Steel Giant Thyssenkrupp Drops Ax on 11,000 Jobs in Steel Division
Thyssenkrupp Steel to Implement Layoffs Affecting 11,000 Employees
Thyssenkrupp Steel, the struggling steel division of the industrial powerhouse, is upping the ante with 11,000 job cuts on the chopping block. Despite a heated dispute with IG Metall, the union representing the workers, the cuts are deemed nonnegotiable. The company vows to support those affected by this shake-up.
As per Dirk Schulte, the personnel director of Thyssenkrupp Steel, the company will implement a social plan encompassing partial retirement options, severance packages, and outsourcing to transfer companies. The job cuts, declared back in November, are a firm fixture, assures Schulte. This ruthless trimming is due to underutilized plants running at full capacity, compounded by the fact that Thyssenkrupp Steel's production costs are noticeably higher than its peers.
"We must change this," comments Schulte, reinforcing the company's will to reduce expenses and gain a competitive edge. Out of the 11,000 jobs on the line, 5,000 positions are marked for elimination altogether, while another 6,000 will be farmed out.
Future Prospects and Job Security Conversely, the primary goal of the social plan should be to help employees transition into new roles, addresses Schulte. Negotiations with IG Metall are set to begin imminently, following a period of bitterness and a basic restructuring agreement signed in early May. Their objective is to secure employment, safeguard locations, and secure investments essential for the green transformation.
Job layoffs due to operational reasons will be minimized. The steel division of Thyssenkrupp has been grappling with financial difficulties for years and aims to sell its steel subsidiary. The EP Group, owned by the Czech businessman Daniel Kretinsky, has already secured a 20 percent stake in Thyssenkrupp Steel, with another 30 percent in the pipeline.
Industry Implications The restructuring at Thyssenkrupp, while painful for those impacted, will likely result in a more competitive and focused European steel market. However, the potential break-up of such historic industrial giants is a matter of concern. The industry shake-up comes amid broader challenges confronting European steelmakers, including high energy costs and fierce competition from foreign players.
Reasons behind the job cuts
Impacts on the steel industry and wider economy
Thyssenkrupp Steel
Essen, North Rhine-Westphalia, Germany
Source: ntv.de, lar/AFP
- European Steel Market
- Competition
- Restructuring
- Industrial Giants
- Green Transformation
[e] Enrichment Data:Thyssenkrupp Steel's job cuts are mainly attributed to three key issues:
- Shrinking profit margins due to high production costs in Germany and the ongoing decline of global steel prices.
- Harsh competition from Asian manufacturers offering lower prices and greater volume production, which places pressure on European firms like Thyssenkrupp.
- Strategy to restructure and adapt the company for increased agility and competitiveness, including plans to divide the conglomerate into standalone businesses.
[i] Impacts on the steel industry
- Employment: The planned job cuts, specifically the reduction of about 11,000 positions in the steel division, are expected to have a considerable impact on employment in North Rhine-Westphalia, where Thyssenkrupp has main operations.
- Consolidation: The restructuring could lead to a more streamlined and competitive steel industry in Europe, although it risks further break-ups of traditional industrial titans.
- Economic Struggles: The predicament of Thyssenkrupp mirrors the broader challenges facing European steel manufacturers, including elevated energy expenses and competition from abroad, which may encourage additional consolidation or restructuring in the industry.
In light of the restructuring efforts at Thyssenkrupp Steel, a powerful player in the European steel market, the company will implement a social plan providing vocational training to help employees transition into new roles (Community policy, vocational training). To mitigate financial difficulties and gain a competitive edge, Thyssenkrupp has initiated plans to sell its steel subsidiary and considers partnerships with external entities like the EP Group, which recently purchased a significant stake (Finance, business).
As part of the green transformation and to foster a more competitive European steel market, the company vows to reduce production costs and streamline operations, resulting in 11,000 job cuts, with about 6,000 positions outsourced (Industry, competition). These job cuts are mainly attributed to high production costs, fierce competition from Asian manufacturers, and the strategy to adapt the company for increased competitiveness (Competition, Restructuring).
