Thyssenkrupp Steel Europe: A Comprehensive Restructuring Package
Thyssenkrupp Steel Europe is facing a profound restructuring, which entails significant cuts for the company and its employees. After lengthy negotiations with IG Metall, a restructuring collective agreement has been reached, which among other things provides for salary cuts of up to 8 percent. Additionally, the package includes further measures such as the reduction of production capacities, massive job cuts, and plant closures.
Reduction of Production Capacity
Specifically, annual production is to be reduced from the current approximately 11.5 million tons to about 8.7 to 9 million tons. To achieve this, one blast furnace at the Duisburg headquarters will be shut down, and a hot strip mill and an electrical strip facility in Bochum will be closed. A plant in the Siegerland will remain operational for the time being but will continue to be evaluated for economic viability.
Changes in Working Hours and Wages
The weekly working hours will be reduced from 34 to 32.5 hours, which also means wage reductions. Holiday pay is expected to be eliminated and Christmas bonuses reduced. Overall, employees are set to contribute around 200 million euros annually to the savings program – through wage concessions and reduced special payments.
Challenges and Opportunities
These measures are a response to the ongoing crisis in the steel industry due to high energy prices, cheap imports from Asia, and cyclical weaknesses. Thyssenkrupp Steel Europe is considered a case for restructuring; management also plans a socially acceptable reduction in personnel without layoffs for operational reasons until at least 2030.
Market Impact
This development is relevant for investors: The restructuring could lead to a more stable cost base in the long term, but could also create uncertainties in the short term due to capacity reductions and job losses, as well as impact the steel market.
| Measure | Details |
|---|---|
| Salary Cuts | Up to about 8% less wage |
| Working Hours | Reduction from 34 to 32.5 hours per week |
| Special Payments | Elimination of holiday pay; reduction of Christmas bonuses |
| Production Capacity | Decrease from about 11.5 million tons/year to about 8.7-9 million tons/year |
| Plant Closures | Shutdown of one blast furnace (Duisburg), closure of two plants (Bochum) |
| Job Reductions | Up to about 11,000 positions to be cut or outsourced; no operational layoffs until at least 2030 |
These profound cuts mark a turning point for Thyssenkrupp Steel Europe in a challenging market environment.