Thyssenkrupp Steel has unveiled a comprehensive strategy to restructure its operations in response to the changing landscape of the European steel market. The announcement, made in a key issues paper presented to the Strategy Committee of the Supervisory Board, outlines the company’s plans to reduce its production capacity, streamline its workforce, and drive forward a green transformation to ensure long-term competitiveness. The steel industry has faced considerable challenges in recent years, including increasing overcapacity and cheap imports, particularly from Asia, which have placed significant pressure on European producers. As a result, thyssenkrupp Steel’s leadership has moved to implement a strategic response to address these challenges and position the company for the future.
A major part of this restructuring is the decision to scale back thyssenkrupp Steel’s production capacity from its current 11.5 million metric tons to a target dispatch level of 8.7 to 9 million metric tons. This adjustment aligns production with current market demand, reflecting the company’s response to weaker steel prices and the increasing influx of low-cost imports from regions with excess steel output. Although this reduction will help thyssenkrupp better match supply to demand, the company remains committed to maintaining the advantages of its integrated metallurgical network, which is a key factor in its operational strength. Even with the planned capacity cuts, thyssenkrupp aims to retain a flexible, cost-efficient operation that will continue to serve the needs of its key customers in the automotive, construction, and manufacturing sectors.
As part of the restructuring, the company will close its Kreuztal-Eichen processing site, a move that will contribute to the overall reduction in production capacity. In addition, thyssenkrupp plans to divest from its stake in Hüttenwerke Krupp Mannesmann, a critical element of the company’s strategy to reduce its capacity and streamline operations. If a sale of its shares in HKM is not feasible, thyssenkrupp will negotiate with other stakeholders to discuss closure or alternative solutions that align with market realities. This marks a significant shift for the company as it seeks to adapt its operations to the rapidly changing steel market while minimizing costs and improving efficiency.
Despite these significant changes, thyssenkrupp remains deeply committed to its green transformation goals. The company has reaffirmed its dedication to achieving carbon-neutral steel production by 2030, a key part of its broader sustainability strategy. One of the core elements of this green transformation is the ongoing construction of a direct reduction plant in Duisburg, which will replace two of the company’s existing blast furnaces by 2030. The DR plant, once operational, will significantly reduce carbon emissions by using natural gas and renewable hydrogen as substitutes for traditional coke in the steelmaking process. This shift away from coal-based methods of steel production is a critical part of thyssenkrupp’s plan to achieve its environmental targets while maintaining the competitiveness of its operations.
The company is also exploring the possibility of replacing another blast furnace with a modern electric arc furnace, although this decision will be made in the coming years depending on the economic, technological, and political conditions at that time. The EAF process, which uses scrap steel as a feedstock, is considered more energy-efficient and environmentally friendly than traditional blast furnace technology. However, the transition to EAF technology requires careful consideration of market conditions, including the availability of scrap metal, the cost of electricity, and the regulatory landscape surrounding carbon emissions. Thyssenkrupp is committed to pursuing the best available technologies to ensure that it meets its sustainability goals while remaining economically viable in an increasingly competitive global market.
Alongside the operational adjustments and green transformation efforts, thyssenkrupp has also outlined a significant workforce restructuring plan. The company plans to reduce its global workforce by approximately 5,000 jobs by 2030 as part of its broader goal to streamline its operations and reduce costs. An additional 6,000 jobs will be either transferred to external service providers or eliminated through the sale of certain business activities. While the company has stated that it will make every effort to avoid redundancies for operational reasons, the job cuts are seen as a necessary step to improve competitiveness and achieve the financial goals outlined in the company’s future industrial concept.
In addition to these job cuts, thyssenkrupp aims to reduce personnel costs by an average of 10% over the next several years. This cost reduction initiative is designed to bring the company’s labor expenses in line with industry standards and make its operations more competitive in a global market where cost efficiency is crucial. The company has emphasized that these measures will be implemented with sensitivity to the impact on its employees. CEO Dennis Grimm expressed that the company takes its responsibility to its workforce seriously, and while the changes will be challenging, they are necessary for securing the long-term viability of the business.
The restructuring plan also includes the continued efforts to make thyssenkrupp Steel more independent. As part of this strategy, thyssenkrupp has already sold a 20% stake in the Steel business to the Czech EP Group, with the goal of increasing this stake to 50%. This move is part of a broader strategy to give the Steel division more operational flexibility and enable it to respond more nimbly to market changes. This strategic shift toward greater independence is aligned with the company’s long-term goals of enhancing competitiveness and ensuring that its operations are agile enough to thrive in an evolving market environment.
Furthermore, the key issues paper being prepared by thyssenkrupp Steel is not just a roadmap for operational changes but also a foundation for a detailed business plan and an IDW S6 restructuring expert report. This report will be essential for guiding the company through the implementation of the restructuring process, ensuring that the changes are carried out efficiently and effectively. The company has stated that all current investments and performance measures will continue as planned, including investments in new technologies and processes designed to enhance operational efficiency. By making these strategic adjustments, thyssenkrupp aims to position itself as a leader in the green transformation of the steel industry, with a focus on profitability, sustainability, and long-term growth.
Marie Jaroni, Chief Transformation Officer at thyssenkrupp Steel, emphasized that while the company faces significant challenges in terms of operational efficiency and profitability, the long-term goal is to drive forward the green transformation in a systematic manner. The transition away from coal-based production is seen as indispensable for the company’s future, and the implementation of the key issues paper will be crucial in making thyssenkrupp Steel competitive, resilient, and carbon-neutral in the coming years. As the company moves forward with its strategy, it is committed to ensuring that it remains a key player in the global steel market, while contributing to the broader goals of environmental sustainability and industrial innovation.
Thyssenkrupp’s focus on innovation, cost reduction, and sustainability is central to its future plans, and the company is committed to navigating the complexities of the market while maintaining its technological edge and product quality. With a clear roadmap for restructuring, green transformation, and independent growth, thyssenkrupp Steel is poised to face the challenges of the global steel industry while laying the groundwork for long-term success in an increasingly competitive and environmentally conscious world.
