Mobility

ZF Friedrichshafen

A small town in Germany ousts a global CEO

ZF CEO Stefan Sommer is not making Angela Merkel happy with his departure. Source: Reuters

Source: image

It is now accepted wisdom that German auto firms are in a race to adapt to the future of e-cars and autonomous vehicles or risk being left behind by more nimble competitors in China or the US. One executive who tried to position his company for the huge changes required was Stefan Sommer, CEO of ZF Friedrichshafen, the world’s third-largest car parts manufacturer.

But developing the technology of the future is expensive and Mr. Sommer ran into stiff opposition from Friedrichshafen’s mayor, Andreas Brand, head of the Zeppelin Foundation, which owns 93.8 percent of the company’s stock. He wanted the company to cut debt and increase dividend payments.

Mr. Sommer threw in the towel on Thursday, resigning from the company with immediate effect, according to a company statement. He will be replaced temporarily by CFO Konstantin Sauer until a permanent successor can be found. The fact that the board had not lined up a replacement gave credence to the idea that Mr. Sommer’s departure was a hasty decision.

Sommer's fate was sealed when the previous chairman left the company.

“In his more than five years at the helm of the ZF Group, Stefan Sommer has vigorously developed the company,” said Franz-Josef Paefgen, chairman of the company’s supervisory board.

Mr. Sommer’s fate was sealed last month when the previous board chairman, Giorgio Behr, who was Mr. Sommer’s strongest supporter, left the company.  There had been months of power struggle over the pace of change at the company, which has revenues of €40 billion a year.

The CEO had engineered the $12.4 billion acquisition of TRW Automotive, a leader in autonomous driving and e-mobility technology, to help in the fight against competitors Bosch and Continental. But his departure now probably means that the ambitious expansion strategy will be toned down or put on hold.

The power struggle pitted the competitive position of a global player in the auto parts business against the workaday needs of a sleepy German town of 60,000 population. The Zeppelin Foundation finances various charitable causes in the town, including the Zeppelin University and the Zeppelin Museum.

The irony was that Mr. Behr said in an interview with Handelsblatt shortly before his departure that the company was preparing to make other large acquisitions and hinted that ZF would buy companies to bolster its truck parts business.

US truck parts company WABCO said it had received a $7.8 billion takeover offer, without disclosing who had made it. But it said the deal fell through when the acquirer’s board rejected the proposed acquisition. The Wall Street Journal reported that ZF was the  company making the offer.

Martin-Werner Buchenau is a correspondent for Handelsblatt in Stuttgart and Charles Wallace is an editor for Handelsblatt Global in New York. To contact the authors: buchenau@handelsblatt.com and C.Wallace@extern.handelsblatt.com