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Thyssenkrupp's Latest Strategy Shake-up: A Return to the Past?
In a surprising twist, Thyssenkrupp's recently unveiled corporate strategy appears to mirror its previous approach, as CEO Miguel López plans to make the corporation's divisions more autonomous. This strategy, however, is a near-copy of the "Group of Companies" concept former CEO Martina Merz introduced before her departure in May 2023.
The new strategy, announced on November 28, 2023, aimed to centralize control over all divisions from steel to trade to automotive. However, López is now advocating for the opposite, suggesting each division will operate independently, with a small holding company at the top managing the finances and overseeing overall performance.
The recurring nature of Thyssenkrupp's corporate restructuring is evident in López's tenure, which has only spanned 17 months. The revolving door of CEOs at the Essen-based company shows no signs of slowing, and López may be eligible for an extension based on union rhetoric.
Many question the feasibility of this latest strategy. Thyssenkrupp intends to hold majority stakes in the divisions when they go public or merge with partners. The exception is the steel business, which the company aims to offload from its balance sheet as quickly as possible. However, investors may be wary of investing in business areas where the parent company retains influence, given the historic lack of progress under Thyssenkrupp's leadership.
Independence comes at a cost, both financially and temporally. López anticipates multiple years to implement the changes. In the meantime, the divisions will require ongoing support and capital from the parent company.
The desire for financial independence is understandable given the challenges each division faces. Key divisions, such as TKMS and Nucera, rely on external investment to survive. However, the quickest path to financial autonomy may be for the parent company to gradually detach from its divisions, minimizing further capital outlay.
Labor unions, particularly IG Metall, express concern about the potential dismantling of Thyssenkrupp and the resulting job losses. Despite union opposition, many employees might welcome the separation from the corporate headquarters if it leads to improved efficiency and competitive positioning.
As Thyssenkrupp continues its perpetual cycle of change in Essen, the future remains uncertain. The company faces a challenging industrial landscape marked by declining steel demand, fierce competition, and global uncertainties. Only time will tell if this latest strategy will secure Thyssenkrupp's long-term success.
The new strategy proposed by CEO Miguel López involves autonomy for divisions, such as community policy, employment policy, vocational training, industry, finance, and business, and a small holding company managing the finances and overall performance. This shift could potentially lead to vocational training programs within each division becoming more tailored to industry-specific needs.
The long-term financial independence of Thyssenkrupp's divisions, including its key businesses like TKMS and Nucera, is a significant aim of this strategy. However, achieving this independence may require the parent company to gradually detach itself from these divisions, minimizing further capital outlay in the process.
