Ailing traditional company wants to cut almost twice as many jobs as previously planned.
Germany's leading steel manufacturer Thyssenkrupp is reacting to the immense losses in the past fiscal year with the largest austerity program in its company's history. Instead of the previously planned 6,000 jobs, a total of 11,000 jobs are to be cut, as the industrial group announced on Thursday at the annual press conference. That is more than every tenth job in the company.
The downsizing will primarily affect the German locations, where 7,000 jobs are available or have already been canceled. It is uncertain whether more jobs will fall victim to the red pen. “We will have to make further, also far-reaching decisions,” said CEO Martina Merz. She is hoping for financial support from the state for the rehabilitation of the steel business. In the fiscal year that ended at the end of September, Thyssenkrupp had to revise the value of its steel division down by more than 1.5 billion euros. Many unprofitable parts of the company are for sale.
Without the elevator business, which has meanwhile been sold, the group had to accept an adjusted operating loss (EBIT) of 1.6 billion euros. In the previous year there was still a minus of 110 million euros. The steel business made the largest part of the deficit with a loss of almost 1 billion euros. In continuing operations, sales slumped by 15 percent to around EUR 28.9 billion. “The corona crisis hit us in full,” said Merz. Demand from the automotive industry in particular had collapsed. Thyssenkrupp makes 30 percent of its sales with the automakers.
A solution to its steel problems is of decisive importance for the traditional company from the Ruhr area. “In principle, we want to have the future solution for steel in March,” said Merz. Then it should be decided: “We will do it ourselves, or we will go together”.
Thyssenkrupp is exploring partnerships with other steel manufacturers in Europe, but is also looking into a takeover offer from the British group Liberty Steel for its steel division. Merz does not even want to appear as a buyer. A takeover would not be an option in the current economic state of Thyssenkrupp. Therefore this option was not examined.
For a single-handed reorganization of the steel business Thyssenkrupp needed financial help, Merz made clear. Talks are being held with the German federal government about money from the economic stabilization fund. If Thyssenkrupp goes on with steel alone, it would be “a great help if we could get funds from it,” emphasized the group boss. That is not enough for IG Metall, it is calling for the state to join Thyssenkrupp's steel division.
Despite the current threatening situation, Merz is confident that it will be able to turn the tide of the traditional company. “Overall, the renovation is making good progress,” she said. The group was able to improve its balance sheet by selling the elevator division for more than 17 billion euros. Thyssenkrupp will be “smaller, but also more profitable,” emphasized Merz.
The downsizing has been going on since last year, around 3,600 jobs have already been lost. This means that 7,400 jobs will have to be cut in the next three years, as HR Director Oliver Burkhard calculated. This number is “a snapshot from today's perspective”. It depends on the further course of business and the development of the pandemic. “We cannot currently give new, long-term employment guarantees.” Operational dismissals are not excluded, but should be the last resort.
IG Metall reacted indignantly. “We reject cost reductions that focus on downsizing and employee contributions,” said the Vice-Chairman of the Thyssenkrupp Supervisory Board, Jürgen Kerner, of the “Rheinische Post” (Friday).
