Stefan Ettwig: Welcome to a new edition of we.talk. Today we are reporting from Northern Germany, more precisely from Ocean World, the showroom of thyssenkrupp Marine Systems in Kiel. Host as well as guest of our edition today is Oliver Burkhard. Thank you very much for your time and thank you again for the invitation.
Oliver Burkhard: With pleasure. Welcome and thank you for the invitation – that's something one doesn’t get to say often.
Stefan Ettwig: Mr. Burkhard, our viewers know you primarily as the Chief Human Resources Officer of thyssenkrupp AG. Since May you're also CEO of Marine Systems, where you've already been Chairman of the Supervisory Board for several years, so you're not new to the business. Nevertheless, two jobs at the same time are very challenging and time-consuming. For you too, the day only has 24 hours. How do you manage that?
Oliver Burkhard: Right now is probably the most difficult time. My old calendar is still entirely focused on our headquarter in Essen, and there's a CEO calendar here with requests from customers for visits, etc. – which of course was also full to bursting in the past.
That will settle down a bit, geographically there's nothing to be done about it. Neither Kiel nor Essen are exactly centrally located, depending on where you're looking from. But for me, that's possible to bridge and solve, and thanks to the hybrid forms of work that we also use as executives, it's manageable also. And so far, it's worked out well.
Stefan Ettwig: Now you are taking over responsibility for the business at a time when, sadly, there is war in Europe. More or less right on your doorstep. Accordingly, defense issues have been discussed differently in recent weeks and months than in the past. How do you see this, what does it mean for business, what news, if any, do you have to offer?
Oliver Burkhard: First of all, on the topic of war: I think we all could have done without it. Ukraine most of all. We condemn that. We had no need for it, even if we are supposedly winners because new orders might come in. In fact, it's terrible and hard to imagine what the people there have to go through.
It has not always been easy for MS in the past. Marine Systems was rightly considered part of the defense industry, given the products. It was also often difficult to gain access to politicians, who of course acted with corresponding caution. I think we can now see everywhere that there is a kind of "recalibration" of the whole narrative. Whether it's in energy policy, but also in security policy. And that leads to a situation where one is in fact more in demand again. It means that what we produce does indeed also provide security.
And accordingly, we are adjusting to the fact that there is more demand. That means growth, which is first of all a good development from the company's point of view. But we already had full halls and books before the Ukraine war, and we already have our hands full trying to work through that. What do I bring to the table that's new? I'm not a shipbuilder, everyone knows that. But I think that in the past nine years – hopefully, for those who know me – I've also tried to always build bridges. Sometimes between the employee side and the capital representatives, but also within the company. And the bridge I want to build is that we find a different way of working together here.
Perhaps one that is more fun, but on the other hand is also perhaps more efficient and allows for greater economic success. Because we are a company in the private sector, not a public company. All other shipyards in Europe are run co-financed by the state – at least, if not with participation. So that is a big challenge in itself.
Stefan Ettwig: You just nonchalantly mentioned as a side note: Marine Systems' order books are full. Norway, Germany, 212 CD, now most recently Israel. Nevertheless, your company is also working short hours. How does that go together?
Oliver Burkhard: Yes, it's hard to understand at first, and it's just as they say: we've had a really good order intake and actually the books are full and the halls and the hut too. And now there's the war and possibly some additional demand. That certainly doesn't make things any easier for now. We have to adjust to the fact that we are now entering a growth phase, and combining this with the issue of short-time working is initially a challenge in terms of communication. But it is being understood here, and I think we have handled it well. After all, when we have a large order intake, that initially means a lot of work for the engineering department. You have to develop what you have promised the customer in terms of products. But you don't manufacture that yet, production always starts later. The fact that we haven't had any major incoming orders for several years, and then all of a sudden we have a lot, means that we are running into a kind of underload in the area of production. There are good solutions for this. Short-time work is also there to cushion temporary fluctuations in orders to a certain extent. We are doing this because we don't want to do without any of the people who work there in production. Because we will need them later anyway, once the orders have been fully engineered and then go into production.
Accordingly, it went without saying that we would have to find a solution to the problem of underutilization. I am very pleased that we have reached an agreement with the IG Metall union and the works council on how we can basically get through this – let's say "less busy" – period and still have everyone on board afterwards. That's why there's growth and lots of new orders, but still short-time work. That's a bit due to the production model here. As in plant engineering, if I may put it that way, even though these “plants” float – and do that well and also come up again. In fact, in plant engineering there are always very long cycles and accordingly we now have underload. That's why we reached an agreement with the workforce, with co-determination, on short-time working. And that is also accepted. At least that's how I perceived it.
Stefan Ettwig: They are currently investing a lot of money in the Kiel site, also because of the new orders. Submarines are built here. That's well known. Why don't you actually build any surface vessels, i.e. complete frigates et cetera?
Oliver Burkhard: Well, you raise a good point there. It was decided in the 2010s that we no longer have our own shipyard for the surface sector. Others bought it and are now building ships there, but of course we are still engineering them. For example at the Hamburg site: focus on surface vessels.
We also sell surface vessels, we just no longer have our own shipyard. And that is a point that has of course always been compensated for in recent years by the fact that we have outsourced this. The Kiel location is particularly important for submarine construction, but also for engineering, as is the case with surface vessels. We are investing almost a quarter of a billion here at this location. This is a great sign of confidence that this shipyard can be upgraded for the next step. Because I think that's necessary. Again and again, we actually have prototype constructions here. In a way, with every boat we start from scratch again. But you can also change things serially in production, so that it doesn't feel like a premiere every time, but actually gets into a workflow. That's why it's important for us to have this money, so that we can improve production. In order to cope with all the demand, which as I said is growing, through the German special defence fund, but also from abroad.
Stefan Ettwig: So you are expanding capacities here on site. Now, most recently, you have a new location in Wismar in the Marine Systems family. Can you tell us a little bit about that?
Oliver Burkhard: There was really a good opportunity for us. Two things come together: On the one hand, the opportunity to get to a new shipyard site that is in good condition. And on the other hand, the turn of the times, the obvious increase in demand for our products from the German Navy. One thing was clear: we no longer had the capacity for additional submarines or surface vessels beyond those already ordered.
That's why we made the purchase. We will start building submarines there in 2024. I think we are giving a good perspective for the region. As a Hanseatic city, Wismar is of course closely linked to shipbuilding on the one hand. But on the other hand, I think people there have been looking for possible connectable industries. I think that's a win-win story for Wismar – but also for MS.
Stefan Ettwig: Let's look at the big picture for a moment. Marine Systems is repeatedly associated with a wide variety of consolidation scenarios. From sale to joint venture, I think almost everything is being discussed in public. How do you assess that?
Oliver Burkhard: Well, one is a business view that I have here – as CEO. But I also have a Group view, and with Ms. Merz, with Mr. Keysberg – that is, my colleagues in Essen – we then of course also discuss the interests of MS from a Group perspective. But one thing is evident, of course. This industry is facing consolidation. Too many ship types in Europe, but also too many suppliers in Germany and, to date, a demand that could not completely sustain them all. It's a bit like the element of water, everything flows. Yes, we will also have to prepare ourselves for consolidation in this industry. And now you said something great earlier. Many discussions in the past have always been conducted from the perspective that thyssenkrupp Marine Systems is a passive object that you can talk about, that you can cut out parts of, so to speak, that you can somehow recycle in whole or in part. I think we have reached a new level now.
This company was deep red and has now initiated a turnaround. And now we have to take the next step into a growth and transformation phase where we become more profitable.
That's why I believe consolidation is coming – and we best be an active player. We are the ones to act, we are the spider in the web, if I may put it that way, because we have everything. We have surface, submarine, and we have electronics, which no one else has on offer. From that point of view, I'm quite confident and I enter such discussions that way, from a position of strength.
Stefan Ettwig: Your company is known for manufacturing, building and designing submarines, ships and also electronics for primarily military purposes. Somewhat less well known is that they certainly have solutions for the civilian sector as well. Is that a plaything or actually a tangible business field that you want to expand?
Oliver Burkhard: No, I think it is, as you say, just as much a tangible business field. There is also a reason why we have to offer alternatives on the civilian side in the ESG debate, i.e. to answer the question of whether the defense industry can be financed at all by the financial sector. There is probably hardly a company that has as much expertise on and under the water as we do.
Including sensor technology and all the things that take place there, so to speak. Also at Atlas Elektronik. And it would be out of the question for us not to find examples of applications that make use of this expertise in order to make things better in the world, and not just for the military sector. The first projects are already up and running. One is well known, the topic of ammunition disposal. There is a lot of dumped munitions in the Baltic Sea from the Second World War that have to be recovered and ensured that they do not cause further damage. We're part of that already. There are other areas of application in the offshore sector unmanned vehicles above and below water that can be manufactured with our expertise, with which you can also very well meet civilian demand. But there are certainly other applications and we would like to combine that. In a new business area. I think it makes sense to do that in order to be prepared for the debate on ESG – in a few years at the latest, it will come back with full force, I'm very sure of that – and also to have a larger share of civilian sales.
Stefan Ettwig: The last question goes to Oliver Burkhard as the Executive Board member for Human Resources, who has a very good picture of the mood at thyssenkrupp as a whole. Now you are at Marine Systems. Marine Systems is considered by many to be somewhat atypical in the thyssenkrupp family, always a bit of a mystery. The customers are nations, governments. Is it really that different, that exotic? Or is it actually just a normal company? And what does that mean for the atmosphere?
Oliver Burkhard: Well, I think it's a relatively normal company that doesn't manufacture completely normal products, it's clearly something very special, with high complexity. After 9 years, there is no such thing as the one thyssenkrupp for me. There are many thyssenkrupp, a bit like having multiple personalities. But you can enjoy having them. And it's not a bad thing that it is so, because the identity is probably just that same bit different at, say, Bilstein in Mandern somewhere in the Eifel as it is up here on the coast.
Nevertheless, I think there are a few tasks that we need to tackle together in the coming years. That also applies to large parts of thyssenkrupp. Namely in the way we work with each other, there are one or two things that still need to be improved. I have noticed that here in Kiel people are very proud of what they produce. There's an attachment to the company, and people don't leave once they've been hired, but there's a latent dissatisfaction with the way we work.
The image I use here comes from the IT world: We need an update in the software for collaboration. I would urgently recommend that we do that in Kiel, i.e. work with everyone together on a transformation and growth program. This should also include a few culture-changing elements. That's where I have a bit of an advantage as an HR person, in the past at least, those were always my topics as well. I also think that we have made progress over the last 10 to 15 years. But I'd say there's still some way to go. And we want to address that as well.
What makes it really unique here is the incredible complexity. In the end, three hundred and fifty thousand system-relevant parts have to fit together so that a boat like this can resurface and not just dive once. That is a huge challenge. This is really the highest art of engineering, I would say at this point, and I am also deeply impressed. Again, I am not a shipbuilder. But I'm happy to help create the conditions that will make it a little easier for us to work together. Given the opportunities for growth – certainly due to a bad reason, namely the war in Ukraine – I also see opportunities for us to develop further, for us to grow, for us to have a story that we think is good together. That would be the goal and that's what I'm stepping up for here as well.
Stefan Ettwig: Sounds confident, we'll be happy to leave it at that. Thank you very much for your time. Thank you again for inviting me. Thanks also to the viewers on the screens. That was we.talk. We'll be back after the summer break, of course with exciting guests and new topics. Until then: Take care, stay healthy. Goodbye from Kiel.