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INDUSTRY & TRADE

German industrial giant ThyssenKrupp faces ‘aggressive restructuring’ after bosses quit

Turmoil has erupted at industrial giant Thyssenkrupp after a mega deal merging its steelmaking arm with India's Tata, with its bosses quitting amid an acrimonious battle with shareholders on whether to break up the venerable institution.

German industrial giant ThyssenKrupp faces 'aggressive restructuring' after bosses quit
Steelworks from ThyssenKrupp in Duisburg, North Rhine-Westphalia. Photo: DPA

The leadership chaos sparked fears of further job losses as some key investors push for redical surgery on the two-century-old conglomerate that makes everything from elevators and submarines to car components, turnkey industrial installations and steel.

“It is clear that ThyssenKrupp is at a crossroads…aggressive restructuring may be in the cards,” analysts at US investment bank Jefferies wrote Tuesday after supervisory board chief Ulrich Lehner followed chief executive Heinrich Hiesinger out of the door late Monday.

Hiesinger, who quit earlier in July, and Lehner were both fierce defenders of keeping ThyssenKrupp's sprawling structure intact.

“I take this step consciously to enable a fundamental discussion with our shareholders on the future of ThyssenKrupp,” Lehner said in his parting statement.

“A break-up of the company and the related loss of many jobs is not an option,” he warned in a final swipe at his opponents.

Tracing its roots back to 1811 and a household name of German industry for  over a century, ThyssenKrupp booked 41.5 billion euros ($48.7 billion) of revenue in its 2016-17 financial year and employs some 159,000 people worldwide.

July should have been a month of optimism for the Essen-based group, after it sealed a deal in late June with India's Tata to merge their European steel operations.

SEE ALSO: Germany's ThyssenKrupp and India's Tata merge to become Europe's second-biggest steelmaker

Bosses had hoped to find 400 to 500 million euros of annual savings, in part by shedding up to 4,000 jobs, persuaded that the merger would secure ThyssenKrupp's historic core against competition from a global flood of cheap Chinese steel.

But activist shareholders like Swedish investment firm Cevian and the US hedge fund Elliott want management to go further.

The two shareholders have been pushing for its dismantling with “methods that could even be described as psychological terrorism,” Lehner told weekly Die Zeit earlier this month.

Beyond their fundamental differences with bosses over the company's direction, the investors also were displeased by the details of the Tata deal.

Hiesinger provided powerful German union IG Metall guarantees to preserve jobs and keep sites open.

'Power vacuum'

News that Hiesinger backer Lehner had quit bounced ThyssenKrupp's stock to the top of the DAX index of blue-chip German shares, gaining 8.6 percent to trade at 22.37 euros by 1100 GMT Tuesday.

The share price appears to have tracked investors' hopes of realizing their dream of breaking up the group to sell off its units or list them independently on the stock market.

Its value had fallen in the wake of the Tata deal as the Alfried Krupp Foundation – the historic anchor shareholder which controls 21 percent of the firm – spoke out against unbundling its divisions.

But the institution, whose founding document calls for ThyssenKrupp to be preserved as a whole “as far as possible into the future”, no longer has the blocking minority needed to hold off other shareholders.

Cevian and Elliott has a combined stake of about 20 percent of the group's shares, making them more or less evenly matched with the foundation and leaving neither side with an uncontested claim on leadership.

But foundation bosses' “muted” defence of the Tata tie-up “has clearly left a power vacuum filled by Cevian/Elliott,” Jefferies analysts wrote.

“Activist investors are increasingly likely to come out on top… a broader break-up of ThyssenKrupp is increasingly likely,” they added.

Business newspaper Handelsblatt predicted that “those who have to pay the price for this development could be the workers,” with hoped-for savings at the different units after a breakup likely to come from more job losses.

ThyssenKrupp works council chief Wilhelm Segerath charged that “we're protecting the financial markets, but protecting too little industry and the real economy” in comments to news agency DPA.

“With the foundation and all the shareholders, we want to try and maintain the enterprise,” he said.

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FARMING

WTO rules US tariffs on Spanish olives breach rules

A US decision to slap steep import duties on Spanish olives over claims they benefited from subsidies constituted a violation of international trade rules, the World Trade Organisation ruled Friday.

WTO rules US tariffs on Spanish olives breach rules
Farmers had just begun harvesting olives in southern Spain when former US President Donald Trump soured the mood with the tariffs' announcement. Photo: Jorge Guerrero/AFP

Former US president Donald Trump’s administration slapped extra tariffs on Spain’s iconic agricultural export in 2018, considering their olives were subsidised and being dumped on the US market at prices below their real value.

The combined rates of the anti-subsidy and anti-dumping duties go as high as 44 percent.

The European Commission, which handles trade policy for the 27 EU states, said the move was unacceptable and turned to the WTO, where a panel of experts was appointed to examine the case.

In Friday’s ruling, the WTO panel agreed with the EU’s argument that the anti-subsidy duties were illegal.

But it did not support its stance that the US anti-dumping duties violated international trade rules.

The panel said it “recommended that the United States bring its measures into conformity with its obligations”.

EU trade commissioner Valdis Dombrovskis hailed the ruling, pointing out that the US duties “severely hit Spanish olive producers.”

Demonstrators take part in a 2019 protest in Madrid, called by the olive sector
Demonstrators take part in a 2019 protest in Madrid called by the olive sector to denounce low prices of olive oil and the 25 percent tariff that Spanish olives and olive oil faced in the United States. (Photo by PIERRE-PHILIPPE MARCOU / AFP)
 

“We now expect the US to take the appropriate steps to implement the WTO ruling, so that exports of ripe olives from Spain to the US can resume under normal conditions,” he said.

The European Commission charges that Spain’s exports of ripe olives to the United States, which previously raked in €67 million ($75.6 million) annually, have shrunk by nearly 60 percent since the duties were imposed.

The office of the US Trade Representative in Washington did not immediately comment on the ruling.

According to WTO rules, the parties have 60 days to file for an appeal.

If the United States does file an appeal though, it would basically amount to a veto of the ruling.

That is because the WTO Appellate Body — also known as the supreme court of world trade — stopped functioning in late 2019 after Washington blocked the appointment of new judges.

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