Bekaert awards the Interim Pope with the highest distinction
Bekaert appoints Oswald Schmid as CEO. The Austrian interim CEO is being rewarded for the way he guided the West Flemish steel cord and steel wire producer through the corona crisis. Yet he is not the visionary Bekaert needs, it can be heard.
Bekaert can look back on a wonderful year. Sales fell 13 percent as a result of the corona pandemic, but otherwise Oswald Schmid, who succeeded the disgraced Matthew Taylor as interim CEO at the beginning of last year, posted excellent results.
The operating profit of the West Flemish multinational increased by 13 percent, the profit margin went to 7.2 percent, the cash flow to almost 1 billion, the working capital decreased by almost a quarter, the net debt decreased by 38 percent and the dividend increased. . All four divisions (steel cord, steel wire, specialty wire and steel cable) performed better than in 2019. This promptly gave Schmid the CEO position.
For this year, the Austrian engineer, who was hired by Bekaert as operational director at the end of 2019, expects at least 6 percent more turnover – ‘at least 4 billion euros’ – and a further increase in the profit margin of about half a percentage point. “Although we have to take into account that Covid-19 is not completely over yet,” he said on a conference call.
Schmid – who became acquainted with Bekaert through his previous jobs at Continental and Schindler, where current Bekaert chairman Jürgen Tinggren was once CEO – wanted to say little about his operational plans for the future. “Our ambition is to create sustainable value for all stakeholders,” it said, “through profit-enhancing programs and a better product mix.” Bekaert wants to focus more on the ‘megatrends’ in the world. Energy transition is one of them.
Schmid wants to focus more on steel and synthetic cables for anchoring floating windmill platforms at sea. Tests are now underway with this. With his steel wire he wants to play a role in anchoring pipelines that connect offshore wind farms on the seabed to the mainland. He also wants to transpose the steel wire technology that is now used by Bekaert in the automotive sector to the (growing) wind energy sector. Schmid did not give more details about his plans. For this he referred to an investor day at the end of May.
Managers and ex-managers of Bekaert have questions about Schmid’s appointment as CEO. They recognize his qualities as an efficient cost-cutter – Schmid also closed a factory in our country last year, cutting 160 jobs – but at some point that financial savings story comes to an end.
‘Bekaert needs a visionary. Someone who thinks about how the company should expand and profile itself over the next ten or twenty years, reinvent himself. Not someone who simply cuts costs, achieves good financial results and pays a nice dividend, ‘an ex-manager sums it up severely.
Bekaert needs a visionary. Someone who thinks about how the company should expand and profile itself over the next ten or twenty years. Not someone who just cuts costs.
“For the various management layers under Schmid, and also for the company itself, what is happening now is a bad thing,” says a former Bekaert executive who prefers to remain anonymous. ‘But apparently the family shareholders who control the company are satisfied with that. Bekaert has many good managers. In recent years, many have left due to a lack of vision and there will be more. Bekaert is a very complex company with different specialties in all parts of the world. People sometimes forget that. ‘
According to the same source, Bekaert certainly has people internally to become CEO, but in recent years there has been a tendency to recruit external CEOs. With the current signal, this trend does not seem to disappear immediately and that is, it is heard, leading to frustration among the many good managers under Schmid. ‘People prefer to choose external profiles instead of people who are grown at Bekaert and who know the company through and through.’
Briton Matthew Taylor became the first outsider to take the helm of Bekaert after Bert De Graeve in 2014 – after a two-year search. ‘He was a visionary’, can be heard. ‘He was less operational, but he was able to motivate and develop people.’
But Taylor, who flew around the world for years to visit factories and customers, fell short of financial goals and intended dividend. He had to leave the job last year, just before the outbreak of the pandemic. He no longer had the confidence of the shareholder families. Schmid, who turns 62 this year, will hopefully have enough time to show what he has to offer.
The West Flemish Bekaert supplies steel cord for the reinforcement of one in four car tires in the world, and produces steel wire for the car, agricultural and construction sectors. It also produces fence wire, bucket brackets, steel wool wire, fibers to reinforce concrete, cables for elevators and the offshore sector, and wire for champagne bottle muselets. Bekaert has 27,000 employees in 120 countries. In Belgium 1,600 people work for Bekaert.