October 2nd, 2023 | 07:55 CEST
Tremors in the Industry - What goes, What stays: ThyssenKrupp, First Hydrogen, BYD
Table of contents:
"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
Trump and the AfD: What's behind the industry decline?
When Donald Trump was riling up auto workers in the US state late last week, he was primarily complaining about US President Joe Biden and his interventions in the industry. The mobility turnaround, for example, is an attack on the industry, he said. But while enthusiasm is said to have been high among workers, the events in Michigan have yet to set the tone for the campaign. Even if hard times are ahead for specific industries, new things are emerging elsewhere. Battery factories and other investments in the wake of the Inflation Reduction Act are also creating new jobs, many of which pay well.
Even though next year's election in Germany will not determine the fate of the Federal Republic, the state elections in Bavaria in a few days and the state elections in Saxony, Thuringia and Brandenburg in the coming year are nevertheless casting their shadows. The surge in support for the AfD (Alternative for Germany) is not without reason: here in Germany, many people are worried about their jobs and see the industry as being in danger. Above all, the Federal Association of Industry was particularly outspoken about this last week. "The lights are literally being switched off at more and more German sites", according to the associated quote in a pre-released speech transcript.
ThyssenKrupp: A sensible move
It also fits into this picture that, according to Handelsblatt, parts of ThyssenKrupp's steel business are up for sale, and the Group is negotiating with buyers. Specifically, the deal involves steel mills in which Czech billionaire Daniel Kretinsky is expected to take a 50% stake. According to ThyssenKrupp, the primary purpose of the deal is to put the steel group's financing on a more stable footing. Behind closed doors, however, the planned partial sale is also seen as an effective step in making the Company less cyclical. The business of steel mills is generally buoyant in growth phases but also weakens when things are not going so well. Both parties are currently still negotiating, but the aim is to have ThyssenKrupp's Annual General Meeting vote on the deal in early February 2024.
First Hydrogen: Commercial vehicles with hydrogen advantage
While industrial companies like ThyssenKrupp are suffering from the fact that certain energy-intensive sectors are hardly getting any support from politicians and even economists like "economic expert" Veronika Grimm are increasingly calling for more flexibility and market-oriented industrial policies, future-oriented sectors like the hydrogen economy are getting support from politicians. The Canadian company First Hydrogen, for example, expressly welcomes the plans within the EU to ensure a nationwide supply of hydrogen filling stations. The Company focuses on light commercial vehicles with fuel cells and also wants to be involved in the distribution and storage of hydrogen.
The young company is a bright spot in times when many industrial stocks are suffering from the market environment. Although the share price fell significantly last year, it is still a winning stock on a three-year horizon. Most recently, the Company announced plans to exhibit at the Fleet & Mobility Live trade show at the NEC in Birmingham starting October 3, 2023. The UK market is particularly important for First Hydrogen. Currently, potential customers are running test runs there with First Hydrogen prototypes under realistic conditions. Recently, the Company reported a positive response. Looking ahead to the upcoming trade show, the Company is also optimistic: "At Fleet & Mobility Live, we will be exhibiting our vehicles at a trade show for the first time, providing us with an excellent opportunity to showcase our breakthrough propulsion technology to leading decision-makers and influencers in fleet management," said Steve Gill, CEO of First Hydrogen Automotive.
While many critics in the discussion of the transition to sustainable mobility focus on electric vehicles and often see Chinese companies like BYD as a real threat to the Western automotive industry, hydrogen solutions in niches, as successfully tested by First Hydrogen so far, could also be an exciting alternative for investors. The share price has weakened recently, but the Company is currently in a promising phase. It may be worthwhile keeping a close eye on First Hydrogen's stock. Growing protectionism against China may also ensure that mobility startups from North America or Europe experience a special boom. For traditional industrial stocks, investors should pay attention to companies that actively manage risks and expand their business activities into new areas. With its hydrogen subsidiary Nucera and planned divestments in the steel business, ThyssenKrupp may already have taken steps towards a long-term turnaround.
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