22 Sep 2010
Dr. Rudiger Grube was born in Hamburg on August 2, 1951. Following technical training in metal aircraft construction, he studied automotive engineering and aircraft construction at the University for Applied Sciences in Hamburg, graduating as a qualified engineer. He later studied vocational and business teaching at the University of Hamburg. From 1981 to 1986 he held a teaching position in production and engineering at the university, before completing his doctorate in industrial science and polytechnology.
Despite this grounding, when Grube was appointed CEO of Deutsche Bahn in May 2009, he walked into a minefield that no amount of training could have prepared him for. Not only had the company been been hit hard by the recession but it was also facing tough questions over its use of technology, which had resulted in mass confusion in Berlin. His predecessor, Hartmut Mehdorn, had just lost his job as a result of a cold war-esque employee spying scandal and the last thing the company needed was more bad publicity.
In July 2009 Deutsche Bahn was forced to take two-thirds of its commuter trains out of service due to safety issues, a move that led to the company losing approximately 100m euro, political fallout and public outcry.
Deutsche Bahn’s technical issues date back to 2003, when the company failed to remove the problems with Berlin’s commuter rail network, the S-Bahn, when the first signs of defective material in the wheels came to light. Deutsche Bahn received a consignment of trains from Bombardier, that turned out to be sub-standard, as they required servicing far more often than every 240,000km, as promised by the manufacturer.
Grube had to take action. He took the standpoint that the flaws were material and design-related, therefore not the fault of Deutsche Bahn. Grube successfully managed to pass all responsibility to the manufacturer, employing a skill and diplomacy that meant that the two firms remained firm business partners. As testament to this, in February 2010 Deutsche Bahn signed a contract with Bombardier for a total of 176 new locomotives, in a deal worth an estimated Ä200m.
The credit crunch and ensuing recession affected Deutsche Bahn in a number of ways, principally because of reduced production by its industrial clients. As a result, the company suffered significant losses in its transport and logistics division, with a total decline in revenues of about 25 percent. Deutsche Bahn also suffered severe declines in terms of passenger service as a result of rising unemployment.
Grube’s main means of addressing these issues was to reduce the working hours of around 10,000 of its employees, primarily in rail-freight division. He also had to take the tough decision to cut jobs, announcing 14,000 cuts over the next five years. Such moves certainly would not have made Grube a popular figure at the firm, but they did ensure that the Group managed to operate in the black in 2009 and the first half of 2010.
As if technological malfunction and a recession weren’t enough to handle, Grube had to deal with issues of broken air conditioning units on trains (which left eight people hospitalised due to heat exhaustion), and scrutiny from regulators in Brussels. Eclipsing these, however, were the financial problems surrounding the firm’s Stuttgart 21 project.
The project concerned the redevelopment of Stuttgart’s main rail terminus as an underground facility over nine years, replacing its dead-end tracks with through lines and installing a new high-speed track over a 60km line between Wendlingen and Ulm.
The aim of the project was to streamline connections between Paris and Vienna, making Stuttgart the new heart of Europe – according to the S21 slogan. At the beginning of the project, the station upgrade and new tracks were expected to cost 2.5bn euro, but in November the company announced that these costs had risen by as much as 1bn euro. As a direct result of this, Deutsche Bahn’s head of infrastructure and services was relieved of his position.
Shortly afterwards Grube told the press that if costs rose above the revised price tag of 4.1bn euro, he would probably have to cancel the project. However, given the amount of money already spent and all the troubles endured, analysts say it is unlikely that S21 will really be called off. And Grube is ploughing ahead with the project, telling one newspaper that it is still reasonable from an economic and microeconomic point of view.
However, many experts even predict that in the end the project could cost 4-6bn euro, which would be a bitter pill for Grube to swallow.
Grube is also looking to expand the company’s reach – principally by accessing the UK market. To this end, in an interview with The Independent newspaper in August this year, he confirmed that Deutsche Bahn is to send a test train through the Channel Tunnel this year, as part of preparations for a possible train service to London, allowing passengers to travel by high-speed train between Britain and Germany.
Deutsche Bahn has already previously suggested operating services between London and Germany using the Channel Tunnel, but regulatory requirements have hitherto precluded operators other than Eurostar. Following the relaxation of regulations, Deutsche Bahn is investing in new trains which meet the safety standards trains require to operate underneath the Channel and is viewed as the most likely company to mount a challenge to Eurostar. This alliance with the UK comes on the back of the announcement made in April this year, that Deutsche Bahn will buy British transport operator Arriva for 1.8bn euro.
Furthermore, in July this year Grube announced plans to make the biggest investment in the history of Deutsche Bahn between 2010 and 2014, injecting approximately 41bn euro in its operations. Around 75 percent of the investment is to be spent on modernising the rail network and its stations, and the remainder used to acquire new trains.
Since his arrival Grube has faced a string of challenges, some of which have called for tough decisions, the results of which could not possibly expect to please all parties. In spite of this, his commitment to investing in the company for future growth and geographical expansion cannot be questioned, and over the course of the next five years we will see whether this strategy bears fruit.