German conglomerate Thyssenkrupp AG announced that its steel business is planning to reduce its workforce by about 40% this decade.
The division is proposing to cut 5,000 jobs by 2030 — and move another 6,000 positions off its books by selling operations or moving people to external service providers.
“The Executive Board of Thyssenkrupp Steel Europe AG has presented plans for a comprehensive future industrial strategy to the Strategy Committee of the Supervisory Board in a key issues paper,” said the company.
“This is the company’s response to the further consolidation of fundamental and structural changes in the European steel market, and in key customer and target markets.
“Increasingly, overcapacity and the resulting rise in cheap imports, particularly from Asia, are placing a considerable strain on competitiveness.
“In addition, urgent measures are needed to improve Thyssenkrupp Steel’s own productivity and operating efficiency, and to achieve a competitive cost level.
“The key issues paper will be fleshed out in the coming weeks in dialog with the supervisory bodies and employee representatives.
“Thyssenkrupp AG and the EP Group, which holds a 20 percent stake in Thyssenkrupp Steel, support the concept.”
Thyssenkrupp Steel envisages reducing production capacities from the current 11.5 million metric tons to a future target dispatch level of 8.7 to 9 million metric tons.
“This roughly corresponds to the dispatch result of the previous financial year,” said Thyssenkrupp.
“Even after this step, the advantages of the integrated metallurgical network will remain intact. The separation from Hüttenwerke Krupp Mannesmann (HKM) remains a key element in the necessary capacity reduction.
“The primary objective is to sell the shares in HKM. If a sale is not possible, Thyssenkrupp Steel will hold talks with the other shareholders about mutually acceptable closure scenarios. In addition, the processing site in Kreuztal-Eichen is to be closed.”
Thyssenkrupp Steel said it remains committed to the green transformation and carbon-neutral steel production.
The company said it “still holds firmly to its intended plan of completing the direct reduction plant that is already under construction, while having constructive talks with the responsible stakeholders to ensure economic viability of this major investment project in the quickly evolving framework conditions.”
Thyssenkrupp added: “By 2030, the two blast furnaces 8 and 9 in Duisburg are to be replaced by the DR plant and the two planned innovative melters with a total dispatch capacity of 2.2 million metric tons per year.
“In the future, another blast furnace could be replaced by a modern electric arc furnace, for example. However, a decision on this will only be taken at a later date and under the economic, technological, and political conditions that apply at that time.”
Thyssenkrupp Steel CEO Dennis Grimm said: “We take our responsibility very seriously and want to create long-term prospects for as many of our employees as possible.
“We will therefore adapt to the changed market conditions through targeted capacity adjustments and cost reductions.
“Comprehensive optimization and streamlining of our production network and processes is necessary to make us fit for the future. We are aware that this path will demand a great deal from many people, especially because we will have to cut a large number of jobs over the coming years in order to become more competitive.
“That is why it is now all the more important for everyone involved to take responsibility together in order to move Steel forward. The quality of our products and our technological expertise are a stable foundation for our future path. Our customers will continue to be able to rely on our high-quality flat steel products in the future.”
Thyssenkrupp AG said it is also continuing the process of making the steel business independent.
In a first step, 20% of the shares in Thyssenkrupp Steel have already been sold to the Czech EP Group with the aim of increasing the stake to 50%.
“With the strategic and long-term structural realignment, we will make thyssenkrupp Steel fit for the future in the long term,” said Marie Jaroni, Chief Transformation Officer at Thyssenkrupp Steel.
“In terms of operational efficiency and profitability, we still have some catching up to do in key competitive areas.
“We need to close these gaps if we want to look forward to a positive future. This is all the more important, because we want to drive forward the green transformation systematically.
“It is indispensable and will replace the previous coal-based business model in the long term. Implementation of the concept presented today will be decisive for our competitiveness, and therefore for our future.”