Thyssenkrupp To Cut 11,000 Jobs At Struggling Steel Unit
Board aims to reduce personnel costs by about 10% on average. Company in talks with Kretinsky about increasing investment.
Thyssenkrupp AG’s steel unit plans to reduce its labor force by about 40% this decade, a move that would shrink a business that’s lost billions of euros to a global steel glut and rising energy prices.
The steel division’s board has proposed cutting 5,000 jobs while moving another 6,000 positions off the books by selling operations or moving people to external service providers, the company said Monday. Thyssenkrupp aims to lower personnel costs by about 10% on average over the coming years.
The company, which employs around 27,000 people, is currently in talks with Czech billionaire Daniel Kretinsky’s EP Corporate Group about the investment group increasing its share in the steelmaker to 50% from 20%.
The proposed measures could help Thyssenkrupp offload its steel unit to Kretinsky, though challenges remain, such as persuading the company’s influential labor unions to accept a deal and securing approval from the Alfried Krupp von Bohlen and Halbach Foundation, the company’s largest shareholder.
The proposed measures — which include shuttering two blast furnaces — add to a deepening industrial downturn in Germany, with Ford Motor Co. last week announcing thousands of job cuts and Volkswagen AG considering unprecedented factory closures. The industrial downturn is intensifying political strife, with the right-wing populist Alternative for Germany gaining ground in towns like Duisburg, where Thyssenkrupp’s steel division is located.
Thyssenkrupp shares rose about 1% as of 3 p.m. in Frankfurt. The stock is down about 39% this year.
With soaring energy costs and low steel prices, Thyssenkrupp’s steel unit has failed for years to break even. Losses and writedowns at the division have eaten into the company’s cash pile, and its high pension obligations have turned off potential investors.
“Increasingly, overcapacities and the resulting rise in cheap imports, particularly from Asia, are having a significant impact on competitiveness,” Thyssenkrupp said in a statement.
