Can Thyssenkrupp reinvent itself as a more lean and eco-friendly group?

Marta Elvira is a professor of managing people in the IESE business school organizations, and Helmuth Ludwig is a professor of strategy and entrepreneurship practice at the SMU Cox School of Business

When the contract for Thyssenkrupp’s CEO Miguel López recently appeared for renewal, the knife came out. In the days leading up to the board meeting, Green Party officials across the country accused the CEO of German conglomerates of prioritizing the happiness of workers and their vows to vote against him over their vice-chairman, the metals union leader.

At the event, López’s contract, which was scheduled to expire on May 31, 2026, was renewed for another five years. However, public denunciations underline the juggling methods he has to play while working to turn around, one of Germany’s most diverse industrial groups and its biggest steel producer, Thyssenkrupp.

Playing a pivotal role in Germany’s postwar industrial rise and employing around 100,000 people worldwide today, the company is striving to reposition its position as a more lean, greener, more profitable business that can meet the demands of the new industrial era.

We do so at a time when Europe is working on how to respond to US tariffs, how to promote expensive climate-friendly technologies while still remaining competitive, and how to modernize its traditional industries. Meanwhile, Germany was hit by a two-year economic slowdown, which is expected to continue in 2025, as US President Donald Trump’s tariffs are suffering additional pain in export-dependent manufacturers.

The first one on Lopez’s agenda is steel. Thyssenkrupp, an industrial powerhouse created from the merger of rival producers Krupp and Thyssen in 1999, is struggling to find a suitable strategy for steel operations. In recent decades, it has expanded and sold from the US and Brazil.

European steel companies suffer from excessive capacity and large amounts of steel, particularly from low-cost Chinese producers. While demand from the region’s automakers and other industries has been undermining sales from home, Trump’s strict tariffs on all steel and aluminum will be hit by exports to the US.

In late 2024, Thyssenkrupp Steel Europe announced a comprehensive restructuring plan to make the steel sector competitive again. Six months later, we reached an agreement with the union on the planning. The strategy includes reducing capacity by up to a quarter, closing processing sites, eliminating 11,000 jobs and focusing on green, sustainable production. It also discussed Czech billionaire Daniel Kzetinky’s EP Corporate Group to raise its energy company’s steel business interest from 20% to 50%.

Such changes include complex stakeholder management. Like other German companies, Thyssenkrupp has a two-tier board structure that requires you to navigate the requirements of the largest shareholder, the charity.

Thyssenkrupp’s iron division is subject to a unique system of German “co-decision” in the coal and steel divisions. This not only gives an equal representation of the interests of the Board of Supervisory Board’s workforce and shareholders, but also considers them neutral, adding even more complexity to governance and decision-making.

For some stakeholders, especially unions, Thyssenkrupp will always be a steel company. Rather than viewing recent geopolitical turbulence as a catalyst for change, we view the rewinding of steel operations as a company’s embodiment, and we consider it a national order to maintain independence in essential sectors such as steel.

The sustainability agenda presents another dilemma. According to Lopez, Germany’s steel industry is responsible for around 7% of the country’s emissions, with Thyssen Krupp Steel Europe alone accounting for around 2.5%.

When he became CEO in 2023, one of López’s early moves was to group initiatives designed to make many of Thyssenkrupp’s divisions greener, creating Decarbon Technologies, a new unit that develops technology that allows other companies to do the same.

The group, which invests heavily in research and development, recently set annual records for patent applications for many of green technology, digital transformation and sustainable industrial solutions. However, the market for these solutions is growing slowly than expected, putting pressure on margins and hampering cash flow.

Thyssenkrupp bets that Europe can use hydrogen to help it gain energy independence. “This means that we produce, develop and sell energy in Europe for Europeans and are very competitive in green electronics,” Lopez told IEESE. However, some investors and policymakers have questioned the costs of hydrogen-powered. Arcelor Mittal, Europe’s largest steel producer, recently abandoned its plans to use hydrogen rather than coal to drive two German plants.

Thyssenkrupp’s defense business is another unit that is undergoing radical change within the group. Germany supports the Trump administration’s demand that NATO members spend up to 5% of their GDP on defense and provide much-needed relief to German industry.

This is good news for the producers of naval ships and submarines, Thyssenkrupp Marine Systems. It hopes to triple its customer base by the end of the decade by expanding sales in electronics, drones, surface vessels and submarines. In early August, shareholders agreed to spin off the unit and had plans to list it on the Frankfurt Stock Exchange by the end of the year.

Uncertainty remains as to whether Thyssenkrupp can remake himself as a slimmer steel manufacturer, green technology innovator, and defensive force. “Changes are easy to explain, but complicated to achieve,” says Lopez. “Every company has a legend. It’s a myth about how the company was and the belief that it can continue to be that way in the future. But you have to be transparent about the real situation.”