Mop-up operation

ThyssenKrupp executives resign as new CEO consolidates power

Thyssenkrupp’s elevator test tower is pictured in Rottweil
Hard landing. Source: Reuters

After five weeks on the job, ThyssenKrupp’s CEO Guido Kerkhoff made his first boardroom move, forcing out the heads of the elevator and materials distribution businesses, people familiar with the company said.

Kerkhoff, a 50-year-old former chief financial officer, became the permanent CEO in September after the maker of steel and warships failed to find an outside candidate.

In order to show he is no shrinking violet, the longtime ThyssenKrupp CFO is now engaged in a mop-up operation to consolidate his new power. The first casualty is the head of the elevator business, Andreas Schierenbeck, whose resignation is expected to be announced within weeks, sources said. The company declined to comment.

Schierenbeck, 52, committed two fatal errors. First, he drew up plans to float the elevator business separately against the expressed will of the executive board and without its knowledge, a high-ranking manager told Handelsblatt. Second, he harbored ambitions for the CEO job after then-boss Heinrich Hiesinger unexpectedly resigned in July.

The elevator business, which made the lifts and escalators for the One World Trade Center in New York, is ThyssenKrupp’s most profitable division but wasn’t running at peak efficiency. The unit lagged behind Finnish archrival Kone in profitability, and Schierenbeck didn’t like management’s cost-cutting measures.

Kerkhoff, the company’s second-best choice for CEO, is currently out to prove he has the stamina and determination to raise ThyssenKrupp’s profitability by splitting up the German engineering icon. The Essen-based firm, which produced gun and mortar shells during the Franco-Prussian War in 1871, previously announced it will separate into two business following pressure by two activist investors, Swedish private equity firm Cevian and US hedge fund Elliott. It will also merge its steel business with Tata Steel Europe, a subsidiary of Indian conglomerate Tata Group.

Schierenbeck’s plan for an independent elevator business ran contrary to Kerkhoff’s intention to split the company. ThyssenKrupp Industrial will become a separately listed firm, managing not only the elevator business but plant construction, auto components and other industrial products as well.

Critical heir

In addition to Schierenbeck leaving, 64-year-old Joachim Limberg, the head of the division which sells metals, pipes and plastics, is retiring early. This leaves Kerkhoff with two top jobs to fill as he moves ahead with the split.

Supplementing the internal strife at the company, the heir of the founding Krupp family voiced criticism of his own. Friedrich von Bohlen und Halbach is the nephew of Alfried Krupp, who led the company until his death in 1967 and created the foundation that holds 21 percent of the company.

84049355 Neues Aufzugsystem von Thyssenkrupp Elevator
Moving down: Andreas Schierenbeck. Source: DPA

Von Bohlen said the Kerkhoff plan breaks the covenant set up by his uncle that the company remains whole. The fact that the foundation is going along with it shows bad faith. His own solution, which he thinks would be in accord with his uncle’s intention, is to have a lean holding company with five operating companies focusing on specific products.

However, Von Bohlen doesn’t have any significant shareholding in the company, nor any participation in the foundation. So aside from his claim to speak for his uncle, his critique is kibitzing from the sidelines.

Kerkhoff, a ThyssenKrupp board member since 2011, still has to demonstrate that his strategy will work and that he can run the company successfully. One key test will be how he fills the newly vacated positions at the top.

The stock market greeted his plans positively and, for the moment at least, he has the support of major shareholders. But he has a way to go to prove that his decisions put the company on the right path.

ThyssenKrupp graphic

Martin Murphy covers industry for Handelsblatt. Kevin Knitterscheidt covers steel and machinery. Peter Brors is a deputy editor-in-chief. Darrell Delamaide adapted this story into English for Handelsblatt Global. To contact the authors: murphy@handelsblatt.comknitterscheidt@handelsblatt.com and brors@handelsblatt.com

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