Thyssenkrupp draws conclusions from steel debacle

thyssenkrupp draws conclusions from steel debacle

The two new steel mills in brazil and the USA have already cost around twelve billion euros and have repeatedly pushed the essen-based steel giant deep into the red.

Little improvement in sight even in the long term. Now the patience of the former siemens manager is at an end: on tuesday, hiesinger put the group’s project, initiated by his predecessor ekkehard schulz, on trial and also did not rule out selling the two steel mills.

The new group president was appointed with the aim of strengthening the technology sector of the essen-based industrial giant. But in view of a mountain of debt that has already grown to around 6.5 billion euros, he simply doesn’t have the financial leeway. The manager has now firmly rejected any further investment in the american steel business. The money is now needed for other projects, he said.

It is now officially certain that the trip to ubersee is a debacle. It has tied up a lot of resources that were lacking elsewhere. Critics have long complained that thyssenkrupp is no longer top class in other segments because of the gigantic expenditures in the steel area.

"We have two rough construction sites. Stainless steel and steel americas," said hiesinger, describing the group’s predicament. A solution is already in sight for the likewise loss-making stainless steel business, now that only the antitrust authorities have to approve the sale to the finnish competitor outokumpu.

He did not want to be completely taken in by his plans for the second "rough construction site" yet. Only a closure of the newly built steel mills was ruled out by hiesinger. Initial talks had also been held with the brazilian raw materials company vale, which has a stake in the steel plant in brazil. There is no timetable.

Although hiesinger did not want to comment on a possible sales lottery, the bottom line is that the group will probably have to prepare for losses of billions of euros as a result of the american "steel adventure. For hiesinger, now is the time to act – even if it is painful and expensive. "But our goal must not be to merely compensate for losses within the group," he said. The entire group must be profitable. And hiesinger sees hardly any opportunities left in the american steel mills.

From the outset, the brazil plant in particular has been a story of mishaps, mishaps and mishaps. Built in a marshy area, construction costs exploded. To make savings elsewhere, a chinese company was hired to build the coke plant instead of using the group’s own specialists.

Hiesinger, however, avoided assigning blame. According to the facts, the right decision was made when planning the project. "However, the facts have changed."In view of the economic upswing in brazil, the situation has changed – wages are rising, the brazilian currency is appreciating and raw materials are becoming more expensive. On the other hand, the US economy was weak. All this now calls into question whether the two plants can be run together in a commercially viable way, hiesinger explained.

In the new plants, managers also change frequently. After the former head of steel, karl-ulrich kohler, and hans fischer, the head of finance responsible for steel, peter urban, is now leaving the company. Former group CEO schulz has also already taken responsibility and resigned from the supervisory board at the end of 2011.

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