Where to go with the steel business? This question plagued Thyssenkrupp long before the leadership change from Martina Merz to Miguel López nearly a year ago. As more funds from the 2020 sale of the elevator division are exhausted, the urgency to resolve the steel problem grows. By the end of March, only 3.5 billion euros remained from the original 17 billion euros generated by the elevator division sale. The risk that the steel division could threaten the entire conglomerate's existence is real. This makes the behaviour of IG Metall, which seems to link its very existence to the steel division, all the more perplexing. Although out of 100,000 Thyssenkrupp employees, 27,000 do work in this division.

Even Heinrich Hiesinger, leading the conglomerate from 2011 to mid-2018, was at that time trying to solve the steel problem. His plan to merge the division with Tata Steel was famously thwarted by opposition from Brussels' antitrust regulators. By that time, however, Hiesinger was no longer in the picture. The long-time Thyssenkrupp CEO fought numerous battles with major shareholders, and endured verbal attacks from works councils and union officials. In the end, it was too much for him, and he eventually resigned.

A similar fate befell Martina Merz, who also struggled with the implementation of a corporate reorganisation plan. She left in May 2023 without achieving her goals, in particular failing to resolve the steel issue in spite of various attempts. Her efforts only alienated employee representatives and her board colleagues. Eventually, the supervisory board felt that it had no choice but to negotiate her resignation. There are reasons why the board now has five members.

The problems in the steel business have not diminished since – in fact they have worsened. The global market has been grappling with increasing overcapacity for years, a problem exacerbated by the current economic situation. The OECD estimates that by 2025 the gap between steel supply and demand will expand further, reaching 644 million tons. That is more than five times the crude steel production of the 27 EU member states. Meanwhile, the green transformation of the steel industry is just beginning. The undertaking is not only costly but also directly impacts the international competitiveness of domestic steel producers.

At least the division's management is now taking the reins. A basic plan is in place that includes the long-overdue reduction of production capacity by one-fifth, along with job cuts. Details are still lacking, but there is a preliminary deal with Daniel Křetínský, who plans to initially acquire a 20% stake in the steel division. This move will give the unpredictable Czech investor a say in developing the new steel concept.

For Thyssenkrupp, the arrival of Křetínský, who is ultimately aiming for a 50:50 partnership, is crucial. Despite statements to the contrary, neither the steel division nor the parent company can manage the transformation alone. Even billion-euro subsidies from the federal and North Rhine-Westphalian governments for the first and possibly only direct reduction plant don't change this.

As the agreement with Křetínský was announced, employee representatives reacted strongly, targeting CEO López and Supervisory Board Chairman Siegfried Russwurm. The supervisory board must approve the deal with Křetínský. They meet on Thursday, 23 May. If the employees refuse to support López, things will get tight. Without the power to implement necessary changes, López is doomed to fail. That said, there are unlikely to be more changes at the top of the board under Russwurm.