Thyssenkrupp’s new CEO, Martina Merz, is the first woman to lead one of Germany’s big industrial firms – but not the first to try turning it around.
The “submarines-to-elevators” conglomerate has 670 subsidiaries worldwide, and is one of the world’s biggest steel producers. It is also in the midst of prolonged crisis. Only a few weeks prior to Merz’s appointment, Thyssenkrupp was dropped from blue-chip share index DAX, due to its tumbling share price. It has been plagued by slowing sales, sinking profit and unclear strategy for years.
Recruiting leadership talent willing and capable of turning Thyssenkrupp around has been a major challenge for the company. In July 2018, both Chairman Ulrich Lehner and Chief Executive Heinrich Hiesinger stepped down in response to disgruntled investors’ insistence on aggressive restructuring. The board tapped an internal candidate, Chief Financial Officer Guido Kerkhoff, to assume both roles. But Kerkhoff also failed to swiftly enact a radical turnaround. Despite a five-year contract, he was ousted only 14 months later.
This time around Thyssenkrupp is being especially cautious. Merz, was appointed Chairwoman of Thyssenkrupp’s Supervisory Board in February, has been charged with leading the company for a 12-month term while the board searches for a long-term successor. An engineer by training, Merz was previously an Executive Vice President at Robert Bosch, and more recently, CEO of Chassis Brakes International. Her board experience within the industrial sector is extensive, including memberships on the boards of Lufthansa, Volvo and SAF-Holland.
As Merz takes the helm, the question of how Thyssenkrupp should be restructured looms large, as does the sale of its successful lifts business, Thyssen Industrials, to raise the funds for restructuring and debt payments. Various avenues that Kerkhoff attempted to pursue went nowhere: Regulators blocked a plan to split the company into a unit centred on Thyssen Industrials and Thyssen Materials, which would have included its troubled steel business. A plan to merge the steel unit with India’s Tata group was also derailed.
Compounding the challenges Merz has accepted is the current malaise within Europe’s manufacturing sector. As The Economist reports, Thyssenkrupp issued four profit warnings during Kerkhoff’s tenure. Now it is feeling the impact of weaker demand from carmakers, the slowdown in the Chinese economy, and uncertainties surrounding international trade tensions. Restoring stability will require Merz to draw on her inventiveness as an engineer as well as the vision and sense of stewardship reflected in her strong record of board experience.