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Company causes uproar by announcing the layoff of 11 people. The measure, combined with the closure of factories and deep cuts, puts the future of a generation of workers at risk.
The crisis is knocking on the door of 11 thousand workers in one of the largest steel industries in the world!
In an announcement that surprised everyone, the European steel division of the German industrial conglomerate Thyssenkrupp AG revealed that over the next six years, the number of jobs in the steel sector will be drastically reduced.
The impact of this decision goes beyond the reduction of jobs, affecting the entire economy of the region and bringing to light a series of questions about the future of the global industry.
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The announcement of mass layoffs: Global and local impacts
On Monday, November 25, Thyssenkrupp Steel Europe (TKSE), based in Duisburg, western Germany, has announced the decision to reduce its workforce from 27 to 16 employees by 2030.
The main reason given by the company for this restructuring was the growing competition from cheap steel imports, mainly from Asia, which has put pressure on its competitiveness.
“Urgent measures are needed to improve TKSE’s own productivity and operational efficiency,” a company statement said.
The situation at the heart of Germany's steel industry
The decision directly affects steelmaking centers in Europe, with most production concentrated in Germany's "rust belt", especially in the city of Duisburg, which is already facing economic problems related to deindustrialization and population loss.
According to local authorities, North Rhine-Westphalia Governor Hendrik Wüst said the announcement came as a “shock to thousands of employees and their families”, a difficult situation for a region already impacted by economic problems.
TKSE itself confirmed that, by 2030, around 5 jobs will be eliminated with “adjustments in production and administration”, while another 6 jobs will be outsourced or eliminated completely through the sale of units.
Factory closures and job losses
In addition to the staff cuts, the restructuring plan includes the closure of a steel mill in the Siegerland region, which currently employs around 1,000 people.
TKSE also said its production capacity will be reduced from the current 11,5 million tonnes of steel to a future target of 8,7 to 9 million tonnes.
Although this movement aimed to adjust production to the new economic reality, it was still a strong blow to the local economy.
The opposition and the union's view on restructuring
The move was not well received by unions, with IG Metall, one of Germany's largest industrial unions, criticizing the plan.
According to the union, the restructuring is “a catastrophe” for workers, who see the loss of their jobs as something inevitable but cruel.
“What is needed now is a bold plan for the future, not an explicit and unimaginative cut,” said Jürgen Kerner, co-chairman of IG Metall.
In response, TKSE CEO Dennis Grimm defended the restructuring as necessary to secure long-term employment prospects, although he acknowledged that many workers would face hardships in the process.
The relationship with other major job cuts in Germany
This move by Thyssenkrupp is just one more in the scenario of mass layoffs that has been plaguing Germany in recent months.
Companies such as Volkswagen, Bosch and other automotive giants have already announced significant cuts in their factories due to the slowdown in new car sales in Europe.
A Volkswagen, for example, as published by PG, announced the closure of factories and the dismissal of tens of thousands of workers.. Bosch, for its part, as also shown here, plans to cut 5,5 jobs.
These cuts reflect a growing trend in the European industrial sector, which has been struggling due to several factors, including the global economic slowdown, pressure from international competitors and increasing automation.
The impact of the crisis in Brazil and the future of Thyssenkrupp AG
Despite the major impact in Germany, the crisis does not involve Thyssenkrupp AG's operations in Brazil, where the conglomerate operates in several areas, such as automotive, naval and chemical.
The company has around 4 employees in South America, and its Brazilian operations were not affected by the cuts announced in Europe.
However, Thyssenkrupp AG, which in 2017 sold its steel plant in Brazil, continues to face financial challenges.
In the 2023-24 fiscal year, the conglomerate posted a loss of €1,5 billion, after a loss of €2 billion the previous year.
Transformation or sale: The future of Thyssenkrupp AG
Along with the job cuts, Thyssenkrupp AG also announced a plan to turn its steel division into a fully independent company, which has been criticized by the union.
The proposal, which includes the possible sale of part of the company, has generated controversy, especially since the Czech holding EPCG, which already owns 20% of TKSE shares, plans to increase its stake to 50%. According to the union, this would be a “sale” of the company for a low price.
The future of the steel industry and changes in the European labour market
As European industry faces drastic restructuring, questions are arising about the future of the steel sector and the impact of this transformation on the labour market.
Mass layoffs and increasing automation are just a reflection of a scenario in which large corporations seek to adjust their operations to remain competitive in the face of global challenges.
What remains to be seen is how these changes will affect the global economy and, in particular, the workforce that relies on manufacturing jobs.
Will European industry be able to bounce back after massive job cuts?
