Major German Steel Manufacturer Slashing 11,000 Jobs

A steel worker of Germany's industrial conglomerate ThyssenKrupp AG stands a mid of emitting sparks of raw iron from a blast furnace at Germany's largest steel factory in Duisburg, Germany. Wolfgang Rattay/Reuters

Germany’s largest flat steel manufacturer, ThyssenKrupp Steel, is set to lay off a large chunk of its workforce in an effort to cut costs.

The company aims 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,” ThyssenKrupp Steel said in a Nov. 25 statement.

The manufacturer had 27,478 workers employed as of September, making the cut of 11,000 jobs a 40 percent reduction in the total workforce. In addition, the corporation plans to reduce personnel costs by an average of 10 percent in the coming years.

Job cuts are part of ThyssenKrupp’s “comprehensive future industrial strategy” and a response to “structural changes” in the European steel market. “Increasingly, overcapacity and the resulting rise in cheap imports, particularly from Asia, are placing a considerable strain on competitiveness,” the company said.

There is a dire need to improve operating efficiency and productivity at the company while ensuring cost competitiveness, it noted. The steelmaker plans to cut down production capacity from 11.5 million metric tons to a range of 8.7 million to 9 million metric tons. The processing site at Kreuztal-Eichen will also be shut down.

Dennis Grimm, CEO of Thyssenkrupp, said the measures were aimed at ensuring the company adapts to changing market conditions via cost reductions and capacity adjustments.

“Comprehensive optimization and streamlining of our production network and processes is necessary to make us fit for the future,” Grimm said. “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.”

ThyssenKrupp is the latest in a string of major German corporations to have announced or suggested job cuts recently.

Engineering and technology company Bosch announced plans to cut up to 5,500 jobs from its automotive division over the coming years. Bosch pointed to stagnating auto sales, excess factory capacity, and slow EV transition as reasons for the layoff.

Last month, German carmaker Volkswagen revealed plans to fire tens of thousands of employees and shut down a minimum of three plants in the country.

The German Economy

The recent layoffs occurred amid a weak German economy, which shrank by 0.3 percent in 2023. While the government earlier this year predicted a 0.3 percent growth in 2024, it later revised that estimate to a 0.2 percent decline.

“The German economy is currently being increasingly affected by structural factors resulting from demographic change, a more difficult competitive position, and geo-economic fragmentation,” Germany’s Ministry for Business and Climate Protection said in a statement.

“In addition, economic effects such as persistently weak domestic and foreign demand and the continued restrictive monetary policy are weighing on economic development.”

Daniela Cavallo, head of Volkswagen’s works council, recently urged the government to prepare plans to ensure the country’s industry does not end up going “down the drain.”

A report from the Federation of German Industries warned that the country is losing ground as an industry location, with the growth momentum of industrial sectors having “significantly slowed” in recent years.

The report specifically highlighted the issue of the increase in energy costs that have “exacerbated German companies’ traditional cost disadvantages in terms of labor costs, taxes, and levies.”

“Higher prices for fossil fuels have raised the production costs of entire sectors by at times more than 25 percent,” it said. “As a result, producers in energy-intensive primary commodity sectors in particular will still face a cost disadvantage of up to 15 percent at the end of the decade compared to competitors in China and the United States.”

This cost disadvantage means that production and investments could move out of Germany, it warned.

In a March commentary at The Epoch Times, Diana Furchtgott-Roth, an adjunct professor of economics at George Washington University, attributed the country’s economic woes to Germany’s excessive renewable energy policies.

The government has for some time focused on energy transition projects—moving away from oil and nuclear—to ensure that renewables make up 100 percent of the country’s energy by 2035. Germany also shut off its nuclear power plants in April last year.

She noted that the high energy costs translate into unprofitable production for companies and result in a loss of purchasing power for consumers.