German battery maker Varta is heading for the corporate knackers’ yard after more than 130 years of making tiny power packs, thanks to its relationship with the fruity cargo cult Apple.
The company was forced to file for insolvency after Job’s Mob ended its contract for AirPods batteries, according to a report from Focus.
To be fair, Varta was already struggling with rising costs, overambitious expansion and the rather dim idea of leaning too hard on one giant customer. Unfortunately, Job’s Mob did not become a trillion-dollar outfit by being nice to suppliers, and Varta seems to have learned that rather late.
For decades, Varta made its name in miniature batteries used in hearing aids and consumer gadgets, including AirPods.
The firm appears to have assumed Job’s Mob would keep flogging wireless earbuds by the truckload and keep needing batteries to match.
That bet went sideways when the Cupertino cult ended the contract in May, soon after Varta had expanded to meet demand.
A Chinese supplier has now picked up the AirPods battery work, leaving Varta to close its Nördlingen plant this autumn.
The shutdown will cost about 350 jobs. Varta employs about 3,000 people, but further cuts could follow as the company sells businesses, shrinks operations and tries to restructure.
The lesson is brutal. Winning a big contract from Job’s Mob can look like a jackpot until the customer finds a better margin elsewhere. Varta’s biggest mistake was failing to build enough business with other customers before Job’s Mob pulled the plug.
Micron chief executive Sanjay Mehrotra hinted that this has happened before and said one “unnamed customer” forced memory prices down so hard that it limited future investment.
Mehrotra said Micron had the foresight to push through those unfavourable conditions, which is more than can be said for Varta.
