Schulz, Ekkehard D. 1941–
Ekkehard D. Schulz
Chairman, Thyssen Krupp
Education: Clausthal Technical University, PhD, 1971.
Career: Clausthal Technical University, 1967–1972, member of scientific staff and chief engineer; Thyssen Group, 1972–1984, technology manager; Thyssen Stahl, 1985–1986, deputy member of executive board; 1986–1988, member of executive board; 1988–1991, director; 1991, chairman; Thyssen, 1991–1998, member of executive board; 1998–1999, chairman; Thyssen Krupp Stahl, 1997–, chairman; Thyssen Krupp, 1999–2001, cochairman; 2001–, chairman.
Address: Thyssen Krupp, August-Thyssen-Strasse 1, 40211 Düsseldorf, Germany; http://www.thyssenkrupp.com.
■ Ekkehard Schulz helped guide the merging of two of the oldest and largest European steelmaking companies in the late 1990s. Fried Krupp AG Hoesch-Krupp and Thyssen were longtime rivals whose histories could be traced back over nearly two centuries. Both companies were founded as family firms and were still controlled by the heirs of their original founders well into the 20th century. The company that resulted from the merger, Thyssen Krupp, became the third-largest steelmaker in the world, a conglomerate that dominated the production of steel, car parts, and elevators.
Schulz's watch, coming as it did during the first decades of the European Union, took the combined steelmakers into the 21st century. He tried to make the traditional heavy-industry companies more competitive by selling off, refinancing, or spinning off new companies out of less profitable segments. In 2000 Schulz opposed his cochairman Gerhard Cromme's idea of putting forth an initial public offering (IPO) of stock in the company's steel business, which had been plagued by seasonal fluctuations in prices and profitability; when the IPO deal collapsed, Cromme left the management team and Schulz became sole chairman of the combined company. Within months
Thyssen Krupp's stock, which had fallen to nearly half of its value at the beginning of 2000, had completely recovered and, according to the Financial Times contributor Peter Marsh, had "outperformed the German Dax index by 90 percent" (December 5, 2003).
STEELING HIMSELF FOR CHALLENGES
When Ekkehard Schulz took the helm of Thyssen Krupp in 1999, he was continuing along a path that he had been following for over a quarter of a century. He began his career as a professor and engineer at his alma mater, Clausthal Technical University. In 1972 he moved to Thyssen Group in Düsseldorf, where he worked as a manager in steelmaking technology. In 1985 he joined the board of Thyssen's steelmaking branch, eventually rising to become the chairman of the executive board of the joint Thyssen Krupp Stahl, the world's largest producer of stainless steel, as of 1997. In his capacity as the head of one of the world's largest steelmaking companies Schulz dealt with economic downturns, accusations of "dumping"—or selling steel in foreign markets below the market price in order to reduce competition—by the United States, problems associated with integrating the heavy industrial economy of East Germany with that of West Germany, and the unification of Thyssen with Krupp in 1999.
The most complicated situation that Schulz faced in the late 1990s was the gradual establishment of a close relationship between the two German industrial giants Thyssen Group and Fried Krupp AG Hoesch-Krupp. Each company had a long and complex history going back over one hundred years. They had been owned and controlled by members of the Thyssen and Krupp families through the mid-20th century; they had been founded and led by men and women of strong character, and each had its own traditions and corporate cultures. Bringing the two firms together would be one of Schulz's toughest challenges.
Of the two companies that merged to form Thyssen Krupp, the older was Krupp. That company was begun in 1811 when the German entrepreneur Friedrich Krupp started a factory in his hometown of Essen in the Ruhr river valley—soon to become the heartland of German industrial production—to produce high-quality cast steel for tools and dies. Although Friedrich Krupp died in 1826, his wife Therese continued the business with the help of their son Alfred Krupp. The transportation revolution, and especially the development of railroads in Europe after 1850, caused the demand for steel to skyrocket. Alfred Krupp earned his reputation through the company's production of seamless railroad tires, axles, and springs. In 1859 he ventured into the production of munitions after the company received an order from the government of Prussia—at that time the military powerhouse of continental Europe—for three hundred blanks for gun barrels.
Munitions quickly became an important aspect of Krupp's production. The firm produced some of the most successful German weaponry used during the Franco-Prussian War of 1870–1871. Alfred's son Friedrich Alfred Krupp made millions by constructing the armor plating that protected German battleships during the arms race leading up to World War I. Between 1914 and 1917 the Krupp firm produced the steel and fabricated the guns that kept Germany and its allies actively fighting. Huge cannons—in particular the "Big Bertha," a large gun named after Friedrich Alfred's daughter, who was heading Krupp Steel at the time—further enhanced the firm's reputation; that reputation, however, played against the company's interests following the signing of the treaty of Versailles in 1919. The terms of the treaty specifically forbade German companies to manufacture munitions, and Krupp was forced to shut down many of its factories and lay off portions of its workforce.
The Krupp family was still left with huge assets, however. They owned chains of hotels, banks, mines, cement works, and a large proportion of shares in many European companies. When Adolf Hitler rose to power in 1933, the Krupps drew on these resources to rebuild their munitions businesses in the Ruhr. Bertha Krupp's son Alfried, a Nazi supporter, took over the company during World War II and expanded its operations to include the manufacture of trucks, tanks, and submarines in addition to guns and munitions. At the close of the war Alfried was accused of exploiting slave labor and during the Nürnberg trials was convicted of war crimes. The company's assets were seized by the Allies, who in 1953 ordered Alfried to sell 75 percent of the company. The assets went unpurchased, however, and within a decade Alfried had turned the firm around. By the time of his death in 1967 the value of Krupp's holdings amounted to more than a billion dollars.
Alfried's death marked the end of the Krupp family dynasty. His only son, Arndt Krupp, refused to lead the company—nevertheless receiving a lifetime stipend. In January 1968, five months after Alfried Krupp was found dead in his hometown of Essen, the family firm incorporated as a limited-liability corporation—ending about one hundred and fifty years of Krupp family domination. In 1992 Krupp merged with Hoesch, and the company changed to a joint-stock corporation.
Thyssen was founded at the end of the 19th century; the company had its origins in the rolling mill in the Ruhr that was purchased by August Thyssen in the 1860s. Thyssen quickly built an empire that rivaled that of the Krupp family. Within 50 years of buying his first mill and establishing the firm of Thyssen & Company, August was worth an estimated $100 million and had property and business interests around the globe; Thyssen had become Germany's largest producer of steel, iron, and coal. August Thyssen even managed to lure some of the German munitions business away from Krupp's industry stranglehold during World War I. He died in the late 1920s and was succeeded in the family operation by his son Fritz.
August Thyssen had been a noted republican, detesting the autocratic power of the German aristocracy; Fritz on the contrary was a conservative, a fervent opponent of Communism, and a supporter of Adolf Hitler early in his career. Fritz Thyssen provided the politician Hitler with financial backing during his drive for the chancellorship. Fritz was a sharp businessman who restructured the myriad Thyssen family holdings into a single trust, Vereinigte Stahlwerke. Through its mines and factories Vereinigte Stahlwerke controlled a majority of Germany's iron-ore interests and became one of the foremost companies in the country.
By the end of the 1930s, however, Fritz Thyssen had become disillusioned with Hitler's megalomania and targeted persecutions of religious and ethnic groups. In 1939 he left Germany for Switzerland; Hitler promptly seized Fritz's property, worth an estimated $88 million. In 1941 Thyssen was captured in France, and he spent the rest of the war in a variety of camps, ranging from the infamous concentration camp Dachau to a small detention camp in northern Italy. After the war the Allies put the industrialist on trial for his original support of the Nazis—disregarding the fact that he had also been one of the dictator's victims. He was ordered to pay a total of 15 percent of his holdings as restitution for his Nazi past. Fritz Thyssen died in 1951, a broken and embittered man, while on a visit to his daughter in Argentina.
While the Allies were trying to dissolve Krupp's holdings, they were also breaking Vereinigte Stahlwerke into a series of separate companies. In 1953 August Thyssen-Hütte, the ancestor of the modern Thyssen Stahl, emerged from the breakup as a publicly traded company. Fritz's widow, Amelia, continued to run the company until her death in 1965, leading Thyssen Stahl to become the largest steel producer in Europe and the third-largest company in Germany. By the 1990s Thyssen had passed Krupp in both size and profitability.
By that decade both industrial giants were in their second centuries of existence and were facing new challenges and increased competition—especially beginning in the 1970s—from cheaper third-world steel and the advent of new metals in industrial sectors previously dominated by steel. Soon both Thyssen and Krupp had to diversify their interests, moving away from steel production into areas as disparate as finance. The tough business climate of the 1970s along with a large decline in European steel production led to discussions of a possible merger in 1983. The unification did not occur at that point, but the discussions brought both companies closer together.
ENTRY OF SCHULZ
It was about that time that Schulz came to Thyssen from Clausthal Technical University. His education and career made him an ideal candidate to work with both firms; he was appointed a board executive of the two companies' already merged steel businesses, Thyssen Krupp Stahl, in 1997, making him a key figure in further discussions about a possible comprehensive merger. Two years later, when Thyssen and Krupp fully combined their operations, Schulz was one of the primary contenders to lead the new company.
On paper the merger promised to serve the interests of both companies well. German production had been threatened throughout the decade by cheap steel from Communist bloc nations such as the Czech Republic and Slovakia. Western European governments responded to the crisis in which their domestic steel industries found themselves by providing subsidies—which amounted to about $80 billion in the two decades between 1973 and 1993. While these tactics may have kept domestic European steelmaking afloat, they also rewarded noncompetitive strategies, as Schulz noted in a speech delivered in 1993 before the American Institute for International Steel, which was excerpted in American Metal Market. When the subsidies were discontinued, steel companies were forced to find new ways of making profits without the benefit of government assistance. The merger of Thyssen and Krupp was one such tactic. Savings produced by the merger were estimated in the range of $300 million per year; despite opposition from some stockholders, the deal went through relatively quickly.
Three figures emerged in the subsequent struggle over leadership. Schulz's rivals included the head of Thyssen, Dieter Vogel, and the head of Krupp, Gerhard Cromme. Vogel was eliminated from the restructured company's leadership fairly early on, and for a time Schulz and Cromme served as cochairmen. Cromme's fall came somewhat later, after he engineered an ultimately unsuccessful IPO for a spin-off of Thyssen Krupp's steel businesses. Cromme and his team had overestimated the price companies would be willing to pay by about 50 percent; they had expected to raise between EUR 4 and 4.5 billion, but actual sales information suggested that they would be hard pressed to raise more than EUR 3 billion. By October 1, 2001, Cromme had left, and Ekkehard Schulz was the sole chairman of Thyssen Krupp.
Under Schulz's leadership Thyssen Krupp prospered. The chairman's team refocused the company on its core activities: the production of steel car parts and elevators and related goods and services. Noncore activities, as Schulz explained in an interview with Peter Lamprecht in the German periodical Die Welt am Sonntag, were slated for disposal. Still, Schulz noted that the company's remaining businesses were not just centered in his home country: "In 1999 we were still a German group with international activities. By contrast, today's Thyssen Krupp is an international technology group with its home base in Germany" (March 14, 2004).
Of Thyssen Krupp's core activities the most profitable was perhaps the trade in automobile parts. In an effort to reduce body weight and improve gas mileage, manufacturers had moved away from relatively heavy steel auto bodies, replacing them with lighter aluminum and magnesium; in 2003 Thyssen Krupp challenged this trend with what they called the NSB—the New Steel Body. By changing the way that auto bodies were constructed, Thyssen Krupp engineers cut the weight of steel bodies by almost a quarter. The new, innovative steel body, which was put together using laser-welding technology and hollow compartmentalized sections, proved very efficient in collision simulations, meeting or exceeding European standards for automobile safety.
MAN OF STEEL
Despite the fact that the German economy remained depressed through 2003, Schulz held high hopes for Thyssen Krupp's future. In 2004 the company announced that it would merge its extensive shipyards—an inheritance from its founding companies' munitions-producing history—with those of Howaldtswerke-Deutsche Werft, the German submarine manufacturer. A writer in the Economist speculated that a cross-border merger with the French defense contractor Thales could be the next step in creating a truly pan-European industrial economy. As had been the case throughout its founding companies' long history, Thyssen Krupp remained at the center of debates about the future of the world's economy.
See also entries on Thyssen AG and Thyssen Krupp AG in International Directory of Company Histories.
sources for further information
"Business Brief—Thyssen Krupp AG: Net Profit More Than Doubles, but 2004 Outlook Is Lowered," Wall Street Journal, December 5, 2003.
"Business: Creating Euro Giants; Industrial Policy," Economist, May 22, 2004, p. 67.
Deveney, Paul J., "World Watch," Wall Street Journal, January 12, 1998.
Fuhrmans, Vanessa, "German Obstacles Produce a Slew of Failed Mergers," Wall Street Journal, September 15, 2000.
——, "Thyssen Krupp Calls Off IPO of Steel Unit as Shares Fall," Wall Street Journal, August 17, 2000.
Honeywill, Tristan, "Steely Resolve," Professional Engineering, October 1, 2003, p. 37.
Kohl, Christian, "Thyssen Krupp: 59,000 Workers, $13 Billion in Sales," Iron Age New Steel, March 1999, p. 70.
Lamprecht, Peter, "Five Years Thyssen Krupp—Interview with Prof. Schulz," Die Welt am Sonntag, March 14, 2004.
Marsh, Peter, "Thyssen Krupp Defends Conglomerate Status," Financial Times, December 5, 2003, p. 29.
"Prof. Dr. Ekkehard D. Schulz, Chairman of the Executive Board," Thyssen Krupp http://www.thyssenkrupp.com/index.html?lang=eng&id;=konzern/schulz.html
Schulz, Ekkehard, "Capacities Require Rationalization," American Metal Market, December 27, 1993, p. 14.
Selland, Kerri J., "Thyssen Chief Sees U.S. Focus on Imports of EC Steel 'Fuzzy,'" American Metal Market, December 1, 1993, p. 2.
Sims, G. Thomas, "Europe Posts Dismal Quarter but Sees an Upturn: Euro-Zone Growth Is Flat as Brussels Sticks to View That Output Will Edge Up," Wall Street Journal, August 15, 2003.
"Thyssen Krupp," Appliance, September 2001, p. 24.
"Thyssen Krupp Gives Up Ambitious IPO Plan," Euroweek, August 18, 2000, p. 14.
—Kenneth R. Shepherd