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Thyssenkrupp's New Strategy: A Return to the Past or a Fresh Start?
Thyssenkrupp's latest corporate strategy, as announced by CEO Miguel López, appears to represent a significant shift towards divesting the conglomerate into independent businesses open to external investment. This corporate overhaul aims to address long-standing challenges and set the stage for future growth, but it also introduces both new opportunities and risks for the various divisions.
After 17 months in charge, López's strategy calls for a move away from the central control of all divisions by the Essen headquarters. The corporation now envisions making each division—from steel to trade to the automotive business—autonomous, with a small holding company at the top focusing on financial management and overseeing goals, but not day-to-day operations.
A closer look reveals striking similarities between this proposed strategy and the one introduced by López's predecessor, Martina Merz, which she sold under the English-German name "Group of Companies." Even then, the individual areas were meant to enjoy maximum freedom, with a minimal supervisory role in Essen tasked with monitoring objectives and their achievement. López has scrapped Merz's concept, interfered especially in the steel business, only to reverse course now.
This latest move is met with skepticism, as some question whether this iteration will fare better than the previous one. Thyssenkrupp plans to retain a majority stake in the divisions when they go public or merge with partners, except for the steel business, which is to be offloaded from the balance sheet as quickly as possible. The question remains: who will invest in divisions that still have a say from the parent company, a policy that has failed to drive growth for several years? Consequently, Thyssenkrupp may face a substantial discount in valuation if investors can be found at all, and independence will come at a high price in terms of financial resources and time.
The need for external investment is particularly critical for high-value divisions such as TKMS (marine division) and Nucera (green specialist), which cannot survive without new funding. Achieving this goal is best accomplished by the parent company swiftly distancing itself from its offspring before Thyssenkrupp burns through even more capital. IG Metall, however, is already vocal in its opposition, using the term "disintegration" in public discourse. Despite this resistance, many employees in some areas might welcome relief if corporate headquarters were finally out of the picture.
In Essen, the merry-go-round of Thyssenkrupp's boardroom continues, and we haven't yet reached the last spin or the final CEO change, even if López now stands a chance for an extension of his contract, according to unionist sentiment.
ThyssenKrupp, Steel industry, Steel business, Bernd Ziesemer
- As ThyssenKrupp moves towards divesting its conglomerate into independent businesses, it's crucial to develop industry-specific policies for employment and vocational training within each division to enhance their competitiveness.
- With external investment vital for divisions like TKMS and Nucera, it's essential to implement a community policy that fosters transparency and aligns business interests with the aspirations of potential investors, ensuring a smooth transition towards autonomy.
