Thyssenkrupp has unveiled detailed plans for a restructuring program within its struggling steel division, outlining a significant reduction in production capacity at its Duisburg site and the implementation of measures that will entail job cuts. The executive board of the steel division revealed that production capacities will be scaled down to approximately 9 million to 9.5 million tons per year, a level that aligns with the shipping volume recorded over the past three years. This represents a notable decrease from the current production capacity of around 11.5 million tons.
The company’s decision reflects the necessity for a comprehensive revamp of the steel business in response to declining demand and intense competition from lower-cost Asian rivals. The streamlining measures are expected to impact downstream processing, as well as administration and service areas, with the aim of minimizing redundancies for operational reasons.
Thyssenkrupp’s steel business, deeply rooted in Germany’s industrial history, has historically held significant symbolic importance as a representation of the country’s industrial prowess, although this status has faced challenges in recent years. The powerful influence of unions within the conglomerate has traditionally shielded the steel unit from major restructuring efforts.
Amidst these developments, IG Metall, Germany’s largest union representing Thyssenkrupp workers, and the works council have emphasized the need for job guarantees before engaging in reorganization negotiations.
Speculation about substantial changes within the business gained momentum in February when Sigmar Gabriel, former German economy minister and current chairman of Thyssenkrupp Steel Europe, highlighted the imperative need for fundamental change within the division. Gabriel underscored the disparity between the steel production capacity and actual sales, hinting at the possibility of job cuts.
Additionally, the potential capacity cuts have become a point of contention in negotiations with EPH, the energy holding firm of Czech billionaire Daniel Kretinsky, as Thyssenkrupp endeavors to secure it as a co-owner of the steel division.