By Christoph Steitz and Tom Käckenhoff
FRANKFURT/DUESSELDORF (Reuters) -The chairman and CEO of Thyssenkrupp’s steel division have decided to step down amid a deepening conflict with its ailing German parent company over the future of the business.
The move, along with the resignation of five other members of the management and supervisory board of Thyssenkrupp Steel Europe (TKSE), creates a major leadership vacuum at a time when Germany’s top steelmaker urgently needs a new business plan.
It also lays bare the fundamental differences between TKSE and Thyssenkrupp over the strategic pathway for the steel business, in which Czech billionaire Daniel Kretinsky owns a 20% stake, with talks to sell him another 30% ongoing.
At the heart of the conflict lies the question over how much capacity and jobs must be cut at TKSE to raise profitability – and how much money it needs from its parent company to pay for the restructuring.
A proposed business plan presented by TKSE’s management earlier this month was deemed insufficient by Thyssenkrupp CEO Miguel Lopez, indicating frustration over the fact that the steel unit consistently swallows most of the group’s investments.
At the time, TKSE said it saw a gap of 1.3 billion euros ($1.4 billion) between the funding Thyssenkrupp is willing to provide and what TKSE thinks is needed.
“We no longer see any possibility of our standards of professionalism, open discussion and a speak-up culture with respect in our mutual interaction,” TKSE Supervisory Board Chairman Sigmar Gabriel told reporters following a board meeting. “It is no longer possible for us to act responsibly as supervisory board members under these conditions.”
Gabriel said TKSE CEO Bernhard Osburg is stepping down immediately and that he himself would stay on until mid-September as required under German laws.
Tensions have been building in recent months over efforts to map out a new ambitious business plan for TKSE that is aimed at regaining the competitiveness lost in recent years and enabling a sale after numerous unsuccessful attempts.
‘UNPRECEDENTED CHAOS’
Thyssenkrupp AG, in a statement following the sweeping changes, said it would press ahead with TKSE’s restructuring irrespective of the changes.
“Despite all its commendable efforts, the management of Thyssenkrupp Steel has not been able to successfully respond to the structural challenges of the steel business and its economic difficulties, not only in recent months but for years,” said Siegfried Russwurm, Thyssenkrupp AG’s supervisory board chairman.
He added that the division has spent more than 3 billion euros over the past five years, missed its own targets several times and caused billions of euros in writedowns due to poor investments.
“Thyssenkrupp Steel is constantly consuming liquidity at the expense of its own future, all other businesses and the owners of the group and has not gained control of this situation under its previous management,” Russwurm said.
Czech energy firm EPCG, via which Kretinsky has bought his TKSE stake, declined to comment.
The Alfried Krupp von Bohlen und Halbach foundation, Thyssenkrupp’s biggest shareholder with a stake of roughly 21%, was not immediately available for comment.
Gabriel said that an earlier plea from German Economy Minister Robert Habeck to delay the meeting in favour of more talks – a rare display of political intervention that shows the gravity of the situation – had found no support.
“The management of Thyssenkrupp AG has led this group into unprecedented chaos,” said Knut Giesler, who leads the branch of IG Metall, Germany’s most powerful union, in North Rhine-Westphalia, where Thyssenkrupp is based.
The slew of resignations marks the biggest leadership crisis at Thyssenkrupp since 2018, when both its CEO and chairman quit in rapid succession partly due to investor criticism over a planned steel joint venture with India’s Tata Steel. That plan later collapsed.
($1 = 0.9024 euros)
(Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Kirsten Donovan, Paul Simao and Marguerita Choy)
