By Emma-Victoria Farr and Tom Käckenhoff
DUESSELDORF (Reuters) -Thyssenkrupp on Thursday fleshed out details of a restructuring programme for its challenged steel division, saying production capacity at its Duisburg site will be significantly reduced, with measures involving job cuts that cannot yet be quantified.
The steel division’s executive board said production capacities would be reduced to approximately 9 million to 9.5 million tons per year, which roughly corresponds to the shipping level of the past three years. Today production capacity at the site is designed for around 11.5 million tons.
The announcement marks the most concrete step so far in the steel business revamp, which has become necessary in light of weakening demand and brutal competition from cheaper Asian rivals.
Thyssenkrupp Steel Europe employs around 27,000 people, most of them at Europe’s largest steel site in Duisburg, a city in the most populous German state of North Rhine-Westphalia (NRW).
The decision is “disappointing news for Germany and North Rhine-Westphalia as a location for steel production, but first and foremost for the many employees,” said the state’s economy minister, Mona Neubaur, adding that Thyssenkrupp had received billions of euros in government support in recent years.
The company must now continue its drive toward sustainable production out of responsibility for the region and its workers, she added.
The streamlining measures would impact downstream processing as well as administration and service areas, the company said, adding that its goal is to continue to avoid redundancies for operational reasons.
Thyssenkrupp’s steel business, whose roots extend back more than 200 years, carries significant relevance as a symbol of Germany’s rise as an industrial power – a status that has somewhat waned in recent years.
The unit has so far been spared major restructuring moves, protected by powerful unions that have traditionally commanded great influence at the German conglomerate.
Fears of a larger turnaround at the business were fuelled in February, when Thyssenkrupp Steel Europe’s chairman Sigmar Gabriel, a former German economy minister, warned the business had to change fundamentally.
At the time, Gabriel said that while Thyssenkrupp Steel Europe could produce nearly 12 million metric tons of steel a year, it only sold around 9 million tons and maybe even less in the future. He also explicitly did not rule out job cuts.
The division’s goal of climate-neutral production by 2045 at the latest remains unrestricted, it said in the statement.
Potential capacity cuts are also a sticking point in talks with EPH, the energy holding firm of Czech billionaire Daniel Kretinsky that Thyssenkrupp is trying to win as a co-owner of the steel division.
(Reporting by Emma-Victoria Farr and Christoph Steitz in Frankfurt and Tom Kaeckenhoff in Duesseldorf, writing by Andrey Sychev, Editing by Matthew Lewis, Miranda Murray, Diane Craft and Susan Fenton)
