Thyssenkrupp AG plans substantial job cuts alongside a reduction in steelmaking capacity as the company struggles to make progress in turning around the business.
   
Steelmaking capability will shrink by as much as 22% to as low as nine million tonnes, the German industrial company said late Thursday, after executives and supervisory board members discussed a strategic review to help put an end to years of losses for the unit. 

Once a flagship of Germany’s industrial strength, Thyssenkrupp’s steel unit has dragged on the company’s overall earnings for years, burdened by high investment requirements and low steel prices. The unit has repeatedly failed to break even despite a number of writedowns on its value.

Shareholders have been ratcheting up pressure on the management team to speed up the company’s restructuring. Thyssenkrupp rose as much as 1.8% in early trading, helping pare its decline over the past year to about 28%.

Lower capacity will lead to job losses at Thyssenkrupp’s biggest steel plant in Duisburg, the company said, stopping short of providing details on the cuts. The company will now seek talks with powerful labour unions, which hold half of the supervisory board seats. No final decisions have been taken. Reuters earlier this week reported that thousands of jobs could be affected.

European steelmakers have for years suffered from low margins and weaker demand, forcing them to idle furnaces and lay off workers. Last year, Germany’s Kloeckner & Co SE announced plans to cut 10% of its workforce in European distribution, and Sweden’s SSAB AB slashed 182 jobs at a Finnish steel mill.

Thyssenkrupp chief executive officer Miguel Ángel López Borrego, who has led the company since June, has pledged to revive the struggling conglomerate, but has faced a series of setbacks as he attempts to offload the steel business. 

Discussions to sell half of the unit to Czech billionaire Daniel Kretinsky are still ongoing, with Thyssenkrupp saying in February that the talks about a possible joint venture are constructive and serious.

Lopez has initiated a performance improvement programme across the company to bolster Thyssenkrupp’s competitiveness. He is also looking into sales of divisions to bolster profitability. In March, Thyssenkrupp said it is weighing a partial sale of its Marine unit, valued at about €1.5 billion , to private equity firm Carlyle Group Inc. 

  - Bloomberg