Synopsis:
Thyssenkrupp, a major German steel company, is planning to make significant changes to its steel division, which may include reducing production capacity and cutting jobs, reports Reuters.
Article:
Thyssenkrupp, the industrial conglomerate based in Germany, is expected to unveil initial details of a major restructuring plan for its steel division next week. The supervisory board of Thyssenkrupp Steel Europe, Germany's largest steelmaker, is scheduled to meet on April 11 to discuss the strategy, according to sources familiar with the matter.
This review is anticipated to lay the groundwork for negotiations with powerful labor unions, which hold half of the supervisory board seats. The plan may outline which parts of the business will be affected and potentially include changes to the steel joint venture HKM, co-owned by Thyssenkrupp, Salzgitter, and Vallourec.
While no final decisions have been made, the restructuring plan could pave the way for thousands of job cuts at the steel business. However, it remains unclear whether any layoffs would be forced, as Thyssenkrupp has previously agreed with unions to avoid job cuts at its steel unit until March 2026.
Handelsblatt, a German business newspaper, reported in February that at least 5,000 of Thyssenkrupp's roughly 27,000 steel jobs could be at risk.
The impending overhaul is a response to the ongoing weakness in the automotive sector, Thyssenkrupp's largest client group. The slowdown has already prompted several suppliers, including ZF Friedrichshafen and Continental AG, to announce job cuts.
Sigmar Gabriel, Chairman of Thyssenkrupp Steel Europe, warned in February that the business must fundamentally change. This could involve both job cuts and capacity reductions, as the company's steel production capacity of nearly 12 million metric tons per year far exceeds its actual sales of around 9 million metric tons, or possibly even less in the future.
Capacity reductions could involve shutting down some of Thyssenkrupp's blast furnaces, a sensitive issue in ongoing talks with EPH, the energy holding firm of Czech billionaire Daniel Kretinsky, which Thyssenkrupp seeks to bring on board as a co-owner of the steel division.
IG Metall, Germany's largest union representing Thyssenkrupp workers, has called a general meeting for April 30 to voice its concerns over the anticipated painful cuts.
Conclusion:
Thyssenkrupp's steel division is facing a crucial juncture, with the need for significant restructuring to adapt to changing market conditions and client demands. While the details remain uncertain, the impending transformation is likely to involve tough decisions, including potential job cuts and capacity reductions, as the company seeks to secure its long-term competitiveness in the steel industry.
Source: STEELGURU
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