German steel producer Thyssenkrupp has reached a deal with unions on a short-term ‘Corona crisis package’ and a longer-term strategy to make it more competitive.
Thyssenkrupp, whose Rasselstein mill at Andernach is a key packaging steel supplier to canmakers, has been working with IG Metall metalworkers’ union to work out a response to falling demand as customers cut back during the pandemic.
As part of the Steel Strategy 20-30, additional investment is planned to optimise the steelmaker’s production network and focus on growth markets. While cost reductions and job cuts of 3,000 are required, forced redundancies will be avoided.
In addition to optimising the production network, the product portfolio is to be systematically aligned to future markets and more profitable steel grades.
The collective agreement applies to all Thyssenkrupp sites in Germany, is effective from the beginning of April and will run for six years until the end of March 2026.
Given Thyssenkrupp’s new focus on added-value steel products, the restructuring is likely to prove positive for its packaging steel business.
Significant investment in new plant is under way at Andernach, including a planned new tin-free coating line that replaces the controversial hexavalent chromium surface treatment.
“These are difficult times right now. That’s why we are pleased to announce that the planned restructuring will have no negative effects on Rasselstein‘s production,” a spokesperson for Thyssenkrupp told The Canmaker. “On the contrary, we continue to look positively into the future as a success driver for Thyssenkrupp.”
Thyssenkrupp’s chairman Dr Klaus Keysberg added: “We have put off problems for too long and shied away from tough decisions. The agreements give us room for manouevre so that steel can remain competitive in the long term. An immediate and comprehensive restructuring is an absolute prerequisite for this. We will lose no time here.”
The strategy is Thyssenkrupp’s response to the enormous challenges in the steel sector. In addition to a significantly cooling economy and the coronavirus crisis, steel has for many years been confronted with overcapacities, highly-volatile raw material prices and high import pressures. With the implementation of these measures, the company expects a significant and sustainable improvement in earnings.
As part of the plans, there will be a reduction of up to 2,000 jobs over the next three years, with around 1,000 more going by 2026. The plan is to strengthen the integrated production site in Duisburg by closing individual units at other locations.
The steel strategy also provides for an additional investment of about €800 million (US$880m) over six years, which adds to the annual investments of about €570m ($627m) already included in the planning.