Steelworkers at Thyssenkrupp to receive a 8% wage reduction - Steelwork comprising Thyssenkrupp employees is proposed to experience an 8% reduction in wage
In an unprecedented move, Germany's largest steel producer, Thyssenkrupp Steel Europe (TKSE), has unveiled a comprehensive restructuring plan aimed at boosting efficiency, reducing costs, and making the steel division more attractive for strategic investors. The restructuring, which involves significant changes, includes large-scale job cuts, wage reductions, and cost-saving measures.
The plan, which is expected to run until 2030, targets a reduction of approximately 40% of TKSE's current workforce of 27,000. About 5,000 direct job losses are anticipated in steel production, with an additional 6,000 jobs to be cut through outsourcing, particularly in administration and central services at Rail & Steel (formerly Iron and Ports).
To achieve these reductions, Thyssenkrupp Steel intends to eliminate about 11,000 jobs by 2030. This includes the closure of a site in Bochum by 2028 and the implementation of a "short-term concept for optimising the site" in Kreuztal-Eichen instead of a closure plan.
As part of the cost-saving measures, a wage cut of 10% is planned, with a demand for €200 million in wage reductions from the workforce. Other cost-saving measures include the halving of the allowance for on-call duty, the elimination of holiday pay, and a reduction in employees' weekly working time to 32.5 hours.
Jubilee payments for employees who have worked for 25 years will also be reduced to 1000 euros. However, Thyssenkrupp aims to avoid dismissals due to operational reasons.
The restructuring aims to reduce costs significantly, improve profitability, and make the steel division attractive for a major investor, such as the Czech billionaire Daniel Kretinsky’s EP Corporate Group, which may take over at least 50% stake in the steel division. The overall restructuring plan is part of Thyssenkrupp’s strategic repositioning to unlock value, which also includes growth in the Marine, Elevators, and Materials Services divisions.
Thyssenkrupp Steel Europe's restructuring comes amidst an economic crisis for the steel industry, characterised by weakness, high energy prices, and cheap imports from Asia. The company plans to reduce its production capacities from 11.5 million tons per year to 8.7 to 9 million tons.
The savings from these measures are expected to reduce personnel costs by a low three-digit million-euro amount per year. However, the company will have to spend money on severance payments to achieve the planned job reductions, but the amount of these restructuring costs was not disclosed.
The approval of IG Metall members at the steel manufacturer and the securing of financing by Thyssenkrupp’s parent company are still pending for the collective agreement to become valid. Despite the painful elements of the agreement for both sides, Knut Giesler, district leader of IG Metall NRW, described it as containing positive signals such as no dismissals due to operational reasons and guarantees for locations and investments in facilities.
Tekin Nasikkol, chairman of the works council of the steel company, stated that concessions were made only where necessary to secure jobs and locations. Marie Jaroni, Transformation Director at Thyssenkrupp, stated that the measures will improve efficiency and achieve a competitive cost level. Dirk Schulte, Personnel Director at Thyssenkrupp, described the measures as necessary and difficult.
In summary, Thyssenkrupp Steel Europe's restructuring includes large-scale job cuts, wage reductions, and cost-saving measures with the financial goal of making the steel unit more competitive and attractive for partial takeover or investment, while also improving the group's overall market value.
Community aid may be crucial for assisting the displaced workers from Thyssenkrupp Steel Europe as a result of the extensive restructuring plan. Vocational training programs can be beneficial for these individuals in transitioning into new industries, such as finance or business, as they seek employment post-restructuring.
