When it comes to venerable German business institutions, the industrial giant Thyssenkrupp is something of a poster boy. The Essen-based company is in turmoil though, as disagreements over job losses mount.Leadership chaos reigns at German industrial giant Thyssenkrupp, with two senior bosses quitting in the space of 10 days over disagreements as to how the company proceeds in the wake of a major merger with India’s Tata Steel.
Two weeks ago, Thyssenkrupp confirmed a long-expected joint steel venture with the Indian company, creating Europe’s second-largest steelmaker in the process. However, disagreements over the scale of restructuring to take place at the company — one of the most iconic German industrial players — has led to some high-profile departures.
Chief executive Heinrich Hiesinger quit just over a week ago and late on Monday, the head of the company’s supervisory board Ulrich Lehner announced he too was leaving.
The leadership chaos sparked fears of significant job losses at the conglomerate, which produces a wide range of industrial products ranging from elevators to car components.
“I take this step consciously to enable a fundamental discussion with our shareholders on the future of Thyssenkrupp” Lehner said in a statement. “A break-up of the company and the related loss of many jobs is not an option,” he warned, pointing towards the central disagreement which has led to the departures.
Less than angelic investors
“It is clear that Thyssenkrupp is at a crossroads…aggressive restructuring may be on the cards,” US investment bank Jefferies wrote of the matter on Tuesday.
Disagreement appears to have arisen over whether or not Thyssenkrupp is now broken up into separate divisions, and over how many jobs would be lost in such a restructuring process.
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After the deal with Tata was confirmed in late June, bosses expected annual savings of around €500 million ($585 million), something which would be achieved through up to around 4,000 job losses. Part of the logic behind the Indian merger is that it will enable Thyssenkrupp’s core steel business to compete into the future with the current global flood of cheap Chinese steel.
However, several shareholders in Thyssenkrupp, such as Swedish investment firm Cevian and US hedge fund Elliott, want management to go much further in the extent to which they take the knife to the German industrial titan.
Hiesinger and Lehner were staunch defenders of maintaining Thyssenkrupp’s current structure, which spans across multiple divisions.
Lehner said earlier this month that Cevian and Elliott were pushing their restructuring plans with “methods that could even be described as psychological terrorism.”
The Alfried Krupp Foundation, the anchor shareholder of the company, holds 21 percent of the shares and is a defender of the status quo. However, Cevian and Eliott have a combined shareholding of 20 percent and have close to an equal claim on the future direction of the company.
“Activist investors are increasingly likely to come out on top…a broader break-up of Thyssenkrupp is increasingly likely,”Jefferies added in its statement on the matter.
Thyssenkrupp booked €41.5 billion ($48.7 billion) of revenue in its 2016-17 financial year and employs around 159,000 people worldwide.
aos/kd (dpa, AFP)