Supplier Thyssenkrupp Steel plans drastic cost-cutting measures

Thyssenkrupp Steel Europe has developed plans for a future concept. It affects, among other things, 5,000 jobs.

The executive board of Thyssenkrupp Steel Europe has presented its plans for a comprehensive industrial future concept. According to the announcement, the supplier is responding to changes in the European steel market and key customer and target markets. Increasingly, overcapacities and the resulting rise in cheap imports, particularly from Asia, are burdening competitiveness, it says.

Urgent measures are also necessary to improve productivity and operational efficiency. This should crystallize into a competitive cost level. The key issue paper will be detailed in the coming weeks in dialogue with supervisory bodies and employee representatives, it further states. Thyssenkrupp AG and the EP Group, which holds a 20 percent stake in Thyssenkrupp Steel, support the concept.

The four key points in the document are:

1. Sale and plant closure

Due to market conditions, the production capacities are to decrease from the current 11.5 to a shipping target level of 8.7 to 9 million tons. This corresponds approximately to the shipping result of the past fiscal year. Even after this step, the advantages of the integrated steel network would remain. A key element for the necessary capacity reduction remains the separation from the Hüttenwerke Krupp Mannesmann (HKM).

The primary goal is to sell the company's shares in HKM. If the sale fails, Thyssenkrupp Steel will hold talks with the other shareholders about amicable closure scenarios. In any case, the processing site in Kreuztal-Eichen (Germany) is to be closed.

2. Green transformation in focus

Thyssenkrupp Steel remains committed to green transformation and climate-neutral steel production. The company still plans to complete the direct reduction plant already under construction and is simultaneously engaging in discussions with the relevant authorities to ensure the economic viability of this major investment project. By 2030, the two blast furnaces 8 and 9 in Duisburg are to be replaced by the plant and the two planned melters with a total shipping capacity of 2.2 million tons per year.

In the future, another blast furnace could be replaced, for example, by a modern electric arc furnace. However, the decision for this is still pending.

3. Lower personnel costs

The implementation of the key points paper will unfortunately also lead to a significant reduction in jobs and further personnel cost reductions, explains Thyssenkrupp Steel. As a result of the planned adjustment of the group-wide production network and a significant streamlining of administrations, around 5,000 jobs are to be cut by 2030.

In addition, a further 6,000 jobs are to be transferred through outsourcing to external service providers or the sale of business activities. Moreover, personnel costs are to be reduced by an average of ten percent in the coming years and thus adjusted to what the company says is a competitive level. Redundancies are to be avoided.

4. Outsourcing continues

Parallel to the concept, Thyssenkrupp AG is continuing to spin off the steel sector. In a first step, 20 percent of Thyssenkrupp Steel's shares have already been sold to the Czech EP Group to increase their stake to 50 percent.

The currently developed key points paper is also the prerequisite for a viable and robust business plan. All ongoing investments and measures will be implemented as planned. The goal is to position Thyssenkrupp Steel as profitable, competitive, and climate-neutral in the long term.