Thyssenkrupp strikes pact with workers ahead of Tata merger

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Published: December 22, 2017 6:19:01 PM

German steel giant Thyssenkrupp has announced a "negotiated settlement" with its workers to clear the way for its proposed joint venture with Tata Steel Europe.

German steel giant, Thyssenkrupp, Tata Steel Europe, Joint venture, Tata mergerGerman steel giant Thyssenkrupp has announced a “negotiated settlement” with its workers to clear the way for its proposed joint venture with Tata Steel Europe. (Image: Reuters)

German steel giant Thyssenkrupp has announced a “negotiated settlement” with its workers to clear the way for its proposed joint venture with Tata Steel Europe. As part of the agreement made with workers’ union IG Metall last night, Thyssenkrupp employees have won a guarantee of job security until September 30, 2026. The union will now put the negotiated settlement to a vote at Thyssenkrupp’s steel sites in January 2018. “In the joint working group set up by the Thyssenkrupp Supervisory Board, Thyssenkrupp and trade union IG Metall have reached a negotiated settlement on the conclusion of a collective agreement. “The agreement will set collectively agreed parameters for the planned combination of the European steel activities of Thyssenkrupp and Tata Steel Europe in a 50/50 joint venture,” the German steel major said in a statement.

Following the settlement, the company hopes to complete its JV with Tata by the end of next year. “As part of the ongoing due diligence, independent expert opinions on the viability of the joint venture and the UK pension liabilities of Tata Steel Europe are being drawn up. Following completion of due diligence, the signing of the joint venture agreement is targeted for early 2018. Once regulatory approval has been received, the closing could take place at the end of 2018,” Thyssenkrupp said. Its settlement with steelworkers applies to all of Thyssenkrupp’s German steel sites.  The collective agreement is to come into force with the start of the joint venture and apply for around eight years until September 30, 2026, the company said.

Thyssenkrupp had announced the formation of a joint venture of its European steel activities with Tata Steel Europe in September.
Its stated aim is to create a leading European flat steel provider and position it as a quality and technology leader. The new company would have pro-forma sales of roughly 15 billion euros and employ around 48,000 people. “The settlement corresponds with our understanding of corporate responsibility. It gives us the ability to achieve the economic advantages and synergies forecast for the joint venture and so create value as planned for Thyssenkrupp and its shareholders. “At the same time, we are providing the employees of the joint venture with good prospects for the future and securing jobs,” said Dr Heinrich Hiesinger, CEO of Thyssenkrupp AG.

As part of the settlement, workers are assured continuation of employment until September 30, 2026, which means the previously announced necessary reduction of up to 2,000 jobs will be carried out “in a socially responsible way”. Oliver Burkhard, Chief Human Resources Officer of Thyssenkrupp AG said “We have agreed on the conclusion of a collective agreement that takes account of everything we attach importance to at Thyssenkrupp: a joint solution with the employee side in line with our corporate culture. “This result does justice to the interests of the company and of our employees. It enables us to provide security for our workforce and creates good prospects for the joint venture going forward.” The company said it has given far-reaching assurances for site continuation, with the future of the majority of sites assured until September 30, 2026.

Within these site assurances, it will still be possible to make changes to individual lines and units. For specific operational units in Bochum, Eichen and Hüttenheim, the company has agreed that a profitability analysis will be carried out at the end of 2020 to decide whether they should be continued; independently of this, these units will continue to operate until the end of 2021. Investments will continue to be made in the German sites at the present level. The company said its goal is to invest at least 400 million euros per year, among other things in the enhancement of production facilities. “The existing apprentice and further training capacities will be retained and thus form a cornerstone for the success of the joint venture. At present, roughly 1,500 young people are being trained in the steel business,” the company said.

Thyssenkrupp will hold an interest in the joint venture for at least six years. At the same time a change to the shareholder structure, possibly as the result of an IPO, is not ruled out during this period. Alongside the retention of coal and steel codetermination in Germany, the collective agreement provides for the establishment of an Employee Executive Committee (EEC), in which the board and employee representatives of the joint venture will discuss strategic issues three times a year. The steel employee representatives will continue to belong to the Group Works Council of Thyssenkrupp AG. Steel employees will retain their active and passive voting rights for the Supervisory Board of Thyssenkrupp AG. The IG Metall union’s collective bargaining committee has recommended accepting the agreement when it comes up for a vote in the New Year.

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