Economy & Politics

The deceptive hope of Thyssenkrupp AG

Capital columnist Bernd Ziesemer
Personal-Financial.com columnist Bernd ZiesemerMartin Kress

You can ask a lot when the day is long. At Thyssenkrupp AG, the works councils and officials of IG Metall are increasingly demanding help from the state. And some managers of the group are also hoping that the federal government and the state could save the company’s deep red steel division. In truth, however, that doesn’t work at all – and the state can certainly not solve the deep-seated problems of the division.

The union’s preferred solution, that the state of North Rhine-Westphalia holds a stake in Thyssenkrupp Steel Europe AG, faces insurmountable legal hurdles. The state’s economics minister, FDP politician Andreas Pinkwart, rightly emphasized it again in an interview with the “Frankfurter Allgemeine”. A participation of the federal government, similar to Lufthansa, seems possible at first glance. But it is not: Thyssenkrupp boss Martina Merz would have to prove that the steel business was competitive before the outbreak of the Corona crisis in order to get the billions from the government’s aid fund. Lufthansa actually flew high profits before Corona, but Thyssenkrupp was already deeply in trouble in 2019. A corresponding proof is therefore almost impossible.

And even if the Chancellor were to bend her own guidelines to the breaking point, Brussels would still come into play. All state aid must be approved by the EU Commission. And that is unlikely to be available for reasons of equal treatment of all steel groups struggling for survival in Europe.

State aid not only for Thyssenkrupp

It is very difficult to justify why a company should not be able to survive without subsidies, which is currently practically debt-free after the sale of the elevator division and has a net credit of 5 billion euros. Many competitors in Europe cannot say that about themselves. That is why the EU Commission must definitely oppose special programs for Thyssenkrupp alone. Everything else led to a subsidy race in Europe that has not existed for a long time.

Realistically, there is only one option left: The federal government can transfer a few billion euros to Thyssenkrupp for the planned switch to “green steel” without coming into conflict with the EU. In principle, a decision has already been made to promote hydrogen systems for the blast furnaces. But there are also a few restrictions: If money goes to Thyssenkrupp for these purposes, it must also go to all other steel manufacturers in Germany. And completely regardless of whether they belong to German owners or foreign ones. This is exactly what the Indian Sanjeev Gupta is speculating with his offer to take over the entire steel division of Thyssenkrupp.

But even more important: the government billions for converting the blast furnaces will only have a very long-term effect and will not solve a single acute problem at Thyssenkrupp. Steel manufacturers cannot spend a cent from the climate protection program for other purposes. And when the plants for the production of “green steel” are up and running in a few years, the Essen-based company will no longer exist if the losses continue to be even approximately as bad as before.


Bernd Ziesemer is a capital columnist. The business journalist was editor-in-chief of the Handelsblatt from 2002 to 2010. He was then managing director of the corporate publishing division of the Hoffmann und Campe publishing house until 2014. Ziesemer’s column appears regularly on Personal-Financial.com. You can follow him on Twitter here.


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