On Friday, May 8, ThyssenKrupp Steel AG, the steelmaking unit of the German industrial conglomerate ThyssenKrupp AG, announced that it agreed in principle with labor representatives on up to 2,000 job cuts to weather the sharp drop in demand for its products due to the global recession.
In a written statement ThyseenKrupp said that it initialed an agreement with its works council that aims for 1,800 to 2,000 job cuts by September 30, 2010, adding that it intended to reduce its workforce through socially-acceptable measures and to avoid forced redundancies and plant closures.
The agreement foresees that jobs will be cut through measures such as voluntary departure with severance payments as well as early retirement, ThyssenKrupp Steel said.
In addition, the company said that the job cuts would result in savings of around €150 million from the beginning of its fiscal year 2011, starting October 1, 2010. The savings from the reduced workforce are part of a plan to cut costs by more than €400 million.
Combined with cost cuts of more than €400 million in administration and materials expenses that were announced in November 2008, ThyssenKrupp Steel's savings measures total more than €800 million.
At the beginning of 2009, ThyssenKrupp initiated short-time work for a large part of its workforce, while the steel unit shut down a blast furnace in March, reflecting the drastic decline in orders.
Meanwhile, the company's supervisory board is scheduled to discuss a far-reaching reorganization of its business that includes a reduction of its five divisions to two at a meeting on Wednesday, May 13. The restructuring of its business is expected to generate €500 million in additional savings, which would be supplemental to the previously announced €1 billion in savings for fiscal year 2009.