German steelmaker ThyssenKrupp said the strategy, finance and investment committee of its supervisory board approved a realignment plan presented by the company’s executive board, designed to strengthen the group moving forward following the failure of its plans to merge with Tata Steel Europe.
The group may also seek partners for some steel operations, according to statements made by the CEO Guido Kerkhoff over the weekend.
A basic agreement has been struck between the executive board and trade union IG Metall on the strategic realignment of the group, ThyssenKrupp said in a statement issued after Saturday’s approval. This will involve the elimination of 6,000 steel area jobs, out of a total of 27,000, and an IPO for the group’s elevator business, it said.
“The agreement lays out the key principles for the future-oriented management of the thyssenkrupp group and sets the framework for responsible implementation of the new strategy,” it said.
Plans for the realignment follow the EC’s decision not to approve merger plans between ThyssenKrupp and Tata Steel Europe, as announced by the two companies last Friday. The companies said they did not wish to make the further concessions being demanded by the EC — understood to be extra divestments over and above the various asset sales already under discussion.
The JV would have formed Europe’s second biggest steelmaker, with crude steel capacity of around 21 million mt/year. Steel demand is seen declining in the European Union this year and carbon costs are cited by some companies as an impediment to profitability.
ThyssenKrupp committees will recommend that the group’s supervisory board approve the executive board’s proposal on May 21, the steelmaker said.
IG Metall had no immediate response to the announcement Monday.
Kerkhoff reiterated in newspaper interviews over the weekend that the group may be looking for steel partnerships to move its business forward, following an initial announcement of this possibility last Friday. The CEO told Germany’s Handelsblatt news service that in any future steel mergers ThyssenKrupp would remain the majority shareholder.
“Our portfolio will become much more flexible,” Kerkhoff had said in a speech Friday. “Business will be added, partnerships will be established and some businesses will be able to develop better outside of ThyssenKrupp.”
A Tata Steel Europe spokesman confirmed Monday that the Indian-owned steelmaker will honor its existing commitments with trade unions to keep the blast furnaces in operation and make further investments for a number of years at its 3.5 million mt/capacity Port Talbot, Wales integrated steelworks. Tata executives noted in a call Friday that its operations in Europe had recently been challenging.
UK-based trade union Unite has since called on the Tata board to give Tata Steel workers assurances and end the ‘rollercoaster’ of uncertainty following news that the Tata/ThyssenKrupp merger is off, while the GMB union says it is “is ready to fight hard for every members’ job in the UK steel industry.”
— Diana Kinch and Annalisa Villa
