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ThyssenKrupp Leader Declares Reformation

ThyssenKrupp CEO Heinrich Hiesinger considers his company’s foray into the Americas its “most costly” mistake.

ThyssenKrupp CEO Heinrich Hiesinger considers his company’s foray into the Americas its “most costly” mistake.

Photo by Roberto Pfeil/dapd

Watching his company’s proud industrial history become “a case of a managerial culture gone wrong,” ThyssenKrupp chief executive Heinrich Hiesinger says it’s time to redirect the German powerhouse, according to a feature in the Wall Street Journal in December.

Among Hiesinger’s plans is a change of focus from heavy industry to high-tech engineering — and selling off the new twin steel mills in Alabama, which contributed heavily to the company’s $6 billion loss last year.

In assessing the financial status of the company, the WSJ wrote: “Most costly, though, has been ThyssenKrupp’s steelmaking foray in the Americas. It bet billions of dollars that it could manufacture steel slabs in Brazil, then process them into high-grade sheets in Alabama. But delays and mismanagement plagued the project from the start. By the time the Brazil plant began running in 2010, a rising Brazilian currency and climbing wage costs had dashed the economics of ThyssenKrupp’s plan, while steel demand in the U.S. slowed. The plants now have a book value of €3.9 billion, just a quarter of the €12 billion ThyssenKrupp ended up spending on the project.”

Meanwhile, ArcelorMittal, the world’s biggest steel company, has reportedly raised $4 billion in efforts to make an offer for ThyssenKrupp’s Americas plants, according to the Economic Times of India and Reuters.

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