The paper is the company’s response to the further consolidation of fundamental and structural changes on the European steel market and in key customer and target markets. Increasingly, overcapacity and the resulting rise in cheap imports, particularly from Asia, are putting a considerable strain on competitiveness.
In addition, urgent measures are needed to improve thyssenkrupp Steel’s own productivity and operating efficiency and to achieve a competitive cost level. The key issues paper will be fleshed out in the coming weeks in dialog with the supervisory bodies and employee representatives. thyssenkrupp AG and the EP Group, which holds a 20% stake in thyssenkrupp Steel, support the concept.
Adjustment of overall capacity – closure of the Kreuztal-Eichen site
thyssenkrupp Steel’s key issues paper provides for a market-driven reduction in production capacity from the current level of 11.5 million tons to a future shipment target level of 8.7 to 9 million tons and thus an adjustment to future market expectations. This roughly corresponds to the shipping result of the past financial year. Even after this step, the advantages of the integrated smelter network will remain intact. The separation from Hüttenwerke Krupp Mannesmann (HKM) remains a key element in the necessary capacity reduction. The primary objective is to sell the shares in HKM. If a sale is not possible, thyssenkrupp Steel will hold talks with the other shareholders about mutually acceptable closure scenarios. In addition, the processing site in Kreuztal-Eichen is to be closed.
Commitment to the green transformation paper
thyssenkrupp Steel remains committed to the green transformation and climate-neutral steel production. The company remains committed to its plan to complete the direct reduction plant, which is already under construction, and is also holding constructive talks with the relevant authorities to ensure the economic viability of this major investment project in a rapidly changing environment. By 2030, the two blast furnaces 8 and 9 in Duisburg are to be replaced by the DR plant and the two planned innovative smelters with a total shipping capacity of 2.2 million tons per year. In the future, another blast furnace could be replaced, e.g. by a modern electric arc furnace. However, a decision on this will only be made at a later date and under the economic, technological and political conditions prevailing at that time.
Reduction in employment and personnel costs
The implementation of the key issues paper that has now been presented will be accompanied by a significant reduction in jobs and further cuts in personnel costs. For example, the planned adjustment of the Group-wide production network and a significant streamlining of administration will result in the loss of around 5,000 jobs by 2030. In addition, a further 6,000 or so jobs are to be transferred to external service providers or the sale of business activities. In addition, personnel costs are to be reduced by an average of ten percent in the coming years and thus adjusted to a competitive cost level. As part of the realignment, it remains the declared aim to avoid redundancies.
“We take our responsibility very seriously and want to create long-term prospects for as many of our employees as possible,” says CEO Dennis Grimm. “We will therefore adapt to the changed market conditions through targeted capacity adjustments and cost reductions. Comprehensive optimization and streamlining of our production network and processes is necessary to make us fit for the future. We are aware that this path will demand a lot from many of us, especially because we will have to cut a large number of jobs in the coming years in order to become more competitive. It is therefore all the more important that everyone involved takes responsibility together in order to move steel forward. The quality of our products and our technological expertise are a stable foundation for our path forward. Our customers can continue to rely on our high-quality flat steel products in the future.”
Independence and further implementation of the future concept
In parallel with the implementation of the concept, thyssenkrupp AG is continuing the process of making the steel business independent. In a first step, 20 percent of the shares in thyssenkrupp Steel have already been sold to the Czech EP Group, with the aim of increasing the stake to 50 percent.
The key issues paper currently being prepared is also the basic prerequisite for a viable and resilient business plan and the IDW S6 report. All current investments and performance measures will continue to be implemented as planned in order to utilize the levers for increasing competitiveness now. The aim is to make thyssenkrupp Steel profitable, competitive and climate-neutral in the long term.
“With the strategic and long-term structural realignment, we will make thyssenkrupp Steel fit for the future in the long term,” says Marie Jaroni, Chief Transformation Officer at thyssenkrupp Steel, with conviction. “In terms of operational efficiency and profitability, we still have some catching up to do in key competitive areas. We have to close these gaps if we want to have a good future. This is all the more important because we want to systematically drive forward the green transformation. It is indispensable and will replace the previous coal-based business model in the long term. The implementation of the concept presented today will be decisive for our competitiveness and therefore for our future.”
