Retail Retainer

A Half Century On, Karstadt Labor Leader Braces for Job Cuts

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Patzelt started his career at Karstadt at age 14 - without his trademark moustache.
  • Why it matters

    Why it matters

    Austrian investor René Benko, who acquired Karstadt for a symbolic €1, will move to cut losses and turn around the struggling retailer. Thousands of jobs could be lost.

  • Facts

    Facts

    • Karstadt has had a series of owners in recent years, none of whom have been able to turn the retailer around.
    • Previous labor agreements to retain jobs ended in massive job cuts.
    • Mr. Patzelt has come under criticism but is well respected among the rank-and-file.
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    Audio

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Helmut Patzelt has been through highs and lows, profitable years and not-so-profitable ones in his many years with Germany’s Karstadt department store chain. He’s had to endure the grandiose proclamations and empty promises of the former owner, billionaire investor Nicolas Berggruen, and finally the bailout sale of 83 stores earlier this month.

Mr. Patzelt started at Karstadt at the age of 14 as a sales clerk. 46 years later, he is still working for the troubled department store chain, one of Germany’s traditional broad-inventory retailers. And in his heart he is still a merchant, although officially he has another title: chairman of the works council, which represents employee interests at Karstadt. It’s a delicate balancing act. For now, Karstadt seems stable, but Mr. Patzelt knows that the survival of the 133-year-old retailer will come down to a painful restructuring. Some 20 Karstadt department stores are at stake – locations that are not profitable and targeted for closure. Even the main office in Essen is considered hopelessly overstaffed.

The Karstadt supervisory board, which hires and fires the chief executive and decides on restructuring, was to discuss a business rescue plan this week, but that meeting has been postponed. When it’s rescheduled, it will probably be Mr. Patzelt’s toughest workday in a long time. As vice chairman of Karstadt’s supervisory board, he’s obligated to do what is  best for the company. That means signing off on the deep cuts that are needed and then, as head of the works council, explaining the cuts to employees. Naturally, he wants to save stores and jobs, but he knows there are few options.  It is a dilemma.

Over the years, Mr. Patzelt has seen company CEOs come and go like a cash register clerk sees customers in and out the door.

“I have never thought him to be ideological but rather quite discerning,” said a longtime associate at the company, who declined to be named. The worker said Mr. Patzelt, a born fighter, tried to adjust to every situation.

“Work council heads often toe the line, particularly in corporations,” the company source said. “That can’t be said of Mr. Patzelt.”

In 2004, when the financial crisis at Karstadt  and its parent company Arcandor became apparent, employees were forced to accept massive pay cuts in return for some stores not being closed.

The next restructuring agreement came in 2008 and was followed a year later by a collective wage agreement when Arcandor filed for bankruptcy. The agreements ran out in August 2012 and Karstadt announced it would have to cut 2,000 jobs. “Telling all that to workers was not easy,” the company associate said.

But Mr. Patzelt might now be reaching his limits. He said he is increasingly “taking Karstadt business home with him.” The last couple of years, he has said he couldn’t even relax at home with his wife and their children. They live in the west German city of Fulda.

It doesn’t make the job easier when you are personally criticized. In 2010, for instance, critics said Mr. Patzelt favored a London Highstreet consortium in bidding for Karstadt in hopes of getting something in return. Mr. Patzelt vehemently denied the charge as slander, and in the end the winning bidder was Mr. Berggruen, a German-American.

Over the years, Mr. Patzelt has seen company CEOs come and go like a cash register clerk watches customers go in and out the store door. He knows the charts of the consultants by memory, and all the strategies of managers who wanted to lead Karstadt into the future – only to quickly leave again.

Only Mr. Patzelt has stayed and worked around the clock since the departure of the last Karstadt boss, Eva-Lotta Sjöstedt, a Swedish manager who lasted less than a year. He has a duty to 500 works councils and thousands of employees. “I’m staying by my people,” he said. “They are, after all, the real heroes.”

He has given himself one more year until he retires, hopefully when Karstadt is back on the right road. Will it all work out?  “There will be exciting days ahead,” he said.

Kirsten Ludowig is an editor covering retailing at Handelsblatt. She can be reached at ludowig@handelsblatt.com.

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