“Best in Class – reloaded” with a savings volume of around €500 million - Operational and structural adjustments at Steel Europe to improve competitiveness in a difficult market environment
ThyssenKrupp is pursuing a holistic strategic development program to systematically optimize its portfolio, change its corporate culture, enhance its performance and thus increase the Group’s value potential. The corporate program “impact”, positive EBIT effects of €2 billion are to be generated in the next three years. In addition to the streamlining of the administration and cross-cutting initiatives mainly focused on purchasing, all the Group’s business areas will be required to contribute to increasing efficiency on a sustainable basis and gaining a competitive edge in terms of profitability.
In this connection Steel Europe has also initiated its current optimization program ”Best in Class – reloaded” (BiC). Steel Europe is holding up very well compared with competitors, but in the past fiscal year achieved adjusted EBIT margin of only 2.2 percent, which means that it no longer covers its costs of capital.
On top of this, the European steel industry faces major challenges: The steel market climate in Europe is worsening due among other things to high raw material and energy prices, CO2 allowance trading, Russia’s accession to the WTO, and in particular economic uncertainties and sharply reduced consumption levels above all in south west Europe.
On the basis of a market and competition analysis, the Steel Europe business area’s new management team has developed a package of measures to sustainably improve the steel unit’s profitability and competitiveness. The optimization program plans to achieve a savings volume of around €500 million by the 2014/2015 fiscal year. That means the Steel Europe business area will make an important contribution to improving the performance of the Group as a whole.
As a supplier of premium steel products and grades, Steel Europe is well positioned in an extremely difficult market environment. Nevertheless, far-reaching structural adjustments and operational improvements are urgently needed to permit the continued running of the core units in the hot end operations and the hot rolling lines. As well as advantages in purchasing, this includes efficiency improvements in the production and administration processes. In addition, the company is looking into the closure, relocation or sale of business units and facilities. These measures are currently being discussed with the employee representatives and relate to coil coating line 1 in Duisburg-Beeckerwerth, one of the two electrolytic coating lines at the Dortmund plant, the cold-rolling and coating plant in Neuwied, the grain-oriented electrical steel products of ThyssenKrupp Electrical Steel, and the hot-dip galvanizing line of ThyssenKrupp Galmed in Spain.
Under the optimization program the workforce of Steel Europe of currently around 27,600 employees will be reduced in a socially responsible way by over 2,000 employees. This will also affect the administration at the Duisburg headquarters. As a result of possible disposals the number of employees could be reduced by a further 1,800. The planned adjustments are subject to the approval of the boards and further discussions with the employee representatives. The measures are to be implemented by the 2014/15 fiscal year.
The “BiC-reloaded” optimization program is a forceful initial step towards improving the position of the ThyssenKrupp Group’s European steel operations in a difficult market environment and achieving the profitability and capital efficiency required of all the Group’s business operations under the Strategic Way Forward. Against this background Steel Europe also aims to use its engineering expertise to stand out further from its competitors and thus strengthen its focus on particularly attractive applications and products. ThyssenKrupp Steel Europe’s technical and logistical capabilities are to be optimized so as to expand its market share in specific product groups and specific sectors. For this a particular focus will be on innovation, customer orientation, and high-performance logistics.
ThyssenKrupp has 150,000 employees in over 80 countries working with passion and expertise to develop solutions for sustainable progress. Their skills and commitment are the basis of our success. In fiscal year 2011/2012 ThyssenKrupp generated sales of €40 billion.
Innovations and technical progress are key factors in managing global growth and using finite resources in a sustainable way. With our engineering expertise in the areas of “Material”, “Mechanical” and “Plant”, we enable our customers to gain an edge in the global market and manufacture innovative products in a cost and resource efficient way.