ZF CEO’s Departure Blamed on “Reckless” Spending

This week’s departure of Stefan Sommer, CEO of German supplier ZF Friedrichshafen AG, was caused by his perceived “reckless” expansion plans and desire to take the company public, says Automotive News Europe.

Sommer was preceded out the door last month by supervisory board chair Giorgio Behr, one of its strongest allies.

ZF is headquartered in Friedrichshafen, a hamlet of some 60,000 residents. ZF is 94% owned by the city-run Zeppelin Foundation, whose Chairman Andreas Brand also is the city’s major.

ANE says Brand has for months chafed as Sommer’s desire to shift ZF’s focus from transmissions, axles and chassis components to electronics for autonomous, connected and electrified vehicles. Brand also was worried about ZF’s rising debt and “reckless” spending on acquisitions. He insisted the company should instead boost dividend payments to the city, according to ANE. It says those disbursements last year totaled €156 million ($184 million).

Sommer groused to the Schwaebische Zeitung about local politics dictating corporate strategy and declared he needed “freedom to do what is necessary” to ensure the company’s sustainability. But ANE suggests he pushed too hard, setting up a confrontation with the town’s provincial view of global competition.

When the company turned 100 years old in 2015, for example, local employees bridled at the idea of other ZF facilities joining the celebration because only the main facility in Friedrichshafen was a century old.

ANE says some of ZF’s hometown workers have struggled to understand why their high-wage town can’t continue to supply transmissions for low-cost vehicles in China. Others, a company source tells the newspaper, had to be reminded that “a bus is not a transportation receptacle for a ZF transmission.”