Major German Steel Manufacturer Slashing 11,000 Jobs

Germany’s largest flat steel manufacturer, ThyssenKrupp Steel, is set to lay off a large chunk of its workforce in an effort to cut costs.
Job cuts are part of ThyssenKrupp’s “comprehensive future industrial strategy” and a response to “structural changes” in the European steel market. “Increasingly, overcapacity and the resulting rise in cheap imports, particularly from Asia, are placing a considerable strain on competitiveness,” the company said.
There is a dire need to improve operating efficiency and productivity at the company while ensuring cost competitiveness, it noted. The steelmaker plans to cut down production capacity from 11.5 million metric tons to a range of 8.7 million to 9 million metric tons. The processing site at Kreuztal-Eichen will also be shut down.
Dennis Grimm, CEO of Thyssenkrupp, said the measures were aimed at ensuring the company adapts to changing market conditions via cost reductions and capacity adjustments.
“Comprehensive optimization and streamlining of our production network and processes is necessary to make us fit for the future,” Grimm said. “We are aware that this path will demand a great deal from many people, especially because we will have to cut a large number of jobs over the coming years in order to become more competitive.”
ThyssenKrupp is the latest in a string of major German corporations to have announced or suggested job cuts recently.
“The German economy is currently being increasingly affected by structural factors resulting from demographic change, a more difficult competitive position, and geo-economic fragmentation,” Germany’s Ministry for Business and Climate Protection said in a statement.
“In addition, economic effects such as persistently weak domestic and foreign demand and the continued restrictive monetary policy are weighing on economic development.”
Daniela Cavallo, head of Volkswagen’s works council, recently urged the government to prepare plans to ensure the country’s industry does not end up going “down the drain.”
The report specifically highlighted the issue of the increase in energy costs that have “exacerbated German companies’ traditional cost disadvantages in terms of labor costs, taxes, and levies.”
“Higher prices for fossil fuels have raised the production costs of entire sectors by at times more than 25 percent,” it said. “As a result, producers in energy-intensive primary commodity sectors in particular will still face a cost disadvantage of up to 15 percent at the end of the decade compared to competitors in China and the United States.”
This cost disadvantage means that production and investments could move out of Germany, it warned.
The government has for some time focused on energy transition projects—moving away from oil and nuclear—to ensure that renewables make up 100 percent of the country’s energy by 2035. Germany also shut off its nuclear power plants in April last year.
She noted that the high energy costs translate into unprofitable production for companies and result in a loss of purchasing power for consumers.