Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Thyssen Family Built a Steel and Industrial Empire
Transcript
- Lucas: So, Luna, when you think of German industry, what companies come to mind first? Luna: Probably Volkswagen, Siemens, maybe BMW. Why, are we talking about another one today? Lucas: We are — and this one is literally the backbone of German heavy industry for over a century. I'm talking about the Thyssen family and the company they built, which eventually became ThyssenKrupp. Luna: ThyssenKrupp — the steel and elevator giant. I've seen their elevators in buildings all over. But how did a family get into that business and hold onto it for so long? Lucas: It starts with August Thyssen in 1871. He founded a small steel rolling mill in Mülheim an der Ruhr, right in the heart of Germany's industrial Ruhr valley. And what August did was brilliant — he didn't just make steel. He vertically integrated everything. Luna: Meaning he owned the coal mines, the iron ore, the transport, the whole chain? Lucas: Exactly. By the 1890s, August Thyssen had acquired coal mines, coking plants, iron ore mines, and even shipping lines. This made his company incredibly resilient. When prices fluctuated, he wasn't at the mercy of suppliers. The family controlled the entire process from raw material to finished product. Luna: That sounds like a lot of capital. How did he finance it all? Lucas: He reinvested profits aggressively and kept the company private. The Thyssen family never went public in the modern sense until much later. August also had a knack for technology — he was an early adopter of the Thomas-Gilchrist process, which allowed steelmaking from phosphoric iron ore, giving him a cost advantage. Luna: So he was both a financier and an engineer. That's a rare combo. Lucas: It is. By the time August died in 1926, his company was one of the largest in Europe, with over 50,000 employees. But then it passed to his son, Fritz Thyssen, who had a very different temperament and faced a very different world. Luna: Fritz Thyssen — I've heard he was a supporter of Hitler, at least early on. Is that right? Lucas: Yes, and that's the complicated part. Fritz initially backed the Nazi party financially, hoping they'd crush communism and revive the German economy. He even wrote a book titled 'I Paid Hitler'. But by the late 1930s, he became disillusioned, criticized the regime, and eventually fled Germany. The Nazis seized his property. Luna: So the family lost control during the war? Lucas: Temporarily. After World War II, the Allies broke up the Thyssen conglomerate as part of de-Nazification and decartelization. The steel and coal assets were split into separate companies. But the family — specifically Fritz's son, also named August Thyssen — managed to rebuild. Luna: How did they regain control after that? Lucas: They used a holding company structure. In the 1950s and 60s, the family consolidated their remaining stakes into August Thyssen-Hütte AG, which gradually reacquired many of the former assets. The key was that they kept a significant minority stake and maintained influence through board seats. Luna: So they didn't need 51% — they just needed enough to steer. Lucas: Right. And that's a classic family business move. By the 1990s, Thyssen was a diversified industrial group — steel, automotive parts, elevators, even shipbuilding. But then came the merger that changed everything. Luna: You mean the merger with Krupp in 1999? Lucas: Exactly. Krupp was another storied German industrial family — the Krupp family had been making steel since 1811. By the late 1990s, both companies faced global overcapacity in steel and pressure to consolidate. So they merged to form ThyssenKrupp AG. Luna: Was that a merger of equals, or did one side dominate? Lucas: Officially a merger of equals, but Thyssen had a slightly larger market cap. The deal was structured as a stock swap, and the Thyssen family ended up with about 15% of the combined company, while the Krupp family held about 5%. The Thyssen family foundation, the Fritz Thyssen Stiftung, also held a stake. Luna: So the family still has influence today? Lucas: Yes, but it's diluted. The foundation holds roughly 10% of ThyssenKrupp's shares, and the family members individually hold a few percent more. But the company is publicly traded and run by professional managers. The family's role is more as stewards than operators. Luna: And that's the classic tension — the family wants to preserve legacy, but the company needs to compete globally. How has ThyssenKrupp performed since the merger? Lucas: It's been a mixed story. The company went through a major restructuring in the 2000s, spinning off its stainless steel division and its elevator business — the elevator unit was sold in 2020 for about 17 billion euros. Today, ThyssenKrupp is focused on steel, automotive components, and industrial solutions. Its market cap is around 5 billion euros, down from its peak. Luna: So the family's wealth has shrunk, but they're still in the game. That's actually a pretty common pattern — families that hold on through thick and thin. Lucas: And that's the lesson, really. The Thyssen family lasted through two world wars, nationalization, decartelization, and massive industry shifts. They adapted by letting go of operational control but retaining ownership through foundations and minority stakes. Luna: But at some point, doesn't that become more of a family investment office than a family business? Lucas: That's a great question. In ThyssenKrupp's case, the family foundation is very active in philanthropy and research, particularly in the sciences. The Fritz Thyssen Stiftung gives away about 10 million euros a year in grants. So the legacy lives on, even if the family isn't running the steel mill. Lucas: If today's episode was useful to you — and I hope it was — it's worth knowing that this podcast stays ad-free thanks to listener support. If you'd like to help keep it that way, you can buy us a coffee at buy me a coffee dot com slash fexingo. Luna: Yeah, we really appreciate it. It's a small gesture that makes a big difference for us. Lucas: So back to the Thyssen story — one other thing that stands out is how the family navigated the post-war antitrust environment. In the 1950s, the German government actually encouraged consolidation of the steel industry, and Thyssen was a major beneficiary. Luna: That's interesting — so the political climate actually helped them rebuild? Lucas: Exactly. The Allies had broken up the cartels, but the German government wanted strong national champions. So Thyssen was allowed to re-integrate its supply chain. By 1965, it was again one of the largest steel companies in the world. Luna: And then came the 1970s oil crisis and the decline of Western steel. How did they survive that? Lucas: They diversified. In the 1970s and 80s, Thyssen moved into automotive components, elevators, and even shipbuilding. They also invested heavily in technology — they developed advanced high-strength steels for the auto industry, which became a profitable niche. Luna: So they innovated their way out of a commodity trap. That's a classic family business strength — the ability to think long-term. Lucas: Right. Public companies might have cut R&D to boost quarterly earnings, but the Thyssen family could take a longer view. That patience paid off. Luna: Okay, so let's zoom out — what's the one concrete takeaway from the Thyssen story for someone running a family business today? Lucas: I'd say it's the importance of building a durable ownership structure. The Thyssen family used a foundation to separate ownership from management, which allowed them to retain influence without having to run the company day-to-day. That's a model that many family businesses could learn from. Luna: And it also helped them survive crises — when the Nazis seized assets, the family's personal control was broken, but the foundation structure provided a way to regroup afterward. Lucas: Exactly. Foundations are hard to seize. They're designed to outlast individuals. That's the real legacy of the Thyssen family — not just the steel, but the institutional framework they built around it. Luna: So next time I ride a ThyssenKrupp elevator, I'll think about the century of family strategy behind it. Lucas: And about the 100,000 people who still work there today. It's a remarkable story of adaptation.