Thyssenkrupp’s steel unit plans to reduce its workforce by around 40% this decade, a move that would reduce output at a business that has lost billions of euros from a global steel shortage and rising energy prices.
The steel division’s management proposed cutting 5,000 jobs and transferring another 6,000 off the payroll, selling operations or transferring people to external service providers, the company said on Monday (25) . Thyssenkrupp aims to reduce personnel costs by around 10% on average over the next few years.
The company, which employs around 27,000 people, is currently in negotiations with EP Corporate Group, owned by Czech billionaire Daniel Kretinsky, for the investment group to increase its stake in the steel company from 20% to 50%.
The proposed measures could help Thyssenkrupp sell its steel unit to Kretinsky, although challenges remain, such as persuading the company’s influential unions to accept a deal and securing approval from the Alfried Krupp von Bohlen und Halbach Foundation, the company’s largest shareholder. .
The proposed measures — which include the closure of two blast furnaces — add to a deepening industrial slowdown in Germany, with Ford last week announcing thousands of job cuts and Volkswagen considering unprecedented factory closures. The industrial recession is intensifying political conflicts, with the right-wing populist Alternative for Germany (AfD) party gaining ground in cities such as Duisburg, where Thyssenkrupp’s steel division is located.
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Thyssenkrupp shares were up around 1% as of 3pm in Frankfurt. The stock is down about 39% this year.
With rising energy costs and low steel prices, Thyssenkrupp’s steel unit has been unable to break even for years. The division’s losses and writedowns have eaten into the company’s cash pile, and its high pension obligations have scared away potential investors.
“Increasingly, overcapacity and the resulting increase in cheap imports, especially from Asia, are having a significant impact on competitiveness,” Thyssenkrupp said in a statement.
