Even as the two major players Tata Steel and Thyssenkrupp cheer the synergies that is likely to manifest after the two come together to form Europe’s second-largest producer of Steel in a Joint Venture arrangement, 4,000 jobs are set to be axed in Europe.
Even as the two major players Tata Steel and Thyssenkrupp cheer the synergies that is likely to manifest after the two come together to form Europe’s second-largest producer of Steel in a Joint Venture arrangement, 4,000 jobs are set to be axed in the combined conglomerate based out of Netherlands. According to the MoU signed by the companies, the new entity which will be called Thyssenkrupp Tata Steel would see up to 4,000 job cuts, about 8 per cent of the joint workforce. Together the companies employ about 48,000 workers. The job losses will also be divided equally between the companies.
Earlier, labor representatives, who have half of the seats on Thyssenkrupp’s supervisory board, had also expressed concern over job losses. Tata Steel cleared a hurdle for the venture after a U.K. regulator approved a deal to solve a long-running pension standoff, which Thyssenkrupp CEO Hiesinger had said was potentially a major stumbling block to the combination.
According to Thyssenkrupp’s statement, there is structural overcapacity in European steel sector, and a constantly high import pressure. “Consequently, all producers are under pressure to fill capacity and forced to pass on restructuring gains to the market time and again. The result is a downward spiral and a need for restructuring about every three to four years, with major steel assets coming under threat of closure in the medium term,” ThyssenKrupp said.
The joint venture will have a turnover of Rs 1,15,000 crore.The company will be headquartered in Amsterdam, Netherlands. As per the company’s estimates, cost synergies for the company is expected to be in the range of 400-600 million euro per annum. “Cost synergies may be realized through integration of commercial functions, R&D and other supporting activities,” Koushik Chatterjee, Group Executive Director, Tata Steel said. The job losses, which had been feared for several months by trade unions at ThyssenKrupp and German officials, would be divided roughly equally between the two groups.