Dusseldorf Thyssen-Krupp is taking the next step in the green transformation: the industrial group is establishing a new division called “Decarbon”. The company announced this on Thursday.
As part of the efficiency program launched by the new CEO Miguel Lopez, the group is bringing together four subsidiaries that are intended to play a decisive role in the green transformation in the industry: the hydrogen subsidiary Nucera, the industrial plant manufacturer Uhde, the rotor bearing manufacturer Rothe Erde, which supplies components for wind turbines, and the subsidiary Polysius, which produces cement plants.
On Wednesday, the CEO, who has been in office since June, presented the concept to the supervisory board – as well as further details of the new “Apex” performance program.
The division is scheduled to launch on October 1st. Lopez wants to take over the management himself. The Thyssen Krupp boss describes the new division as a “green industrial powerhouse”. The group currently already has technologies to reduce a large proportion of CO2 emissions. “We want to consistently tap the great potential of these businesses and convert it into valuable growth,” said Lopez, explaining the move in a press release from the group.
It is the next step in the new CEO’s far-reaching transformation program. According to Lopez, the efficiency program called “Apex” is intended to improve the industrial group’s cost base – and increase returns in all business areas.
“Lopez Method”
As an initial step, the new CEO will focus on the topics of material costs, sales, personnel and organization, as well as the business models and the “performance culture”. His predecessors had already initiated the restructuring of the group, but had failed.
He makes implementation a top priority: the new chairman of the board is personally on site at all appointments and brings the board together much more often than usual, according to company circles. “This definitely puts pressure on the manager level,” an insider explains to Handelsblatt. A reduction in personnel has already taken place as part of the restructuring under Lopez’s predecessor. But the “Lopez method” is now to set ambitious goals – and to be present everywhere that affects the management team.
At least in the remaining business areas. As part of the restructuring and with the creation of the “Decarbon” segment, two old areas of Thyssen-Krupp will be dissolved: the Multi Tracks segment, in which areas were bundled that are no longer part of the group’s core business, and the Industrial Solutions area , which was responsible for the construction of industrial facilities, will no longer exist in the future.
The business areas of Battery Assembly Automation Engineering, Chassis Technology Springs & Stabilizers, and the drive supplier Industrial Components that remain in Multi Tracks will be part of the existing Automotive Technology segment, the automotive supplier division, from October. In the future, the industrial group will consist of the segments Automotive Technology, Decarbon Technologies, Materials Services as well as the steel division Steel Europe and the armaments subsidiary Marine Systems.
In the 2021/2022 financial year (as of September 30), the four corporate divisions that are now bundled in the new segment generated sales of three billion euros. A total of 15,000 employees work in the area – and all of them will be transferred to the new segment. In the future, however, the industrial group will also urgently need new skilled workers, as the Handelsblatt learned from company circles. The green transformation-focused segment is expected to help the group create the incentives it needs.
With a reduction in material costs, possible price increases and new business models, weaker-performing areas of the company in particular should now be made fit. Because Thyssen-Krupp is sticking to the goals it already communicated in 2021: The industrial group is aiming for a margin of four to six percent and a positive cash flow in the medium term – and also wants to continue to pay its shareholders a dividend.
Employees reject staff cuts
The employee side supports the establishment of the new segment. “The fact that sustainable company parts such as Uhde, Polysius, Rothe Erde and Nucera have a common future and that employees are no longer in uncertainty is positive news,” said IG Metall corporate representative Daniela Jansen in a statement.
But the employees are strictly against any dismissals for operational reasons. “Programs to develop the value of Thyssenkrupp’s businesses are nothing new,” explained Jürgen Kerner, executive board member of IG Metall and deputy chairman of the group’s supervisory board. “It is important for us that the focus is on sustainably improving performance. We reject short-term measures such as foregoing necessary investments and reducing the number of employees. We expect clear messages from the board to employees that Apex is not a workforce reduction program.”
In recent years, the focus has been on staff reductions, said Tekin Nasikkol, chairman of the group works council and head of the steel division’s works council. “None of that has led to us getting better.”
CEO Lopez not only wants to improve the balance sheet, but also wants to restructure the entire group. So he is sticking to his plan to sell the steel division. Other areas could also be sold or brought into partnerships. “We continue to strive for independence for the Steel Europe and Marine Systems units,” the company says.
The majority of the submarine manufacturer Thyssen-Krupp Marine Systems (TKMS) is to be handed over to a financial investor. The favorite is the American private equity fund Carlyle. The German state also wants to take over a minority share, as the Handelsblatt learned from several people familiar with the plans.
When looking for a partner in the steel sector, the most important thing is how steel can be produced profitably in the future. Thyssen-Krupp earned significantly less in the third quarter due to weak steel and materials trading business.
More: The federal government wants to invest in Thyssen-Krupp’s submarine subsidiary