Published by Jessica Weisman-Pitts
Posted on November 25, 2024
By Tom Käckenhoff and Friederike Heine
DUESSELDORF (Reuters) -Thyssenkrupp’s steel business plans to cut some 40% of its workforce over the coming years, it announced on Monday in the latest painful overhaul of a German industrial giant, with workers promising fierce resistance.
Germany’s largest steelmaker, a division of Thyssenkrupp AG, is under pressure from cheaper Asian competitors, high power prices and a weakening global economy, leading to operating losses in four of the past five years.
Under the restructuring, Thyssenkrupp Steel Europe (TKSE), which has a workforce of 27,000, said it would cut 11,000 jobs in total – 5,000 of which would be axed by 2030 and another 6,000 shed through spin-offs or divestitures.
The goal is to reduce personnel costs by some 10% on average in the coming years.
“Urgent measures are required to improve Thyssenkrupp Steel’s own productivity and operating efficiency, and to achieve a competitive cost level,” the company said in a statement.
Under the plan, TKSE’s plant in Kreuztal-Eichen, which employs 500 people, is to close.
The company also hopes to shed its stake in another plant in Duisburg – although if that sale is not achievable TKSE has said it would hold talks with other shareholders about closure scenarios.
Thyssenkrupp Steel said it wants to adapt to “future market expectations” by reducing production capacity from 11.5 million metric tons a year to between 8.7 and 9 million tons.
INDUSTRIAL WOES
“Anyone who wants to cut over 11,000 jobs and close a site must expect fierce resistance from IG Metall,” said Knut Giesler, head of the IG Metall union in North Rhine Westphalia, Germany’s industrial heartland and the home state of Thyssenkrupp.
The company’s steel-making roots date back to the early 1800s.
Economy Minister Robert Habeck said German-made steel should be protected, while standing by Germany’s commitment to secure the sector’s future with more climate-friendly production.
“We stand by this clear commitment (to a climate-friendly transition). It is important that steel is also produced in future,” Habeck said in response to the planned cuts.
Germany’s industrial star has been fading in recent months as production slows, foreign demand ebbs and costs rise.
Other big German companies are considering shutting down factories. Last week, workers and management at carmaker Volkswagen held a third round of crunch talks over pay cuts and possible factory shutdowns in Germany.
Earlier this month, Thyssenkrupp wrote down the value of its steel division by another 1 billion euros ($1.1 billion), blaming the sector’s worsening outlook.
TKSE is now valued at 2.4 billion euros in the group’s books, less than half what it was worth two years.
(Reporting by Tom Kaeckenhoff, Writing by Friederike Heine and Rachel More, Editing by Miranda Murray, Emelia Sithole-Matarise and Ros Russell)
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