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Thyssenkrupp plans to cut or outsource 11,000 jobs by 2030 in its steel division, a sector under heavy pressure in recent years due to rising energy prices. The announcement of a major restructuring was in the air, and in recent weeks it had also been the subject of a harsh clash between the company’s top management, resulting in the resignation of the CEO Bernhard Osburg (replaced by the “hawk” Dennis Grimm) and the Prime Minister supervisory and front line top management. Now the plan has been officially presented. In detail, the company explained, the board of directors of the steel unit has proposed to fire 5 thousand workers and transfer another 6 thousand to external service providers. In this way the Group aims to reduce personnel costs by around 10% on average in the coming years, to “bring them to a competitive level”.
The company, which employs around 27 thousand people, is currently in negotiations with Czech billionaire Daniel Kretinsky’s EP Corporate group, which wants to increase its stake in the steelworks from 20% (a recently acquired stake) to 50%. “Growing overcapacity and the resulting increase in low-cost imports, particularly from Asia, are having a significant impact on competitiveness,” Thyssenkrupp said in a statement.
Thyssenkrupp’s steel division closed at a loss both this year and the previous one due to the need for substantial investments to manage the carbon transition and as a consequence of low steel prices, which together with the difficulties of the user sectors (primarily automotive) they are weighing on profits. High energy prices resulting from Russia’s invasion of Ukraine and rising interest rates also increased costs for the division. Furthermore, the company’s high pension obligations have proven to be an obstacle in negotiations with potential buyers in recent years.
The new strategy also includes reducing production capacity from 11.5 million tonnes to a target level of future shipments of between 8.7 and 9 million tonnes. Processing plant in Kreuztal-Eichen will be closed. The sale of the Duisburg site, Huettenwerke Krupp Mannesmann (it is a joint venture with Salzgitter and Vallourec) is also a key part of the planned capacity reduction, but if the sale is not feasible, the company will hold talks with other shareholders on scenarios of closure, the company said.g
The Thyssenkrupp conglomerate has been pursuing a process of restructuring its internal organization and portfolio for years. Fincantieri itself has never hidden its interest in the Marine division, relating to submarines, while again in Italy the subsidiary Berco (tracked undercarriages) has started the dismissal procedure for around 500 people (except for withdrawing it in recent days). The Group managed to successfully sell its elevator division for 17.2 billion euros ($18 billion) in 2020, but its liquidity has declined in recent years, partly due to a series of losses and write-downs (around a billion in the last financial year alone) in its steel division. The German industrial group announced that it achieved a turnover of 35.0 billion euros during the period October 2023-September 2024 (-7% compared to the previous year), with an Ebitda of 895 million euros ( -47%), an adjusted Ebit of 567 million euros (-19%) and a negative net result of 1.4 billion euros, against the loss of 2 billion in the 2022/2023.
Thyssenkrupp’s Job Cuts: The Steel Solution or a Steel Sieve?
Big news from the land of Bratwurst and Bavarian beer: Thyssenkrupp plans to cut or outsource a staggering 11,000 jobs from its steel division by 2030. Now, I know what you’re thinking: “Is that even a real number, or did someone throw darts at a board of calculations?” But alas, it’s true. Thyssenkrupp’s steel sector is feeling crushed under the pressure; much like a poor chap in a nightmarish game of Twister gone wrong!
Management Drama: “Who’s Getting the Axe?”
Recent weeks have spawned quite the managment drama, glaring rivalries and—*drumroll please*—the resignation of CEO Bernhard Osburg! Enter the new ‘hawk’ in town, Dennis Grimm. You can almost hear the corporate squawking echo through the hallways. Their plan? Fire 5,000 of their workforce and shift another 6,000 to external service providers to save a cool 10% on personnel costs. Look, I get it—sometimes you need to trim the fat, but can we at least get a steak dinner out of it?
Thyssenkrupp claims it’s all about bringing those spiraling costs back to “competitive levels.” You know things are getting serious when those words pop up! It’s like saying, “Don’t worry, we’re just making the tough choices,” while applying for a job at the same time.
Steel: The New Banana? Peel It Back, Baby!
The steel industry is facing heavy hits, primarily due to rising energy prices—already making our bills spike like a poorly calibrated thermostat! And let’s not forget the low-cost imports swarming in from Asia, putting the kibosh on Thyssenkrupp’s competitiveness. It’s like the heavyweight boxing match of globalization, and unfortunately, the home team just got knocked out.
With low steel prices and a desperate need for investment amidst a carbon transition—thanks, climate change!—the steel division has consistently logged losses. This includes a whopping negative net result of 1.4 billion euros in the past year. At this point, even my bank account looks better!
Capacity Reduction: Time to Downsize
Thyssenkrupp has also announced plans to cut production capacity from 11.5 million tonnes to a target of between 8.7 and 9 million tonnes. So let’s get this straight: less production, more outsourcing, and a workforce that’s thinning out like my hair in the 90s—what could possibly go wrong?
Sales Strategy: Where’s the Gold?
The company’s been chasing a potential deal with billionaire Daniel Kretinsky’s EP Corporate group to up its stake in the steelworks. However, with a track record like that, it’s hardly surprising if they’re getting more “what do I offer?” looks than “where do I sign?” It’s like going on a group date and desperately trying to convince everyone you can eat the most at the buffet.
The Bottom Line: Cracking Under Pressure!
Thyssenkrupp, which just sold its elevator division for a jaw-dropping 17.2 billion euros, seems to be more focused on cutting than climbing. With shareholders eyeing potential closures of key sites and negotiations fraying at the edges, one must wonder: are we witnessing an industrial renaissance or a mischievous decline? The real question remains: who’s left holding the bag after all is said and done?
So grab your popcorn and watch this space, folks—because this show isn’t over yet!
Thyssenkrupp has announced an ambitious plan to significantly reduce its workforce in the steel division, targeting the elimination or outsourcing of approximately 11,000 jobs by the year 2030. This decision comes as the steel industry faces heightened challenges, particularly due to soaring energy costs that have placed immense financial strain on companies in recent years. Following a tumultuous period of internal conflict within the company’s upper echelons, which culminated in the resignation of CEO Bernhard Osburg, replaced by the more assertive Dennis Grimm, Thyssenkrupp has now officially unveiled its restructuring approach. The steel unit’s board has specifically proposed the termination of 5,000 positions while transitioning another 6,000 jobs to external service providers. This strategy is aimed at achieving a personnel cost reduction of approximately 10% on average over the coming years, with the ultimate goal of aligning these costs more closely with industry standards.
The company currently employs around 27,000 individuals and is in active discussions with Czech billionaire Daniel Kretinsky’s EP Corporate group, which is seeking to increase its stake in the steelworks from a recently acquired 20% to a controlling 50%. Thyssenkrupp cited the mounting challenges posed by growing overcapacity and a surge in low-cost imports—particularly from Asian markets—as significant threats to its competitive standing.
In a troubling trend, Thyssenkrupp’s steel division has reported financial losses in both the current and preceding fiscal years. The losses are attributed to urgent investments required for the transition towards carbon-neutral production methods, as well as plummeting steel prices that have affected profit margins. The automotive sector, which is a primary consumer of steel, has also encountered difficulties that weigh heavily on profitability. Additionally, soaring energy prices, driven largely by geopolitical tensions from Russia’s invasion of Ukraine, coupled with ascending interest rates, have exacerbated cost pressures within the division. The company has also grappled with substantial pension obligations, complicating negotiations with potential buyers in recent years.
The newly defined strategy involves a substantial cut in production capacity, shrinking from a previous high of 11.5 million tonnes down to a target range of between 8.7 and 9 million tonnes. Among the significant operational changes is the impending closure of the processing plant located in Kreuztal-Eichen. Furthermore, the planned sale of the Duisburg site, known as Huettenwerke Krupp Mannesmann—a joint venture with Salzgitter and Vallourec—stands as a core element of the capacity reduction efforts. However, should the sale not materialize, the company indicated it will engage in discussions with other stakeholders regarding possible closure scenarios.
The Thyssenkrupp conglomerate has been strategically restructuring its internal organization and portfolio for several years. Notably, Fincantieri has expressed interest in acquiring the Marine division, particularly relating to submarine technology. Additionally, the company’s Berco subsidiary, which specializes in tracked undercarriages, recently initiated a dismissal process affecting around 500 employees, although there have been indications of a potential withdrawal of this plan in recent days. Previously, Thyssenkrupp made headlines when it successfully sold its elevator division for €17.2 billion ($18 billion) in 2020, but has since seen a worrisome decline in liquidity, attributable to significant losses and write-downs—approximately €1 billion in the past financial year alone—in its steel division. Recently, the German industrial group revealed a turnover of €35.0 billion for the period spanning October 2023 to September 2024, reflecting a 7% decline from the previous year. This downturn was accompanied by an EBITDA of €895 million (-47%), an adjusted EBIT of €567 million (-19%), and a notable net loss of €1.4 billion, contrasted against a loss of €2 billion in the prior fiscal year.
How might Thyssenkrupp’s ability to sell the Duisburg site influence its overall restructuring strategy and financial stability?
Onnes to a target range of between 8.7 and 9 million tonnes. This reduction will necessitate the closure of the processing plant in Kreuztal-Eichen. The sale of the Duisburg site, part of a joint venture with Salzgitter and Vallourec, is also a critical aspect of the planned capacity cuts. Thyssenkrupp has indicated that if a sale is not achievable, discussions regarding potential closures with other stakeholders will take place.
In a broader context, Thyssenkrupp has been engaged in a lengthy process of restructuring its organizational setup and portfolio. In recent years, it has successfully divested its elevator division for €17.2 billion ($18 billion) in 2020, though it has since faced declining liquidity partly due to significant losses and impairments, amounting to approximately €1 billion in the last financial year, mostly driven by its underperforming steel division. For the fiscal year of October 2023-September 2024, it reported a turnover of €35 billion—a 7% decline from the previous year—with an EBITDA of €895 million (-47%), adjusted EBIT of €567 million (-19%), and a negative net result of €1.4 billion, albeit an improvement from the €2 billion loss in the prior year.
Given the steel division’s challenges, including rising energy costs, increased competition from low-cost imports, and the need for investments into carbon-neutral production technologies, Thyssenkrupp’s future direction remains uncertain. As the company navigates through these tumultuous waters, stakeholders are left to ponder whether these drastic job cuts and capacity reductions will ultimately stabilize the business or if they are merely symptomatic of deeper issues in the industrial landscape. The landscape for Thyssenkrupp is one to watch, as it confronts significant hurdles while trying to adapt to an increasingly competitive and challenging environment.