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Opinion
Chris Bryant

German Giant Sees $2.6 Billion Sink Below the Waves

Thyssenkrupp is hoping that a split will restore its fortunes. But it won’t be helped by the heavy bleeding of cash at its Industrial Solutions unit.

German giant Thyssenkrupp is pinning its hopes on a company split. But it's hard to love either of the spin-offs.

German giant Thyssenkrupp is pinning its hopes on a company split. But it's hard to love either of the spin-offs.

Photographer: Sean Gallup/Getty Images Europe

German steelmaker Thyssenkrupp AG’s most opaque division has gone from hero to zero in the space of four short years. The not-very-sexily-named “Industrial Solutions” unit builds plants for cement, chemical and mining customers. Until last month, it also included its ship-making and submarines business.

When sales boom, industrial contractors like this generate cash thanks to the advance payments they get from customers for long-term projects. But if orders evaporate or the contractor misjudges the cost of finishing complex tasks, they bleed cash instead. Industrial Solutions has burned through about 2.3 billion euros ($2.6 billion) over the past four years, something the indebted parent company can ill afford. It explains why Thyssenkrupp remains under pressure after seven years of cost-cutting, asset sales and restructuring.