Steel Titan in Troubled Waters: Thyssenkrupp Plans Thousands of Job Cuts in Steel Division
Thyssenkrupp Steel to eliminate positions for 11,000 workers
Recently, the steel division of the industrial powerhouse Thyssenkrupp, based in Essen, has found itself in a tough spot. With a strong intention to bounce back, the company is committing to heavy job cuts and restructuring plans. Even a dispute with the IG Metall union won't sway this decision, assures Thyssenkrupp Steel.
In the spirit of transparency, Dirk Schulte, Thyssenkrupp Steel's personnel director, spoke to the Westdeutsche Allgemeine Zeitung. According to him, the restructuring will involve regulations for part-time retirement, severance payments, and transfer companies.
Back in November, Thyssenkrupp announced its intent to cut around 11,000 jobs in the steel sector. Schulte confirmed this number, stating, "The number 11,000 stands." To justify this move, he pointed out plants that are operating at undercapacity while running around the clock. He further elaborated that compared to other steel producers, Thyssenkrupp's steel production is exceptionally expensive, prompting the need to change this scenario. A staggering 5,000 jobs will be eliminated entirely, while another 6,000 will be outsourced.
Schulte stressed on the necessity to "bring people into new jobs" with a main focus on the social plan. Negotiations with the IG Metall union are set to begin shortly, following an early May agreement providing a foundation for further discussions. The ultimate goal is to secure employment, locations, and investments crucial for the green transformation, as stated by the union at the time.
Avoidance of dismissals on operational grounds is a priority. The steel division of Thyssenkrupp has faced challenges for quite some time now, and the company has plans to sell its steel subsidiary. The EP Group, a conglomerate owned by Czech businessman Daniel Kretinsky, has already acquired a 20% stake in Thyssenkrupp Steel, with an additional 30% gradually in the works.
Beyond Steel: The Future of Thyssenkrupp's Survival
Thyssenkrupp's restructuring is a significant strategic move that aims to transform the company into a more adaptable and sustainable business entity. Some key factors that motivate this restructuring include:
- Market Challenges: Thyssenkrupp grapples with elevated costs, dwindling steel prices, and fierce competition from Asian competitors, particularly impacting its conventional steel business[2].
- Corporate Restructuring: The company plans to separate into autonomous businesses, targeting improvements in entrepreneurial flexibility, investment transparency, and strategic autonomy for each division[1][2].
- Investor Response: The restructuring plans have received positive reactions from investors, with the company's stock market value soaring following the announcement. However, concerns about job losses and the long-term implications for the workforce persist[4].
The restructuring should have noticeable effects on the steel industry:
- Market Consolidation and Efficiency: The new structure might result in stronger and more efficient operations across the industry[2].
- Job Market Concerns: The restructuring could lead to additional job losses, impacting not only Thyssenkrupp's employees but also influencing employment patterns in the broader steel sector[2].
- Market Dynamics: The transformation might lead to the creation of more self-reliant business units, potentially attracting new investments and partnerships[4].
Overall, Thyssenkrupp's restructuring plan signifies a strategic initiative to adapt to ever-evolving market conditions, making the company more competitive amid unrelenting industry challenges.
The restructuring plan of Thyssenkrupp aims to reshape the company into a more agile and sustainable business, which includes the separation into autonomous businesses. This corporate restructuring could lead to increased job training opportunities in the new divisions, as the company focuses on bringing people into new jobs.
In the context of financial considerations, Thyssenkrupp is facing challenges in the steel industry, including elevated costs and dwindling steel prices, which might necessitate changes in financial management strategies, potentially involving vocational training programs to adapt to the new business landscape.
