Saturday, December 7News That Matters

We are aware that this path will demand a great deal from many people, especially because we will have to cut a large number of jobs over the coming years in order to become more competitive.”-CEO Dennis Grimm

25.11.2024 19:00

thyssenkrupp Steel presents key points for future industrial concept

  • Lowering the operating point to a dispatch level of 8.7 to 9.0 million metric tons.
  • Further processing site in Kreuztal-Eichen to be closed.
  • The aim is to cut around 5,000 jobs by 2030 through adjustments in production and administration, while a further tranche of 6,000 jobs is to be transferred to external service providers or shed through the sale of business activities.
  • Reduction in personnel costs by an average of ten percent in the coming years to a competitive cost level.
  • Future concept forms the basis for discussions with employee representatives, the preparation of the business plan, and the restructuring expert report in the form of the IDW S6, a standard published by the Institute of Public Auditors in Germany.

The Executive Board of thyssenkrupp Steel Europe AG has presented plans for a comprehensive future industrial strategy to the Strategy Committee of the Supervisory Board in a key issues paper. This is the company’s response to the further consolidation of fundamental and structural changes in the European steel market, and in key customer and target markets. Increasingly, overcapacity and the resulting rise in cheap imports, particularly from Asia, are placing 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 percent stake in thyssenkrupp Steel, support the concept.

Adjustment of overall capacity – closure of the Kreuztal-Eichen site

The key points paper from thyssenkrupp Steel envisages reducing production capacities from the current 11.5 million metric tons to a future target dispatch level of 8.7 to 9 million metric tons in line with market conditions, thus adapting capacities to future market expectations. This roughly corresponds to the dispatch result of the previous financial year. Even after this step, the advantages of the integrated metallurgical 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

thyssenkrupp Steel remains committed to the green transformation and carbon-neutral steel production. The company still holds firmly to its intended plan of completing the direct reduction plant that is already under construction, while having constructive talks with the responsible stakeholders to ensure economic viability of this major investment project in the quickly evolving framework conditions. By 2030, the two blast furnaces 8 and 9 in Duisburg are to be replaced by the DR plant and the two planned innovative melters with a total dispatch capacity of 2.2 million metric tons per year. In the future, another blast furnace could be replaced by a modern electric arc furnace, for example. However, a decision on this will only be taken at a later date and under the economic, technological, and political conditions that apply at that time.

Job cuts and reduction in 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 personnel-related cost reductions. 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 tranche of about 6,000 jobs is to be transferred to external service providers or shed through the sale of business activities. In addition, personnel costs are to be reduced by an average of ten percent over the coming years, thus adjusting them to a competitive cost level. As part of the realignment, it remains the declared aim to avoid redundancies for operational reasons.

“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 great deal from many people, especially because we will have to cut a large number of jobs over the coming years in order to become more competitive. That is why it is now all the more important for everyone involved to take responsibility together in order to move Steel forward. The quality of our products and our technological expertise are a stable foundation for our future path. Our customers will continue to be able 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% of the shares in thyssenkrupp Steel have already been sold to the Czech EP Group with the aim of increasing the stake to 50%.

The key issues paper currently being prepared is also the basic prerequisite for a viable and resilient business plan and the IDW S6 restructuring expert 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 carbon-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 need to close these gaps if we want to look forward to a positive future. This is all the more important, because we want to drive forward the green transformation systematically. It is indispensable and will replace the previous coal-based business model in the long term. Implementation of the concept presented today will be decisive for our competitiveness, and therefore for our future.”

25.11.2024 17:45

Oliver Burkhard is focusing on his role as CEO of thyssenkrupp Marine Systems and is stepping down from his role as CHRO on the Executive Board of thyssenkrupp AG

At the request of Oliver Burkhard, the Supervisory Board of thyssenkrupp AG has decided by mutual agreement to terminate his mandate as a member of the Executive Board of thyssenkrupp AG as of January 31, 2025. This is due to the Group’s efforts to spin off the Marine Systems segment and list it on the stock exchange. In addition to his role as Chief Human Resources Officer and Labor Director on the Executive Board of thyssenkrupp AG – including the thyssenkrupp Services division – based in Essen, Oliver Burkhard has also been Chief Executive Officer of thyssenkrupp Marine Systems GmbH in Kiel since May 1, 2022. From February 1, 2025, he will focus fully on this role and prepare the spin-off of thyssenkrupp Marine Systems as decided by the Executive Board of the AG.

Prof. Dr. Siegfried Russwurm, Chairman of the Supervisory Board of thyssenkrupp AG: “As a member of the Executive Board, Oliver Burkhard has played a key role in shaping the destiny of thyssenkrupp AG for more than a decade. As Chief Human Resources Officer and Labor Director, he has worked hard to balance the interests of various stakeholders, while at the same time using his considerable expertise to give the human resources function a strong voice. In addition, in his role as CEO at Marine Systems, he has led our naval shipbuilding business to economic stability and growth in recent years. The Supervisory Board would like to express its sincere thanks to Mr. Burkhard for his many years of service to thyssenkrupp AG and is pleased that he will remain with the company in such an important position as Chief Executive Officer of the Marine segment.”

Miguel López, Chief Executive Officer of thyssenkrupp AG: “The spin-off of Marine Systems is one of the most important strategic projects of thyssenkrupp AG and no one is better suited to drive the process forward than Oliver Burkhard. In this respect, his decision to focus entirely on the task of CEO at Marine Systems is to be welcomed – even though we regret his departure from the AG board. On behalf of the board of thyssenkrupp AG, I would like to thank Oliver Burkhard very much for the close and trusting cooperation and look forward to continuing our work in a new constellation.”

Oliver Burkhard: “The changed security policy environment is leading to increased demand in naval shipbuilding. Our order books are full, and we expect a continued high level of new orders. At the same time, the planned spin-off requires very intensive preparations at tkMS. Therefore, from February onwards, I will focus fully on my role as CEO of Marine Systems. I would like to thank the Supervisory Board for the swift and amicable termination of my Executive Board mandate and for our many years of trusting cooperation. I would also like to thank my colleagues on the board and, of course, the many employees with whom I have had the pleasure of working over the past twelve years.”

The Supervisory Board will decide in due course in an orderly process on the succession of Oliver Burkhard as Chief Human Resources Officer and Labor Director of thyssenkrupp AG. Jens Schulte, Chief Financial Officer, will take over responsibility for the Human Resources department on an interim basis.

thyssenkrupp is an international industrial and technology group with around 98,000 employees. In the fiscal year 2023/2024, the company generated sales of €35 billion in 47 countries. Its business activities are bundled in five segments: Automotive Technology, Decarbon Technologies, Materials Services, Steel Europe and Marine Systems. With extensive technology know-how, the businesses develop innovative solutions for the challenges of the future. Around 3,900 employees work in research and development worldwide. They are mainly focused on climate protection and the energy transition, the digital transformation in industry and the mobility of the future. The patent portfolio of thyssenkrupp currently includes approximately 16,900 patents and utility models. thyssenkrupp is pursuing ambitious climate protection targets and actively optimizing its own energy and climate efficiency. At the same time, the Group is supporting its customers with advanced products to help them achieve their climate targets, thus playing a key role in advancing the green transformation. As a publicly listed company, thyssenkrupp is part of the MDAX index. thyssenkrupp shares are traded on the Frankfurt Stock Exchange (ticker symbol: TKA) and as American depositary receipts (ticker symbol: TKAMY) in the USA.

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