Zeitung”, Michael Peneder, industrial economist at the economic research institute Wifo, sheds light on the basic advantages and disadvantages of state participation. He has one on this topic this January Studie published.

In principle, Peneder only supports state participation in exceptional cases and then only in the form of a temporary minority participation. “At MAN in Steyr, however, I don't see any reason for state participation,” he says.

"The acid test is always whether private investors consider the continuation of a business to be sensible," emphasizes Peneder. "If nobody wants it, the state cannot do it."

Whether a company has a sustainable concept as well as market potential and thus also enables long-term employment for its employees, politicians are "the wrong authority", according to the Wifo economist. However, the core task of politics is to find compromises with potential investors, to get involved in negotiations and to bring the workforce together with the investors.

Exceptional cases in which state involvement could make sense, for example, to close short-term funding gaps, to save unique know-how or to keep company headquarters in the country, he explains. Only then, and then only after careful examination, could the state step in.

Do we need more state in pandemic times?

But isn't a pandemic and thus possibly greater reluctance on the part of potential investors a period that speaks in favor of more state involvement?

"There may be companies that are suffering from a shortage of capital due to the current pandemic," admits Peneder. Austrian Airlines would be an example of such a case. At the domestic airline, the pandemic was the trigger for the capital problem, the economist analyzes. It was true that there was no state participation there, because they relied on subsidies and guarantees. However, such a thing would have been possible.

Peneder goes on to say that so-called “network effects” in particular are decisive for state participation. If a company has an impact on others, for example through the AUA's hub function, which is of strategic importance for Austria as a location and affects other companies' decisions for or against involvement in the country, state involvement is more justified. "However, I don't see this argument at MAN."

E-mobility as an investment in the future

Wouldn't the planned switch to electromobility in Steyr be a future-oriented strategy that could speak in favor of state participation in the company?

Peneder recommends, however, to rely on subsidies rather than state participation. There is a tried and tested set of instruments for this, and with the EU development fund there may also be other options. However, the prerequisite is to find private investors to run the company.