Job cuts in the steel industry: Thyssenkrupp-Stahl wants to cut thousands of jobs

Germany’s largest steel company Thyssenkrupp Steel is taking the red pencil: the number of jobs is expected to shrink by 11,000 within six years, as the company announced. Of the current 27,000 jobs, there should still be 16,000 left. The loss-making company wants to become profitable again.

5,000 jobs are to be eliminated in production and administration by the end of 2030, and 6,000 additional jobs are to be outsourced to external service providers or business sales.

The company is responding to the weak demand with the key issues paper that the Executive Board presented to a Supervisory Board committee. The project involves reducing steel capacity from the current 11.5 million tons per year to just 8.7 to 9.0 tons. This corresponds to the shipping volume of the previous financial year. The steel company is majority owned by the industrial group Thyssenkrupp.

A location is closed

The location in Kreuztal (NRW), which currently has 500 employees, is to be closed, and the number of jobs at the other locations is to be reduced. Duisburg, where the company has around 13,000 jobs, will be particularly hard hit. Terminations for operational reasons are not explicitly excluded. The company says that the goal is to avoid them. IG Metall rated the project as a “clear-cutting” that would be “a catastrophe” for the employees and the industrial location of North Rhine-Westphalia.

The entire German steel industry is under pressure

Thyssenkrupp Steel Europe is not alone with its problems; the entire industry is under pressure. Germany’s steel industry includes, among others, the companies Salzgitter and Arcelor Mittal as well as Saarhütten; all in all, around 80,000 people were employed in the industry at the end of 2023.

The industry is facing profound change. It should be geared towards climate change, but this will cost billions. The aim is to make the previously very CO2-intensive steel more climate-friendly and thus make it “green”. The current situation is compounded by the difficult economic situation and cheap imports from Asia.

“The entire German steel industry is currently fighting for its survival and its future,” says Kerstin Maria Rippel, managing director of the steel industry association. Excessively high energy costs and unfairly subsidized competing products from China threatened to cut companies off.

Management presents step as inevitable

The board of Thyssenkrupp Steel recently had to reorganize itself after several departures. She considers the job cuts to be necessary in order to ensure the retention of the remaining positions.

The aim is to create long-term prospects for as many employees as possible, says Thyssenkrupp’s steel boss Dennis Grimm. Therefore, we will adapt to the changed market conditions through targeted capacity adjustments and cost reductions. “In order to position ourselves for the future, a comprehensive optimization and streamlining of our production network and our processes is necessary.”

A key element in reducing capacity remains the separation from Hüttenwerke Krupp Mannesmann (HKM), it said. This is a joint venture with the steel group Salzgitter and the French tube manufacturer Vallourec, in which Thyssenkrupp Steel holds half of the shares – of the 3,000 HKM employees, 1,500 are attributed to Thyssenkrupp’s steel division. If the sale is not possible, closure scenarios should be discussed.

In parallel to the savings program, the parent company Thyssenkrupp would like to push ahead with the independence of the steel division. The Czech energy company EPCG, owned by Czech billionaire Daniel Kretinsky, currently holds 20 percent of Thyssenkrupp Steel; in the next step, this share is expected to increase to 50 percent.

Green steel plant is to be further built

Thyssenkrupp Steel would like to continue the construction of a plant costing around three billion euros to produce “green steel” in Duisburg. It will initially be operated with natural gas and later with hydrogen. The federal government and the state of North Rhine-Westphalia are paying a total of two billion euros for this.

Despite the state’s strong financial injection, the project is an expensive affair for Thyssenkrupp Steel. According to media reports, internal consideration was given to exiting the project. Now the company emphasizes that it is sticking to the plan.

At the same time, “constructive discussions” are being held with the responsible authorities “to ensure the economic viability of this large investment project under the rapidly changing conditions.”

Sharp criticism from the union

The union harshly criticized the planned job cuts. IG Metall district manager Knut Giesler, vice chairman of the supervisory board of Thyssenkrupp Steel, announced “bitter resistance from IG Metall”. He complained that there was no waiver of redundancies and site closures for operational reasons. “These are exactly the red lines that we have communicated again and again.” Regarding the planned cuts in personnel costs, Giesler said: “Anyone who comes up with such ideas in times of a shortage of skilled workers has understood nothing.”

NRW Prime Minister Hendrik Wüst (CDU) also reacted with concern. He told the “Rheinische Post” that this was a “shock for thousands of employees and their families” and “once again bad news for Germany as an industrial location.” He appealed to the company to live up to its social responsibility. “The state government has a clear expectation of the company that there will be no redundancies for operational reasons.”