Stuttgart The afternoon on Good Friday of all days was chosen by Mahle’s supervisory board chairman Heinz Junker (72) to announce the separation of CEO Matthias Arleth (54). With the departure of the ex-Webasto manager after just three months, Junker has not been able to find a permanent successor for the third time in four years.
But nobody had to go as fast as Arleth. And the change comes at an inopportune time for the automotive supplier. In the middle of the Ukraine war, there are supply bottlenecks, a lack of chips and the demand for automobiles has collapsed.
“Even if we ultimately have different opinions about the strategic course setting for Mahle, I would like to thank Matthias Arleth on behalf of the entire Mahle team for his great commitment,” Junker said in the statement. It was “mutually agreed to end the cooperation on April 30, 2022,” said the fourth-largest German automotive supplier. The company and the head of the supervisory board left it open what exactly the reason for the dispute was.
It is another surprising change in leadership at Mahle. Just a few days before the presentation of the balance sheet on April 25, the step puts the spotlight on the head of the supervisory board as a central figure at Germany’s fourth largest automotive supplier.
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External and internal successors have a hard time at Junker. Only a year ago, Jörg Stratmann, who had been in charge of thermotechnology for many years, had to leave. An internal solution failed with him after his predecessor Wolf-Henning Scheider left at short notice in early 2018 to join the much larger competitor ZF on Lake Constance.
Scheider was intended as a major solution for Junker’s direct successor to the CEO post. Because Scheider previously managed the mobility division at the industry giant Bosch. He switched to Mahle mainly because he could become the head of the company there, which he was denied at the world’s largest automotive supplier. But things didn’t go well between Junker and Scheider either, so that neither side was sad about the quick separation at the time.
separation in record time
With Arleth, the second attempt with an external manager fails in record time. Junker had given months of time to search. When he was appointed, the Chairman of the Supervisory Board was still full of advance praise: “In Matthias Arleth, we have gained both a proven expert for product development in future technologies and a consistent driver of transformation processes in order to make Mahle fit for the future.”
In any case, the scope for CEOs seems to be very limited under the all-powerful chief supervisor. This should make the search for an external solution more difficult. Because the candidate not only has to match Mahle, but above all Junker. “At Mahle there is already one person who is very dominant in his field,” says the competition.
Engineer Junker knows Mahle like no other. For a total of 18 years he was at the operative top of the company and has been Chairman of the Supervisory Board for seven years. He has an incomparable network. And the structure of the foundation gives the 72-year-old an abundance of power that an employed manager can hardly achieve in any other company.
Not a role model for corporate governance
It was 1964 when Hermann and Ernst Mahle transferred their property to the non-profit Mahle Foundation. Since then she has held 99.9 percent of the shares – but no voting rights – and concentrates on the purpose of the foundation, the promotion of health, education and culture. The foundation receives annual distributions in the single-digit millions.
In order to strictly separate non-profit and industrial interests, all voting rights were transferred to the Association for the Promotion and Advice of the Mahle Group eV (Mabeg). Mabeg thus effectively exercises the ownership function. Mabeg, in turn, includes seven experts led by Heinz Junker.
<< Read here: ZF boss leaves: Wolf-Henning Scheider does not extend his contract
As with the Bosch foundation group, Mahle will thus become a “company that belongs to itself”, on whose fate former executives have a significant influence. Experts on the principles of proper corporate management (corporate governance) generally criticize systems with a seamless transition from the CEO to the top of the supervisory board.
At Mahle, the experts should start to worry. Because who actually controls Heinz Junker? Internally he is reverently called “Professor”. Junker, born in 1949, studied and did his doctorate at the RWTH Aachen. In 1986 he went to the US automotive supplier TRW (now part of ZF Friedrichshafen). From 1996 to 2014 he was head of Mahle. And then went directly to the top of the supervisory board and Mabeg.
Transformation in a delicate situation
With the manufacture of pistons, cooling systems and now also electric drives, Mahle is one of the big players in the industry with over 70,000 employees and sales of almost ten billion euros. After two difficult years, in which losses were made and several thousand jobs were cut, the profit zone should be reached again in 2021.
In the first half of 2021, sales increased by 32 percent to 5.7 billion euros. After a minus of 146 million euros in the first half of 2020, the operating result (EBIT) rose to a plus of 201 million euros, which corresponds to an EBIT margin of 3.5 percent.
Like the entire industry, the company finds itself in a very difficult situation with a global slump in automobile production, supply bottlenecks and a shortage of chips, as well as the risks posed by the Ukraine war.
In addition, Mahle had to spend a lot of money in order to become less dependent on the combustion engine through targeted acquisitions. Mahle was also interested in Hella, but Faurecia got the company. According to the company, more than half of its sales no longer depend on the combustion engine. But the distance between the industry fourth and Bosch, ZF and Continental has increased, especially in technologies for electromobility and autonomous driving.
For the time being, Chief Financial Officer Michael Frick, 55, is to take over as CEO on an interim basis. He had already managed the company on an interim basis from March to December 2021. “The management continues to work very well together, everyone knows their tasks, everyone is well coordinated,” says a spokeswoman. Perhaps the cost-conscious manager will become a permanent solution after all.
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