Stuttgart The search for a new CEO has come to an end at ZF. The supervisory board of the second largest German automotive supplier ZF promoted chassis boss Holger Klein to CEO in a special meeting on Friday. He is to take over the management of the company from Wolf-Henning Scheider at the turn of the year. On October 1, he will initially be promoted to Deputy CEO.
It had already become apparent that, despite external candidates, an in-house manager would win the race. The new chairman of the supervisory board, Heinrich Hiesinger, is known for having a soft spot for internal candidates.
Of the three eligible managers from the company’s board of directors, Holger Klein was the favourite. The 52-year-old former McKinsey consultant came to ZF eight years ago and earned his merits for the chief post through his leading role in the integration of the billion-dollar takeover TRW.
ZF took over the Americans in 2015 for a double-digit billion sum – the largest acquisition in the company’s history. The foundation company, which grew up with transmissions and chassis, was able to catch up with the industry leaders Bosch and Continental in future technologies such as electromobility and autonomous driving.
Top jobs of the day
Find the best jobs now and
be notified by email.
ZF board member Klein was also involved in the strategic realignment of ZF and the expansion of international activities. In 2017 he took over the management of the core division Car Chassis Technology. Klein has been on the board since October 2018. He is responsible in particular for the Asian key customers and is therefore currently managing his areas from Shanghai. From there he also heads the chassis division.
In addition to the change at the top, the ZF Executive Board is being restructured overall: With Scheider, CFO Konstantin Sauer (62) and the head of the commercial vehicle business, Wilhelm Rehm (63), are leaving as planned and due to age. “The almost simultaneous end of three appointments from proven, successful and highly valued board members is a special challenge for the company,” said Supervisory Board Chairman Hiesinger.
ZF has already found a successor for the commercial vehicle business in Peter Laier (54). Laier left competitor Knorr Bremse in Munich last fall, also to serve out a non-competition clause in good time and to be free for the new post. There is not yet a successor for the outgoing CFO, which gives ZF the option of appointing another woman to the Executive Board.
International experience and successes for Klein
In addition to Klein, Stephan von Schuckmann, head of the drive division, and Martin Fischer, head of active and passive safety technology, were also traded as candidates for the top of the group. But the sum of merits and skills was probably the deciding factor for Klein.
Among other things, the business graduate with a deep technical understanding has already worked in all three world markets: As a partner of McKinsey, he came in 2014 with many years of experience in the international consulting business for the (automotive) industry. In this function, he has also advised tech companies in the USA and is therefore also familiar with an industry that has become extremely important for the automotive business. He also pushed ahead with the positioning of ZF in Asia with new development centers.
Also read about ZF:
Klein is valued because he “can make tough decisions while remaining appreciative and empathetic,” the company says. In Asia, the inquisitive manager is said to have learned Chinese and also acquired software programming skills. Klein acts like a digital native in everyday life, using social media and all current digital means of communication. He is considered modern and unpretentious. He trains his stamina by cycling and running.
CEO Wolf-Henning Scheider is leaving at the end of the year
CEO Scheider, who will be in office until the end of the year, announced a few weeks ago that after five years in office he would not be looking for a second contract and would be leaving at the end of the year. Scheider was the only external manager to date at the helm of the foundation company.
Andreas Brand, the mayor of Friedrichshafen, welcomed the decision. As head of the Zeppelin Foundation, he is considered the key shareholder: the foundation holds more than 93.8 percent of the shares in ZF. General works council chief Achim Dietrich had already indicated in an interview with the “Südkurier” that he would prefer an internal candidate.
It was different with Scheider at the beginning of 2018. His predecessor Stefan Sommer had fallen out with the supervisory board and especially with the mayor of Friedrichshafen in the course of 2017 after he had not received the green light for the billion-euro takeover of the brake manufacturer Wabco. The fronts were hardened. The head of the supervisory board at the time, Franz-Josef Paefgen, who was also a member of the supervisory board at the competitor Mahle, skillfully guided the then Mahle CEO Scheider in a flash move from Stuttgart to Lake Constance.
At that time, the capital side of the Supervisory Board really wanted an outside heavyweight to bring calm back to the company. Two years later, Scheider was allowed to make up for the strategically important takeover of Wabco, which Sommer was still refused. However, some managers with potential have left the company in recent years, which many industry observers attribute to Scheider’s strict management style.
Economically, ZF did quite well last year. Since car manufacturers prefer high-margin luxury models in times of chip shortages, sales of expensive automatic transmissions have also increased. However, the limited production has not left the supplier completely cold: According to Scheider, the drop in sales due to the production cuts by the car manufacturers adds up to an additional 2.7 billion euros.
Overall, however, ZF’s sales increased by 17.5 percent to 38.3 billion euros last year – and are thus again higher than before the pandemic. The adjusted EBIT increased from one to 1.9 billion euros, the EBIT margin rose to five percent. Earnings after taxes turned from minus 741 to plus 783 million euros.
The company recently remained cautious about the outlook for 2022 in view of the Ukraine war, supply bottlenecks and inflation. Subject to no further escalation, ZF expects group sales of more than 40 billion euros this year. The adjusted EBIT margin should be between 4.5 and 5.5 percent. However, ZF will present its half-year figures at the beginning of August. There could be forecast corrections.
High levels of debt harbor risk potential
One of the challenges of the new CEO are the high debts from the two major acquisitions of TRW and the brake specialist Wabco, which currently amount to ten billion euros. The imminent collapse of the economy and the turnaround in interest rates are increasing the pressure here: after all, loans are always linked to meeting earnings targets. Although the equity ratio rose from 12.1 to 19 percent at the end of 2021, it is significantly weaker than, for example, that of the industry leader Bosch, which is 45 percent.
The supplier must qualify its employees for the electric age.
(Photo: dpa)
In addition, ZF must master the transformation to electromobility – and avoid mass layoffs as far as possible. ZF recently granted the location of the largest transmission plant in Saarbrücken, which alone has 9,000 employees, until the end of 2025. Because the supplier has orders in the tens of billions for electromobility. But the qualification of the workforce is a mammoth task – just like the competitors Bosch, Continental, Vitesco and Schaeffler.
More: Conflict between car manufacturers and suppliers escalates