DUISBURG/FRANKFURT (Reuters) – Ailing conglomerate Thyssenkrupp (TKAG.DE) has worked out a new strategy for the group’s steel business, a leading labor representative said on Tuesday, adding the roadmap included significant investments but also restructuring steps.
FILE PHOTO: Thyssenkrupp’s logo is seen close to the elevator test tower in Rottweil, Germany, September 25, 2017. The 246 metre construction will test innovative elevator technology. REUTERS/Michaela Rehle
The strategy paper was presented to the supervisory board of Thyssenkrupp Steel Europe on Tuesday, following labor protests at the division’s headquarters in Duisburg, in the heart of the Ruhr area, Germany’s industrial heartland.
The unit’s future hangs in the balance after a deal to combine it with the European division of Tata Steel (TISC.NS) collapsed earlier this year, forcing management to announce the reduction of 2,000 out of the unit’s total 27,000 jobs.
Knut Giesler, who leads the powerful IG Metall union in North Rhine-Westphalia, where Thyssenkrupp is based, said the new plans, which were kept under wraps, would be assessed by workers and be discussed with management.
“We are paying close attention to the impact of the production network’s restructuring on sites and employees,” Giesler said, adding avoiding forced layoffs was paramount.
Giesler said workers had won time, as a far-reaching employment protection scheme, which was due to run out at the end of the year, would be extended by at least three months.
Thyssenkrupp declined to comment on details of the proposals.
The group had earlier said there was limited scope for additional funds for Steel Europe in light of Thyssenkrupp’s stretched balance sheet, which is aching under 12.7 billion euros ($14 billion) of debt and pension liabilities.
“We have to invest. And that’s what we do. This means that the financial funds available to us must be proportionate to the expected profit,” Thyssenkrupp said in a statement. “In light of the group’s economic situation the leeway is limited.”
Thyssenkrupp Steel Europe’s adjusted operating profit plunged 95% in the last fiscal year, hit by high raw material costs and falling demand in Europe.
Thyssenkrupp said its current plans include 570 million euros of investments for steel per year, adding it would have to first review the unit’s new strategy before it would decide whether to top that up – and by how much.
Steel workers have demanded 1.5 billion euros of investments over several years.
The elevators-to-submarines group said the new steel plan will have to be a part of the group’s broader strategy, which includes selling units or finding partners for businesses that are not competitive with rivals.
Editing by Riham Alkousaa and Jan Harvey; Editing by Richard Chang