Grammer AGM

Shareholders Stave Off Auto Industry Shakeup

  • Why it matters

    Why it matters

    A main investor in car parts supplier Grammer, the Hastor family demanded a management shakeup. Unions, workers and politicians instead fear an upheaval in the car industry.

  • Facts

    Facts

    • The Bosnian Hastor family, which owns some 20 percent in the supplier, has called on shareholders to replace the management and supervisory board.
    • Unions, workers, company executives and politicians warned that a takeover by the family would risk thousands of jobs, potentially unraveling Germany’s car industry.
    • Shareholders at Wednesday’s annual general meeting rejected the Hastors’ proposals and backed Grammer’s management, but the family will appeal the decision.
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    Audio

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Grammer produces headrests on seats for all German automakers. Picture source: Reuters

The power struggle ended after a nearly eight-hour-long, at times tumultuous debate that ultimately saw the majority of shareholders of car parts maker Grammer unite behind its management.

Shareholders staved off what many of them viewed as a dangerous challenge to Germany’s auto industry and the way in which suppliers and carmakers do business in the country.

The controversial, Bosnian-based investor family Hastor, which holds some 23 percent in Grammer, had drawn the ire of Grammer’s management when it called on investors to get rid of Chief Executive Hartmut Müller and  replace some members of the supervisory board with its own nominees.

The Hastors accuse Grammer – which makes headrests, armrests, and center console systems – of mismanagement. But executives, shareholders, unions and Grammer workers do not agree. They point to the company’s nearly 20-percent revenue increase in 2016 and warned that a management takeover by the Hastor family would risk some 3,000 jobs within Germany and up to 15,000 across the world.

“The Hastors are playing a reckless power game at the expense of the company and its employees.”

Ilse Aigner, Bavaria's economy minister

Mr. Müller pleaded with the shareholders to reject the family’s proposals in what he called “the most important shareholder meeting in the company’s history.” Even politicians, such as Bavaria’s Economy Minister Ilse Aigner have gotten involved: “The Hastors are playing a reckless power game at the expense of the company and its employees,” she said ahead of the meeting.

At the end of a raucous debate and fiery protests outside the convention hall in Bavaria’s Amberg, 62.78 percent of the shareholders supported the management board. A share of more than 60 percent stood behind the supervisory board.

“No investor with his head on straight would vote for the resolutions,” Günter Hausmann, a representative of a German shareholder advocacy group, had called on the members of the meeting.

The Hastors are convinced that the Grammer CEO and Chairman Klaus Probst are in cahoots with Germany's largest carmaker Volkswagen.

Franz Ederle, a lawyer of the Hastor family, which itself was not present at the annual shareholder meeting, promised to lodge an objection and called for a new meeting in July or August this year. Courts will now have to decide on whether there will be a second vote.

Mr. Ederle said legal procedures would also have to determine whether the votes of investor Ningbo Jifeng, a Chinese shareholder brought on board as a white knight shortly ahead of the meeting, were legal. Jifeng, itself a car parts supplier, holds a 15-percent stake in Grammar.

The Hastors are convinced that the Grammer CEO and Chairman Klaus Probst are in cahoots with Germany’s largest carmaker Volkswagen and jointly developed a defense strategy to prevent the family’s takeover.

Chief Executive Müller said that orders had dropped 60 percent since January, when the Hastor family made its plans to topple the Grammer leadership public. The family believes the timing of the release of such figures was no coincidence and a poor effort on management’s part to stoke up fear among the employees of a potential Hastor takeover.

But union representatives and Hastor employees point to an episode in the summer of 2016, when the Hastors showed what stakeholders believe to be their true face. Back then, Prevent Group, a wholly-owned Hastor car parts maker, clashed with Volkswagen over the terms of delivery for seat upholstery from a Prevent subsidiary. As a direct result, a sister company halted delivery of gearbox casings to Volkswagen, forcing a halt in production of Golf and Passat models for days.

Workers at Grammer, which produces all the headrests for German carmakers, such as VW, BMW and Daimler, fear that similar coercive tactics would be employed if the Hastor clan took over at Grammer.

“Whoever tries to violently push through higher margins is consciously gambling with the existence of operations, employees and their families and even entire regions,” said Frank Iwer, a member of powerful German union IG Metall.

Markus Fasse specializes in aviation and automobile industry news and works from Handelsblatt’s Munich office. To contact the author: fasse@handelsblatt.com

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