Thyssenkrupp, workers strike deal to pave way for Tata Steel merger
DUESSELDORF/FRANKFURT: Workers on Thursday struck a deal with German industrial company Thyssenkrupp to secure steel plants and jobs, a big step towards a planned merger of the group’s European steel business with that of India’s Tata Steel.
The deal removes a major obstacle to the merger, planned for next year, which will create Europe’s second-largest steel group after ArcelorMittal and continue Thyssenkrupp’s efforts to transform itself into a more technology-focused company.
The workers’ approval for the deal, first announced in September, is seen as key to getting the deal done and shows Thyssenkrupp’s commitment to seek workers’ consent for far-reaching structural changes.
“The outcome achieved today represents a key prerequisite for meeting our strategic objectives and at the same time satisfying the interests of our employees,” Thyssenkrupp CEO Heinrich Hiesinger said in a statement.
The agreement, which still needs to be approved by the members of German union IG Metall, foresees no forced layoffs or major site closures until September 30, 2026, labour representa- tives and the group said.
This comes close to the union’s demands for 10 years, which were made in response to concerns that Thyssenkrupp might be shirking responsibility for its volatile steel unit, whose roots go back more than 200 years, by merging it with a rival.
Thyssenkrupp and Tata Steel in September reached a preliminary deal to merge their European steel units to create the continent’s second-largest steelmaker after ArcelorMittal, with $17.81 billion of sales.
They said the deal will help them to tackle overcapacity in Europe’s steel market, which faces cheap imports, subdued construction demand and inefficient legacy plants.
The companies have already announced 4,000 job cuts as part of the tie-up.
Thyssenkrupp, which also said it would invest at least 400 million euros a year at its German steel sites, still needs to get the joint venture deal through its supervisory board before a final contract can be signed in 2018.