Anyone who looks at Volkswagen’s new chief executive, Matthias Müller, understands the stress he’s under. His pale face and baggy eyes are proof, but, he quipped recently: “I always had gray hair.”
The months since Mr. Müller took over as head of Europe’s biggest carmaker have taken their toll. But the strain will really mount this year when VW fully faces the consequences of its emissions cheating scandal and Mr. Müller revamps the firm.
He is one of many German managers who will be tested to the extreme in 2016. Crises, scandals, failures, risky investments, technical upheaval and huge expectations are what drives them — or slowly grinds them down.
Many German managers will be tested to the extreme in 2016. Crises, risky investments, technical upheaval and huge expectations are what drives them — or slowly grinds them down.
The leaders come from a wide range of industries and almost all age groups, and their missions are diverse. At stake are long-established companies, thousands of jobs, billions in tax revenues and many careers.
Here’s a look at the men and women with the toughest jobs in the German economy for 2016.
The Downsizing Manager
Christian Sewing is a down-to-earth, accessible guy who often opts for public transportation instead of the company car. In 2015, the year of rapid falls, he had the steepest ascent at Deutsche Bank: At the beginning of the year he rose to chief legal officer, and this summer took over the important business with private customers. Many predict an even grander future for the 45-year-old.
But first Mr. Sewing must succeed in the most sensitive job at the bank. More than anyone else, he is at the center of restructuring that is actually downsizing for the troubled bank. Particularly in private banking, future cuts threaten to paralyze and frustrate employees.
The most visible step for the coming year is splitting off Postbank. This is above all a technical and organizational challenge. Cuts at the retail bank have taken aim at its very heart — about 200 of 700 branch offices will be closed and 4,000 jobs eliminated.
Mr. Sewing presents it as a forward-looking strategy and a step toward digitization. But things look different inside the firm. Employees in branch offices will lose their jobs because of the sins of much-better-paid investment bankers, whose tricks and manipulations cost the parent bank billions and robbed it of its good reputation.
So the importance of the private banking sector doesn’t dwindle too much within the company, Mr. Sewing is also being assigned the wealth management business with extremely rich customers. But that alone will not be enough to motivate employees to support the new strategy.
Mr. Sewing might be aided by his background. He originally wanted to be a sports journalist, but then apprenticed as a bank clerk while simultaneously pursuing unglamorous studies at the Bank Academy in Bielefeld. Later he spent almost his entire career at Deutsche Bank, though far removed from customers, risk management and internal auditing.
The hope within Deutsche Bank is that his leadership skills will compensate for gaps in his detailed knowledge. The mission is a risky bet — but Germany’s largest bank is quite familiar with tightrope acts.
The Shackled Boss
In 2015, no one in aviation had a tougher job than Lufthansa CEO Carsten Spohr, who had to deal with the Germanwings tragedy, fierce competition from Gulf carriers, restructuring and striking pilots.
But in 2016, no other top manager in Germany will have a more trying, doubly difficult job than Stefan Pichler, head of Air Berlin.
While other chief executives of money-losing companies wrestle with market and managerial economics, Mr. Pichler also is fighting against his largest shareholder, Etihad Airlines from the United Arab Emirates.
The sheikhs are turning the rescue of Germany’s second largest, highly indebted airline into a stress-filled game of ping-pong. Every time the 58-year-old former long-distance runner scores a point, the head of Etihad, James Hogan, returns with his own, quite different ideas.
For example, in 2016 Mr. Pichler would actually need to continue to impose tough austerity measures on Air Berlin. For that reason, he intended to undertake harsh downsizings in Air Berlin’s fleet, routes and staff, costing up to 1,000 jobs.
But when he sought approval from Mr. Hogan, the Briton said no. Instead he demanded that Mr. Pichler content himself with minor reductions in the coming year and even add new flights, for instance to the United States.
Mr. Hogan apparently fears incurring the ire of owners from the ruling family in Abu Dhabi if, after three years of expensive reorganization, he needs money for a radical restructuring. If Mr. Pichler had his way, Air Berlin might turn out to be too small a feeder airline for the expansion-obsessed majority shareholder Etihad.
So after barely managing to pay back a loan of €200 million in fall 2015, Mr. Pichler will have to muddle through 2016 just as before. It’s not clear where that will lead.
Since going public in spring 2006, the company has never really made money, and meantime has piled up billions in losses and debts. At least a third of its routes lose money, including many that Air Berlin flies as a feeder for Etihad.
“Everyone here has only one interest, namely to restructure the company,” Mr. Picher said as late as last spring. Now he can’t be sure of even that.
Along with his restructuring rescue plan, he also might have to abandon his forecast that 2016 would see Air Berlin emerge from its operating losses.
Where can he turn for money? Etihad can scarcely participate in another capitalization. If the Arabs were to receive more shares, Air Berlin could lose its status as a European Union airline, and thereby forfeit important air rights.
Mr. Pichler categorically rejects bankruptcy with debt relief and subsequent recapitalization as “absolutely absurd speculation.” So only one possibility remains — a miracle.
Knights of the Nuclear Panel
Germany has never seen quite such a mixed band of brothers but one look at the board overseeing the wind-down of nuclear energy shows politicians of every stripe.
At the center of the table sits Jürgen Trittin, an ex-communist, former environmental minister and Green Party member. On his right is Ole von Beust, an aristocrat from Brandenburg, former mayor of Hamburg and a center-right Christian Democrat. And to Mr. Trittin’s left is Matthias Platzeck, a trained engineer in biomedical cybernetics, former state premier of Brandenburg and ex-party leader of the center-left Social Democrats.
With them are seven women and nine men who embody just as many contradictions as the panel itself.
They include the Green Party critic Georg Nüßlein, deputy party leader for the CDU and its allies in the Christian Social Union. Also: Ralf Meister, the regional bishop of Hanover who opposes storing atomic waste at Gorleben in Lower Saxony, and Gerald Hennenhöfer, a former energy manager and unofficial envoy of Germany’s utility companies.
The body was set up by the federal government in October under a long official title: the Commission for Monitoring the Financing of the Exit from Nuclear Energy. But everyone just calls it the Nuclear Commission. The body meets regularly and by February must issue a proposal for financing Germany’s withdrawal from nuclear energy.
The undertaking has historical importance and follows a peculiar dialectic. A previous Nuclear Commission met from 1956 to 1971 to advise governments of that era on how many nuclear power plants could be built as quickly as possible. What emerged is well known — 36 German nuclear plants, of which eight remain. Like others, they must close by 2022, as ordered by the government following the 2011 Fukushima disaster.
Just as the former Nuclear Commission unanimously idolized peaceful nuclear fission, the present committee is tasked with consigning nuclear power in Germany to the history books forever. The problem is to resolve the issue of who must pay billions required to end the era.
Should it only be companies that built the power plants with state funding, then turned them into cash cows and are now legally liable for dismantling and final storage?
Or should taxpayers also be billed, because otherwise the companies might collapse under the burden and require the state to spend even more money?
Never has a panel of politicians, along with public and business representatives, been called upon to make such an expensive decision.
Also at debate is safeguarding and utilizing €38 billion set aside on the balance sheets of Germany’s four big energy providers — E.ON, RWE, EnBW and Vattenfall.
Auditors doubt that sum would be sufficient. In their opinion, the four companies should realistically reserve €70 billion, or about $76 billion. But that could mean their economic ruin, without it being clear that there are sufficient funds for final storage of atomic waste.
Mr. Trittin, Mr. von Beust and Mr. Platzeck are tasked with reaching a broad consensus like has never existed in German economic policy. They can’t engineer the utilities’ doom, or otherwise risk a rebellion by the firms’ employees and municipalities in North Rhine-Westphalia, which receive dividends as shareholders in RWE.
At the same time, the companies must be called upon to pay as much as they can bear, in order to keep the taxpayers’ share as low as possible for disposing of nuclear waste.
Any feasible deal depends on the persuasive powers of the contradictory trio at the head of the commission. It comes down to whether the companies will ultimately be able to buy their way out of part of the burden — and how much is ultimately passed on to the state.
Mr. von Beust, the representative from the conservative CDU, believes he knows the general direction.
“The taxpayer has to come out well in the final program,” he said. “But we can’t allow ourselves to take away the very air the utilities need for breathing.”
The Disruptive Figure
As head of Osram lighting, Olaf Berlien has to pull off a feat in 2016 that many firms in other industries also struggle with — switching from dying technologies to newer ones.
For nearly a century, the Munich-headquartered lighting manufacturer built its business on traditional bulbs, and more recently on halogen and energy-saving lamps.
Now Osram must evolve to more efficient lighting from semi-conductors, or LEDs. Otherwise the company, with its 33,000 employees and €5.6 billion in revenues, simply won’t survive.
But ever since Mr. Berlien announced two months ago his intention to invest €1 billion in a new chip factory in Malaysia, he has been exposed to extreme scrutiny by the capital market.
Mr. Berlien, a 53-year-old former Thyssen-Krupp manager, painted a rosy picture of Osram’s future at the time, but investors didn’t believe him. The company’s share price fell as much as 30 percent and hasn’t recovered.
The subsequent word from the company was that the chief executive did “not optimally” communicate his strategy.
Disruptive is the word for the sort of dramatic transition that Mr. Berlien must achieve at Osram. With its new chip factory in Malaysia, Osram faces tough competition from South Korea and Japan. And LEDs, or light-emitting diodes, are subject to drastic price competition, just like computer chips.
Investors prefer that Osram concentrate on niches such as automotive lighting and components. So if Mr. Berlien doesn’t manage to earn money with LEDs, the expensive factory in Malaysia could someday cost him his job.
He knew it was going to be difficult at Volkswagen, very difficult even – but probably not that difficult.
When the former BMW executive Herbert Diess took the reins as head of the Volkswagen brand in July, his mission was clear. He was the man for abrasive action who would transform VW into a more profitable brand and shift the team into a higher gear.
If Mr. Diess could achieve that, he could set himself up to succeed then-CEO Martin Winterkorn as top executive at the Wolfsburg-headquartered group.
But ever since September 18, when environmental regulators in the United States officially accused Volkswagen of installing software to cheat emissions standards on nearly half-a-million diesel cars, that prospect has faded into the distance.
Everything has become much more difficult. The Dieselgate affair severely tarnished the VW brand, forced Mr. Winterkorn to resign – and overnight multiplied the challenges for the 57-year-old Mr. Diess. Instead of merely managing Europe’s largest carmaker, his new mandate is to save it. Instead of polishing up a VW brand with around six million auto sales annually, he must now breathe new life into it.
On Tuesday, Mr. Diess kicks off 2016 by appearing as keynote speaker at the Consumer Electronic Show in Las Vegas, where he will present VW’s new electric car. It will be his first appearance on stage in the United States since news of the scandal broke. Will he find the right words? Will he come across as modest yet sufficiently confident, as the group’s new chief executive, Matthias Müller, desires of all his employees? The symbolic power of this moment will be immense.
In everyday operations, Mr. Diess almost has to work miracles. Earnings per employee must rise, while costs need to fall – but without any layoffs, according to an agreement between Mr. Müller and VW’s labor chief, Bernd Osterloh.
That means Mr. Diess has to tackle other problem areas even harder. He must shelve models and slash costs – as he did at BMW, by getting suppliers to reduce their prices. Since they are already under brutal pressure to do so, however, Mr. Diess must avoid coming across as overly aggressive – which will be one of the biggest challenges for a manager known for his hard-nosed approach.
There may be no more perfect contrast to the former head of Siemens’ energy business, Michael Suess, than his replacement Lisa Davis.
The ex-senior U.S. executive at Shell Oil comes across as a smart manager, happily clad in pink business attire. Her predecessor, on the other hand, preferred walking about in traditional Bavarian garb whenever he had the chance.
Former colleagues describe Mr. Suess, a mechanical engineer, as the type of manager who would pick up a wrench in the factory and had “lubricant on his fingers.” The gentle Ms. Davis, a chemical engineer, prefers wise words as her tool of choice.
Ms. Davis is Siemens chief executive Joe Kaeser’s chosen one to lead the German engineering giant’s under-performing energy division in its battle with U.S. rival General Electric. The unit – which focuses on power generation, transmission and related services – accounts for approximately 40 percent of Siemens’ total group revenue of €76 billion.
The veritable soul of Siemens, the energy division is in desperate need of a turnaround.
Ms. Davis, 52, has her work cut out. To begin with, she needs to fix the unit’s technical glitches at offshore wind farms, which have resulted in write-downs in the triple-digit millions. She must also assure that Siemens does not further cede ground to GE in the heavy-duty natural gas turbine business and makes up ground with smaller, distributed gas turbines.
When she stepped into her role in August 2014, Ms. Davis suggested she lead the division from Houston, Texas. Ostensibly, that would position Siemens to capitalize on the U.S. boom in shale oil and gas. American equipment supplier Dresser-Rand, which Mr. Kaeser acquired for $7.6 billion one month after Ms. Davis arrived, would open the door.
But with oil prices plummeting virtually since the day Ms. Davis joined Siemens, and many investments now on ice, that door hasn’t opened very wide.
The big future energy markets do not lie at Ms. Davis’ doorstep, but rather lie much farther east – in Egypt, for instance, where Siemens this October reeled in its biggest contract ever. As part of the around €8 billion deal, Siemens will supply three large-scale natural gas-fired power plants and up to 600 wind turbines.
Whether Ms. Davis can orchestrate a blockbuster of that magnitude from the U.S. energy capital remains to be seen.
HSH owes its predicament, above all, to the ships it so frivolously financed – about 1,900 of which continue to weigh on its books.
The Ghost Captains
Monika Heinold, a member of the German Green Party, and Peter Tschentscher, a Social Democrat, are not captains of finance. But they are finance ministers – of the northern states of Schleswig-Holstein and Hamburg, respectively.
As if governing were not enough, the two finance ministers in 2016 will become the involuntary heads of HSH Nordbank, the northern German public bank in which the two states collectively control 85 percent.
The bank owns a virtual fleet of ghost ships in the form of bad debt, accrued through an ongoing crisis in the shipping sector. Thanks to the conditions of a European Union-approved bailout, the onus is on the two states – specifically, on Ms. Heinold and Mr. Tschentscher – to extract value from that bad debt and to save the bank. They must also privatize it by 2018.
Relying on taxpayers, the two finance ministers should be able to free the bank from the fetters of its past, at least to the extent that it is able to continue under a reduced business model focused on entrepreneurs and mid-sized companies.
In other words, HSH has another lease on life – different than in 2012, when Brussels effectively shuttered Dusseldorf-based state bank WestLB.
HSH owes its predicament, above all, to the ships it so frivolously financed – about 1,900 of which continue to weigh on its books. The rampant overcapacity of tankers and container ships on the high seas created a flood of losses, leaving HSH’s customers unable to repay loans or even cover interest. Under the agreement with the E.U., taxpayers in Schleswig-Holstein and Hamburg are on the hook for around €6.2 billion in credit defaults.
Ms. Heinold and Mr. Tschentscher hope it doesn’t come to that: they will seek to squeeze out whatever value they can from the toxic assets. Through a public company specifically created to wind down that side of the business, bankers will have to determine, ship by ship, what debt they can sell for how much. The two state banks will have to cover every euro they write down.
The consolation: Mr. Tschentscher and Ms. Heinold have calculated they can save taxpayers several billion euros by taking these actions, compared to allowing HSH to simply sink in an immediate, uncontrolled manner.
The Cash Combustors
The head of Rocket Internet, Germany’s largest Internet startup platform, knows how to play it cool. But looks can be deceiving: Oliver Samwer is standing in front of a mountain of problems. Now he must prove he can climb that mountain and make his online incubator work.
Investors have been grumbling for months over the company’s anemic share price. At just under €30, the share is down a good 30 percent from Rocket Internet’s IPO price in October 2014.
Mr. Samwer had hoped to trigger a turnaround in 2015 with an IPO for online grocery delivery specialist HelloFresh – the most promising of his majority holdings. But he wanted too much for the company and had to put his plan on ice at the end of the year.
Instead of making things right, the colorful serial founder has a growing credibility problem. The question of whether Rocket’s hundreds of investments in online startups will ever pan out remains unanswered. As it stands today, there is no proof Mr. Samwer can incubate online start ups into valuable assets that can be monetized in public markets.
For the first nine months of 2015, earnings before interest, taxes, depreciation and amortization for Rocket Internet’s 10 most important holdings was minus €620 million. On top of writing red ink, an apparent clash has erupted between Mr. Samwer and a major shareholder, Swedish investment firm Kinnevik.
According to sources, Lorenzo Grabau – Kinnevik’s chief executive, who until recently headed Rocket’s supervisory board – opposed Mr. Samwer’s IPO plans for HelloFresh because of concerns over a possible disaster from the company’s overvaluation.
Shortly thereafter, the board’s deputy chief, Marcus Englert, a close confidant of Mr. Samwer, replaced Mr. Grabau. Presuming that Mr. Samwer does not want to completely alienate his most important financial backer, it will be interesting to see how the power struggle plays out in 2016.
The Fillet Carver
“The market knows no compassion for inefficient companies,” Per Utnegaard, chief executive of Bilfinger, wrote in a letter to his around 70,000 employees a few weeks after taking office in June.
Bilfinger, the Mannheim-based former construction company known for building such iconic structures as the Munich Olympic Stadium and the Sydney Opera House, has transformed itself into an engineering and services firm focused on industrial and power plant sectors.
In making the transition, however, the company witnessed just how uncompassionate the market can be when its share price tumbled from nearly €93 to under €32 in less than a year after six profit warnings.
A Norwegian who speaks German with a Swiss accent, Mr. Utnegaard’s assessment of Bilfinger’s situation is sobering. He said the company is just scratching the surface of its possibilities, that it sells its “complex products and services too cheaply,” and that costs are too high, while profits are too low.
Business as usual “will not happen,” he cautioned. “Our shared future is at stake.”
Placed at the helm by investor and major shareholder Cevian, Mr. Utnegaard stands before one of the most radical corporate restructurings in Germany. He must deliver results in the coming year.
Mr. Utnegaard plans to share his strategy this spring. But it already is evident he plans a targeted reduction of Bilfinger’s revenues to an estimated €5 billion from around €8 billion, in large part by exiting non-European markets. His biggest target is services for power plants, the main source of Bilfinger’s bleeding, which the company has signaled it will sell.
The 11,000-employee-strong division has suffered from Germany’s energy transition, which has made many fossil fuel power plants too unprofitable to operate.
Mr. Utnegaard wants to sell the business by mid-2016. Whether he can fetch a lucrative price remains unclear.
Simultaneously, he wants to make all other divisions – including industrial services and building maintenance – more efficient.
While his predecessor Roland Koch, the former conservative German politician, focused on centralizing operations, Mr. Utnegaard now wants “more freedom for the segments,” he said, since “there are no synergies.”
Therefore, the logical outcome would be for the complete disintegration of Bilfinger through the sale of its parts. The former head of the Zurich airport operator Swissport has revealed how he will accomplish this: “With German efficiency.”
Vodafone Germany – a wholly owned subsidiary of London-headquartered Vodafone Plc – is like a Bundesliga football club on the brink of demotion, whose coach has been replaced by a fresh face tasked with resuscitating a desolate team.
At Vodafone Germany, this is the job of Hannes Ametsreiter, 48, an Austrian whose responsibility, since October 1, is to save Germany’s second-largest wireless carrier from dropping out of the premier league.
Bluntly put, this is a job from hell. The one-time market leader has experienced an exodus of German customers for four years now – falling from 37.6 million in December 2011 to 30.2 million today. Mr. Ametsreiter knows he cannot allow Vodafone’s customer count to slip below 30 million. After all, it was the first mobile services company in Germany to transcend that mark in 2006.
The head of Vodafone Germany plans to stop the customer flight with new pricing structures and marketing campaigns. Those may be the most important points in Mr. Ametsreiter’s strategy, but they are not necessarily the most sophisticated ones.
Long term, his goal is to get back on equal footing with leading sector rival Deutsche Telekom. Mr. Ametsreiter’s predecessor Jens Schulte-Bockum laid the technical foundation by investing billions into closing gaps in Vodafone’s coverage in Germany.
Mr. Ametsreiter’s job now is to integrate landline, wireless and television businesses into a single telecommunications company that can beat Deutsche Telekom at its own game. He must also end the internal power struggle between the mobile services division in Dusseldorf and the landline unit in Munich.
Deutsche Telekom needed three years to pull off a similar feat. Mr. Ametsreiter doesn’t have that much time.
This article first appeared in WirtschaftsWoche. Rebecca Eisert, Rüdiger Kiani-Kress, Mark Fehr, Henryk Hielscher, Reinhold Böhmer, Harald Schumacher, Matthias Kamp, Angela Hennersdorf, Michael Kroker and Cornelius Welp contributed. To contact the authors: [email protected]