Thyssenkrupp boss denounces management failure

thyssenkrupp boss denounces management failure

"I’m not going to gloss over anything here, because it’s obvious that a lot has gone wrong in the past," said the manager, who has only been in office since the beginning of 2011. Germany’s largest steel group has to cope with a record loss of five billion euros in the fiscal year ended september due to misinvestments overseas.

On the previous evening, the supervisory board had dismissed half of the management board at the end of the year. Steel business in europe now also causing problems. The group CEO’s new share price was well received on the stock market. Thyssenkrupp shares rose almost 6 percent by midday to top the dax index.

The background to the deep crisis is above all massive losses in the construction of steel mills in brazil and the USA. A further 3.6 billion euros had to be written off on the steel mills, which are now up for sale. Hiesinger called the outmab of misinvestments dramatic. For seven years, the group has spent more money than it has received.

"The disaster at steel americas has shown us that our management culture has failed at many points in the company," said hiesinger. Rope systems and blind loyalty were often more important at thyssenkrupp than business success. "A culture was cultivated in which deviations and misdevelopments were concealed rather than corrected."In addition, some people apparently had the opinion that "rules, regulations and laws do not apply to everyone," criticized hiesinger.

Since taking office at the beginning of 2011, he has fired around 50 employees for improper business practices. Hiesinger declared that he would not show any tolerance in the case of deaths, even if the group were subsequently to lose in labor courts. "This signal is crucial," said the manager. This is also a lesson from the corruption traps at his former employer siemens and an important signal to all employees.

Following the fallout from improper business practices, hiesinger announced his intention to establish a new corporate culture and break up old structures. Top managers are having to resign in a row: jurgen claassen, who is responsible for good corporate governance (compliance), will have to leave at the end of the year, as will olaf berlien, head of technology, and edwin eichler, head of steels. No decision has yet been taken on a new executive board member, hiesinger said. The board of management is accused of not having taken the right action to deal with the problems.

Hiesinger defended the role of the supervisory board under the chairmanship of gerhard cromme, who has also been severely criticized recently. The control committee had supported all decisions in brazil and the united states. The statements made by the former management under hiesinger’s predecessor ekkehard schulz turned out to be too optimistic and also wrong. The role of the old executive board and possible claims for damages are now being re-examined by the supervisory board. The result of the evaluation will be available in january.

Small shareholders, on the other hand, demanded an open discussion, also about the role of the chairman of the supervisory board. At the annual stockholders’ meeting in january, thomas hechtfischer, managing director of the german association for the protection of investors in securities (DSW), will only vote to approve the actions of the management board and the supervisory board if the necessary transparency has first been created, he announced.

The group, which is heavily in debt with 5.8 billion euros, is in a serious situation, said hiesinger. After the dramatic misinvestments in new steel mills overseas, the steel business in europe is now also causing increasingly serious problems. Job cuts are not ruled out either.

In the steel business in europe, operating profit slumped by almost 80 percent to 247 million euros in the fiscal year ended september. Group suffers from weak demand and rough price pressure. The waiting trend has continued since october. The group therefore expects lower earnings and lower sales in the first quarter of its new fiscal year. Nevertheless – unlike most of the european competitors – there should still be a win. Thyssenkrupp wanted to extend the short-time work introduced in august for some of the 17,500 steelworkers in germany.

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