ThyssenKrupp CEO on Germany's Energy Revolution 'An Effort Comparable to Reunification'
In a SPIEGEL interview, ThyssenKrup CEO Heinrich Hiesinger discusses his plans to radically restructure the steelmaking firm. He says the traditional German company is deeply concerned about the European debt and currency crisis as well as Chancellor Angela Merkel's expensive plans for an energy revolution.
SPIEGEL: Mr. Hiesinger, the debt crisis is keeping Europe in suspense. Are you worried about your money?
Hiesinger: No, I'm not worried about that. We should approach these problems in a levelheaded way. The important thing now is that the uncertainty must disappear from the financial markets.
Hiesinger: We have to accept the realities once and for all. Greece will not be able to pay its debts. We should face up to this fact.
SPIEGEL: Face up to it and pay? Then the monetary union will finally turn into a transfer union.
Hiesinger: We cannot treat Europe as a common zone in good times and egoistically pursue our own interests in crises. If we want to establish the euro as a global currency, we will need a new European financial policy.
SPIEGEL: With the result being that the weak will get used to being supported by the strong.
Hiesinger: Naturally, transfers must be tied to binding conditions so as to avoid this. That was one of the key reasons we entered into this crisis in the first place. Although we had the rules, we did not consistently demand that they be obeyed. Help without obligations cannot exist.
SPIEGEL: ThyssenKrupp faces a situation similar to Europe's: The company has to reduce debts and at the same time reinvent itself.
Hiesinger: Oh come on! You can't equate the dramatic situation in a few European countries with that of ThyssenKrupp. We are really a long way from that.
SPIEGEL: Your company's debts amount to 6.5 billion ($9.2 billion).
Hiesinger: That's true, but that level of debt is by no means critical for a company like ThyssenKrupp. There are companies with a much higher debt ratio. More importantly, we accept these realities and act accordingly. That's what differentiates us from Europe.
SPIEGEL: Rating agencies have periodically downgraded the company's credit rating to junk status, just as they have done for Greece. Why?
Hiesinger: That was certainly an exaggeration. Once again, our debt burden is manageable when compared with the value of the company.
SPIEGEL: Why are you reacting in such an exaggerated way? Unlike the European Union, which is helping Greece tackle its debts, you aren't even trying to preserve the company. You are breaking it up and selling off the family silver.
Hiesinger: The primary purpose of the planned sales is not to reduce debt. We need room to maneuver so that we can capture new markets and continue developing the company. The 6.5 billion limit our ability to achieve this goal. That's why we have decided to sell a few parts of the company. We're not breaking it up.
SPIEGEL: At any rate, you do intend to sell off divisions that represent about a quarter of total revenues and about 35,000 employees. It's the biggest change that has ever happened at ThyssenKrupp.
Hiesinger: It is undoubtedly an unusually large cut. But it's correct and necessary.
SPIEGEL: What can be so correct about depriving so many people at ThyssenKrupp of their future prospects?
Hiesinger: That's not what we're doing. We are selling off divisions that we can't continue developing on our own. In doing so, we are even creating new prospects. Besides, it produces clarity for our employees. I don't want to have to stand up in front of the employees and the supervisory board every quarter to tell them that we have to sell off yet another division or make a change somewhere in the company. I wanted a concept that endures and is supported by everyone involved.
SPIEGEL: Did you succeed?
Hiesinger: Clearly I did. We incorporated the shareholders and employee representatives into the analysis. There was considerable agreement about the requirements of the markets of the future, and about our weak points.
SPIEGEL: You identified the traditional stainless steel division, with its 11,000 employees and 6 billion in revenues, as one of those weak points. Do you already have prospective buyers, or are your intentions to sell still in the business simulation phase?
Hiesinger: No, these are no longer simulations. We have named the investment banks, have appointed new management and are in the process of creating the organizational requirements to achieve independence.
SPIEGEL: It sounds as if you planned to go public with the company.
Hiesinger: We haven't made that decision yet. We are preparing for both options, a stock split and an initial public offering. For an IPO, we are dependent on a good economic environment. That's hard to predict, so in that sense a spin-off of the division is possible.
SPIEGEL: Exactly how certain are you of finding qualified buyers? Your first attempt to spin off divisions was a terrific failure. After long negotiations, Abu Dhabi Mar decided not to buy your shipyards.
Hiesinger: That was a special case. And I'll say this very openly: I'm pleased that we've finally achieved clarity on this issue.
SPIEGEL: ThyssenKrupp has been trying to sell the shipbuilding division for years. Now the main prospective buyer pulls out, and you're pleased?
Hiesinger: We negotiated for more than a year without reaching an agreement. It couldn't continue that way. In this regard, even a minor solution and a clear decision are better than nothing. Now we can reorient ourselves.
SPIEGEL: Do you also have a strategy that extends beyond the sale of divisions?
Hiesinger: In the executive board, we have developed very clear ideas of what the company should look like in the future. Otherwise we wouldn't have reached a unanimous agreement on these sweeping steps.
SPIEGEL: What will change?
Hiesinger: First we have to move away from ThyssenKrupp being seen purely as a steelmaker, which is naturally highly dependent on the economy. We already achieve a substantial portion of our earnings with our technology division today. For example, we sell the world's most energy-efficient elevators. We benefit from urbanization, because we can offer modern cement plants and components for excavators, cranes and building machines. And our conveyor technology enables us to benefit from the boom in natural resources. We have to emphasize this more heavily.
SPIEGEL: That sounds more like a communication issue.
Hiesinger: Communication is certainly part of it. But there is also a clear concept behind it. We want to be involved in the big trends around the world, in the building of infrastructure, in the development of efficient production processes for steel and cement, for example, and in the production of automobile components that reduce gasoline consumption. These are areas we intend to expand.
SPIEGEL: Energy efficiency, mobility, urbanization: These are the trends that your old employer, Siemens, proclaimed as a strategy some time ago. Are you copying that strategy?
Hiesinger: Siemens didn't exactly invent these developments. They just happen to be the reality. We want to provide technologically superior products to address these future-oriented areas, and we are well-equipped to do so.
SPIEGEL: Without any additional purchases?
Hiesinger: Well, we don't have any spectacular purchases planned. We will substantially increase our spending on innovation and research, and we will massively expand our foreign business. We want ThyssenKrupp to become an umbrella brand for sophisticated technology. That's our goal, worldwide.
SPIEGEL: Your company has had some disastrous recent experiences with investments abroad. The construction of steel mills in Brazil and the United States was suddenly billions more expensive than planned. Can you explain this?
Hiesinger: It was a little naïve to believe that we could apply the same standards to building a plant in Brazil as we do in Europe. In addition, prices exploded because, in certain phases of the large-scale project, we needed more engineering services or qualified workers than were available there.
SPIEGEL: Despite the difficulties, you intend to complete and start up both steel mills. Why?
Hiesinger: Depending on the analysts' estimates, the mills are valued at between 400 million and 3 billion today. However, we have already invested between 8 and 10 billion. In other words, we have nothing to lose, but to that end we'll have to start up the mills first and see what they can do.
- Part 1: 'An Effort Comparable to Reunification'
- Part 2: 'After Fukushima, We Cannot Continue As If Nothing Happened'