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NUMBER OF EMPLOYEES INCREASED

Employees by segment
			Sept. 30, 2005		Sept. 30, 2006
Steel			31,634		30,647
Stainless			12,201		12,197
Automotive			43,537		39,446
Technologies			28,042		27,492
Elevator			34,151		36,247
Services			35,067		40,163
Corporate			1,300		1,394
Group			185,932		187,586

The number of employees increased in the year under review. On September 30, 2006 ThyssenKrupp employed 187,586 people worldwide, 1,654 more than a year earlier. The almost 1% increase was mainly attributable to the first-time inclusion of the RIP group in Brazil in the Services segment. In the Elevator segment the headcount rose as a result of the business expansion. At Automotive the workforce decreased in particular in the framework of the ongoing restructuring measures in the American automotive supply business.

The number of employees decreased in Germany by 3,089 to 84,052, but increased outside Germany by 4,743 to 103,534. At the end of September 2006, 45% of employees were based in Germany, 13% in the USA, 7% in Brazil, and 6% in France. The remaining 29% of employees work in a total of 55 countries.

Employees by region
			Sept. 30, 2002		Sept. 30, 2003		Sept. 30, 2004		Sept. 30, 2005		Sept. 30, 2006
Europe			141,336		141,508		135,178		130,418		128,113
NAFTA			34,697		32,318		32,204		33,872		32,622
South America			7,933		8,707		9,846		10,474		13,618
Asia/Rest of World			7,288		7,569		9,808		11,168		13,233
World			191,254		190,102		187,036		185,932		187,586

Employees by region on September 30, 2006 in %

 

Age structure of the German workforce Share of employees by age group on Sept. 30, 2006 in %

 

The average age of employees in Germany at the end of the fiscal year was 41.7 years. We have a balanced age structure in the Group, with 41% of employees under the age of 40. Details are provided on the above chart.

The accident frequency rate continues to show a clear decline at the German subsidiaries. In fiscal 2005/2006 the number of reportable accidents decreased by around 10% to 11.4 accidents per 1 million hours worked. This means that over the past five years the accident rate has fallen by 33%, with 17.1 accidents per 1 million hours worked having been reported in fiscal 2001/2002. We expect a similarly encouraging reduction at our operations outside Germany, because our health and safety measures are incorporated in a cross-segment and cross-country reporting system.

Nevertheless, every accident is one accident too many. Health and safety at work play a key role in the success of the Company and are extremely important for the quality of life of our employees. To further enhance health and safety, we launched a Groupwide initiative in 2005 under the heading "Company target: Zero accidents". Key elements of the initiative are the establishment of an improved health and safety organization, new health and safety guidelines and a broad-based management training scheme.

Personnel expense increased by 4% to €9.3 billion in the reporting year. The chart below shows how personnel expense has developed over the past five years.

Personnel expense in million €

* excluding expected return on plan assets and interest cost of pension and healthcare which are recognized as part of interest income/expense

BASIC AND ADVANCED TRAINING CREATES PERSPECTIVES FOR THE FUTURE

For years we have provided training for young people beyond our own needs. We see this as part of our responsibility to society. In these times of high youth unemployment it is particularly important to offer young people high-quality training and thus improve their prospects on the labor market.

At September 30, 2006 a total of 4,139 young people were learning one of over 60 occupations offered by ThyssenKrupp in Germany. The Group offers the full range of industrial apprenticeships, from industrial mechanics and lathe operators to electronic engineers and industrial clerks. Our apprenticeship training rate, i.e. the ratio of the number of apprentices to the overall workforce, remains pleasingly high at 5.4%.

ThyssenKrupp also has an exceptionally good track record with regard to the training pact between government and industry. In the three years since the pact was first made, we have improved the employment prospects of 636 young people – by providing 330 additional apprenticeships and 306 internships.

Future perspectives through further training

To help employees meet the constantly increasing requirements created by innovations and market competition and to upgrade their skills, ThyssenKrupp offers an extensive further training program. In the year under review over 4,000 further training events were held in Germany. Around 65,000 – or eight out of ten – employees attended courses and seminars to improve their vocational qualifications. Key areas were quality management, data and information processing, sales training and management courses.

Employees benefit from modern company pension plans

As a technology-based Group, ThyssenKrupp is strongly dependent on securing highly qualified employees with innovative ideas. In the competition to recruit such employees, pension plans represent a considerable incentive and are therefore an important instrument of HR policy aimed at retaining employees in the Company over the long term.

Flexible and calculable defined-contribution pension plans are increasingly replacing conventional defined-benefit plans for executives and other employees. By providing regular information on the status of the pension plan, we increase transparency and make our employees aware of the significant value of their pension benefits.

Alongside employer-financed pension plans, a wide range of employee-financed pension plans are available across the entire tax-relief spectrum. The Group-specific deferred compensation plans are particularly popular. The collective agreement on allowances for occupational pension schemes in the metalworking industry will increase interest in our pension plans.

Universities and graduates

Recruiting talented and highly qualified employees at a young age and integrating them successfully is one of the key tasks of a forward-looking company. In the increasing competition for the best young graduates, ThyssenKrupp has gained a strong position. The Group is seen by university graduates as an extremely attractive employer. In addition, activities and projects carried out over recent years have helped establish rewarding partnerships with universities. Both these aspects – the Group's attractiveness as an employer and sustainable collaborations with universities – must be stabilized and further expanded.

For this reason we conduct activities at national and international level and maintain close relations with over 80 universities worldwide. A good example of this is our close cooperation with Tongji University in Shanghai, under which we also provide support for young academics. In Germany ThyssenKrupp works particularly closely with seven key universities: RWTH Aachen, TU Berlin, Ruhr University Bochum, Dortmund University, TU Dresden, TU Hamburg-Harburg and now also TU Bergakademie Freiberg. The aim of these collaborations is to intensify the exchange of knowledge in areas of common interest such as education and teaching, technology and innovation. In addition, targeted support is provided for highly talented students. Activities range from workshops, excursions and joint projects through to fellowships and prizes such as the "ThyssenKrupp Student Award". Intensive contacts are also maintained with TU Clausthal.

Our university marketing activities focus on selected target groups. These include for example young people who intend to take up a degree course at some stage in the future as well as talented female students on engineering or science degree courses. At TU Berlin we are cooperating with the university careers center for women, "femtec", with a view to recruiting more women with technical qualifications to key positions in our Company.

Our efforts to attract young talent are rounded off by the ThyssenKrupp study support program. In addition to financial support and interdisciplinary seminars, the accompanying mentoring program has proved advantageous for students. Students on the program each have their own mentor, an experienced executive who can provide advice on personal and career development.

EXECUTIVE POLICY AS KEY OBJECTIVE

Attracting and developing outstanding executives and specialists both internally and externally for the wide-ranging tasks in the Group remains one of our key objectives and has become even more important in view of the Company's growth targets. Among our tried and trusted instruments is the potential and succession planning carried out annually in all segments worldwide, in which high potentials at all levels of the Group are identified. Yearly management development meetings of the Executive Board of ThyssenKrupp AG and the segment executive boards increase transparency regarding management qualifications, provide an overview of candidates and permit succession planning – including necessary contingency plans – for current and future vacancies at top management levels. This process ensures continuity and helps prepare suitable candidates for senior positions in the Group from an early stage.

The sustainable development of future executives is a key management task at ThyssenKrupp, including the Group Executive Board. Wherever possible and expedient, we aim to fill management positions from within so as to reduce costs for adjustment and create performance incentives for qualified employees.

Future management development with ThyssenKrupp Academy

The strategic development of ThyssenKrupp places increasing demands on the Group's management. This relates not only to management capacity and quality but also to the fostering of young talent and promotion of knowledge management in the Group. For this reason we have added three key new elements to our management development activities.

In summer 2006 we launched the Groupwide "Management Development Initiative". The aim is to analyze the instruments, processes and structures of management development and on the basis of our findings develop a "ThyssenKrupp management development model" for the future. In a further step the Executive Board decided to introduce rules for filling senior management positions in the Group. In addition, the ThyssenKrupp Academy was founded in the reporting year and began work in the fall of 2006.

The ThyssenKrupp Academy will be a place of learning and research, providing new impetus and fostering dialogue. It will support the development of around 2,500 executives and prepare them for new tasks. The programs and events of the Academy will contribute to the excellence of our executives. Internal and external experts with outstanding international experience in specialist fields and management will cooperate with the Academy and present and discuss new findings from the fields of management and technology.

The Academy's programs and courses are divided into four learning platforms. The Management School will teach management competencies based on a practical approach. In the Competence Forums participants can exchange knowledge relating to functions, themes and markets. In the Impact Workouts high potentials, i.e. junior executives with outstanding prospects, will work on concrete projects. In Horizon Sessions participants have the opportunity to look beyond the limits of their day-to-day work.

Located in the future ThyssenKrupp Quarter in Essen, the ThyssenKrupp Academy will send out a clear signal of integration and identification within the Group. It symbolizes the importance of learning as a natural part of management work. At the same time it makes clear that the ThyssenKrupp Academy is an institution of the Group for the executives of the Group and the Executive Board will seek dialogue with management employees on the campus. A report on the building of the new Group headquarters is given here.

Elevator establishes international management school in Madrid

In October 2005 the Elevator segment opened the first international school for training executives in Madrid, the SEED School (Specialized Education for Executive Development). The school offers nine-month courses with a balanced mixture of practical and theoretical training. It is planned to use the concept to train executives throughout the segment.

Sharing in the Company's success

Alongside opportunities to further their careers based on their individual performance and the chance to take on responsibility at an early stage, all employees at ThyssenKrupp benefit from an attractive compensation policy. In addition to a fixed salary, which is subject to the provisions of collective or individual employment contracts, there are further compensation components based on the Company's earnings and the stock price which are gradually being expanded. In the year under review, a further instrument was added to our performance-based compensation policy. In early 2007, selected executives who are not included in the Mid Term Incentive plan will have the opportunity for the first time to purchase shares in our Company at a specific discount. The amount of the discount depends on the development of TKVA in the reporting year.

In addition, in 2006 some 84,000 employees at our German subsidiaries had a further opportunity to purchase ThyssenKrupp shares on favorable terms up to a value of €270. In the meantime national programs have also been introduced in France, Spain and the United Kingdom. Details of the employee share program are provided here.