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Company Causes Uproar by Announcing Layoff of 11 Thousand People. The Measure, Combined with Factory Closures and Deep Cuts, Puts the Future of a Generation of Workers at Risk.
The crisis is knocking at the door of 11 thousand workers from 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 job losses, affecting the entire economy of the region and raising a series of questions about the future of the global industry.
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The Announcement of the Mass Layoff: Global and Local Impacts
On Monday, November 25, Thyssenkrupp Steel Europe (TKSE), headquartered in Duisburg, in western Germany, announced the decision to reduce its workforce from 27 thousand to 16 thousand employees by 2030.
The main reason cited by the company for this restructuring was the growing competition from cheap steel imports, mainly from Asia, which has pressured its competitiveness.
“Urgent measures are needed to improve the productivity and operational efficiency of TKSE itself”, said a company statement.
The Situation at the Heart of Germany’s Steel Industry
The decision directly affects steelmaking centers in Europe, most production being concentrated in Germany’s “rust belt”, particularly in Duisburg, which is already facing economic issues related to deindustrialization and population loss.
According to local authorities, North Rhine-Westphalia governor Hendrik Wüst stated that the announcement was a “shock for 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 thousand jobs will be eliminated with “adjustments in production and management”, while another 6 thousand positions will be outsourced or completely eliminated through the sale of units.
Factory Closures and Job Losses
In addition to staff cuts, the restructuring plan includes the closure of a steelworks in the Siegerland region, which currently employs approximately one thousand people.
TKSE also stated that its production capacity will be reduced from the current 11.5 million tons of steel to a future target of 8.7 to 9 million tons.
While this move aims to adjust production to the new economic reality, it has nonetheless been a heavy blow to the local economy.
The Opposition and Union View on the Restructuring
The measure has not been well received by unions, with IG Metall, one of the largest industrial unions in Germany, 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-chair of IG Metall.
In response, TKSE CEO Dennis Grimm defended the restructuring as necessary to ensure long-term job prospects, although he acknowledged that many workers would face hardships in the process.
The Relation to Other Major Job Cuts in Germany
This move by Thyssenkrupp is just another in the scenario of mass layoffs that has been sweeping Germany in recent months.
Companies like Volkswagen, Bosch, and other automotive giants have already announced significant cuts in their factories due to the slowdown in new car sales in Europe.
The Volkswagen, for example, as published by PG, announced the closure of factories and the layoff of tens of thousands of workers. Bosch, in turn, as also reported here, plans to cut 5.5 thousand jobs.
These cuts reflect a growing trend in the European industrial sector, which has faced difficulties due to various 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 significant impact in Germany, the crisis does not involve Thyssenkrupp AG’s operations in Brazil, where the conglomerate operates in various sectors such as automotive, naval, and chemical.
The company has about 4 thousand employees in South America, and its Brazilian operations have not been affected by the cuts announced in Europe.
However, Thyssenkrupp AG, which sold its steel plant in Brazil in 2017, continues to face financial challenges.
In the fiscal year 2023-24, the conglomerate reported a loss of € 1.5 billion, following a loss of € 2 billion the previous year.
Transformation or Sale: The Future of Thyssenkrupp AG
With the job cuts, Thyssenkrupp AG also announced a plan to transform its steel division into a fully independent company, which is being criticized by the union.
The proposal, which includes the possible sale of part of the company, has generated controversy, especially given that the Czech holding company EPCG, which already owns 20% of TKSE shares, plans to increase its stake to 50%. According to the union, this would mean a “handing over” of the company for a low price.
The Future of Steel Industries and Transformations in the European Labor Market
As the European industry faces a drastic restructuring, questions arise about the future of the steel sector and the impact of this transformation on the labor market.
Mass layoffs and increasing automation are just a reflection of a scenario where large corporations seek to adjust their operations to maintain competitiveness 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 depends on jobs in the industrial sector.
Will the European industry be able to recover after the major job cuts?
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