Merkel Challenger Blasts Thyssen-Tata Deal

Updated on
  • SPD’s Schulz says headquarters shouldn’t go to Netherlands
  • IG Metall won’t accept merger without job, site guarantees

Thyssenkrupp's CFO Says Merger Creates Future for Steel

Chancellor Angela Merkel’s main challenger slammed a plan by Germany’s iconic Thyssenkrupp AG and India’s Tata Steel Ltd. to cut thousands of jobs as they merge their European steelmaking operations, moving the headquarters out of Germany to the Netherlands.

Hours after the news of the planned merger broke in the final week of Germany’s election campaign, Social Democrat leader Martin Schulz launched his attack during an already planned stop in Gelsenkirchen, one of several cities in the Ruhr industrial area with a Thyssenkrupp plant where jobs may be at risk. With the Social Democrats trailing badly in the opinion polls after four years as Merkel’s junior coalition partners, Schulz is facing the prospect that his SPD may slump to its worst election result since World War II.

“The plan to move the company headquarters to the Netherlands makes me believe they want to cut jobs -- that is not acceptable,” Schulz told a crowd of several hundred people in central Gelsenkirchen, less than 2 kilometers (1.25 miles) from the Thyssenkrupp plant. “Steel is at the core of our industry and the German sites must remain here.”

Thyssenkrupp, which developed stainless steel a century ago and whose metal was used in Manhattan’s Chrysler and Empire State buildings, wants to merge its European business with that of Tata to instead focus on manufacturing products such as elevators and ships. The proposal could see 4,000 jobs cut from a combined workforce of 48,000, the companies said.

Moving the headquarters to the Netherlands threatens co-determination, the system that gives workers a say in German company’s management, as well as easing the way to job cuts, Schulz said.

Guido Kerkhoff, chief financial officer at Thyssenkrupp, discusses his joint steel venture with Tata.

(Source: Bloomberg)

Thyssenkrupp, formed in 1999 through the merger of two historic big names in German heavy industry, has been caught in the political spotlight as it tries to restructure its steel operations in response to a global glut depressing prices. Ever since talks between Essen-based Thyssenkrupp and Tata started last year, employees and political leaders have been critical of a tie-up, which they see as a possible precursor to site closures and an eventual exit from steel altogether. 

“Steel is a product with a bright future, and we can’t understand why that shouldn’t be part of the core company anymore,” Knut Giesler, regional director of the IG Metall labor union in North-Rhine Westphalia, where Thyssenkrupp employs about 22,000 steelworkers, said in a phone interview. “So far we have been given no concrete information and that’s why the workers are scared. We won’t accept a deal without job guarantees for the employees and the German sites.”

Widespread job cuts would be especially painful for the labor-friendly SPD, whose heartland is in North Rhine-Westphalia, an area that has been in economic decline as traditional industries have shut. Thyssenkrupp’s facilities around Duisburg are Europe’s largest steel production site, while Dortmund and Bochum also have plants.

The SPD lost control of the state government in regional elections in May. Discontent among Social Democrat voters might see them drift away on Sunday to the anti-capitalist Left party or the populist Alternative for Germany, which scored its best result in the regional elections in Gelsenkirchen. The city has unemployment double the national average and a higher-than-usual share of foreign-born residents.

Social Democrat Vice Chancellor Sigmar Gabriel, who has in the past called on Thyssenkrupp to consider alternatives to a merger, met with employee representatives on Monday.

“The German sites are highly competitive, and that must also be the case in the future,” Labor Minister Andrea Nahles, also of the Social Democrats, said in an emailed statement. “There must not be a merger at any cost.” Her party colleague, Economy Minister Brigitte Zypries spoke in a statement of the need for the deal to gain “acceptance from all those affected.”

Not everyone is concerned about job cuts. Such mergers are necessary to rein in overcapacity in the steel industry and protect other jobs, said Michael Fuchs, a senior lawmaker from Merkel’s CDU.

“Since we are in a very, very fantastic position at the moment, because we have a low unemployment rate, these people are very skilled laborers," Fuchs told Bloomberg Television on Wednesday. "I’m quite sure they are absorbed by the market immediately. So it won’t be a big difficulty."

— With assistance by Rainer Buergin

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE