Thyssenkrupp eyes steel plant closures, says labour official

By Georgina Prodhan

DUISBURG, Germany (Reuters) - German conglomerate Thyssenkrupp wants to come up with a new, aggressive cost-cutting plan for its steelmaking division by May, probably including the closure of some plants that would violate a labour agreement, a senior labour official said.

Thyssenkrupp Steel Europe's Chief Executive Andreas Goss informed about 250 steel labour representatives of the plan at a conference on Friday, Steel Europe works council chief Guenter Back told journalists.

The steel-to-elevators group is in talks with Tata Steel to merge their European steel operations, but Back said any plan to close some plants could go ahead irrespective of whether there is a deal with Tata.

Thyssenkrupp has its 19th century roots in steelmaking but the sector is now being hit by lacklustre demand and cheap imports into Europe. Labour representatives fear the group wants to exit the sector at any cost, under pressure from activist investor Cevian, which owns 15 percent of the group.

Back said any plan to close plants in Germany would breach an agreement management made with the works councils in 2014, which guaranteed no site closures or job cuts until 2020 in return for workers' concessions on hours and pay.

"What does this management want from its workforce at all?" said Back. "We will not allow ourselves to be used and abused."

Back said Goss had been instructed by Thyssenkrupp Chief Executive Heinrich Hiesinger to find a way to close "a valuation gap of 800 million to 1.6 billion euros ($900 million to $1.8 billion)" at the steel division but did not elaborate. Goss had also told the conference that the division's personnel costs were 200 million euros too high.

The works councils said they had not been informed about the progress of the talks with Tata, but argue that consolidation to shut down capacity in a single region would have little effect in a global market dominated by China.

Back said a mass protest of about 10,000 Thyssenkrupp steel workers was planned for August 31 against cost-cutting and restructuring, although the protest would not be an official strike. Back was reluctant to say what other measures the works councils, backed by powerful trade union IG Metall, might be prepared to take.

TRADITION

Thyssenkrupp has a strong tradition of taking decisions in consultation with its workers, who have not staged a strike since the late 1970s, but Back said he feared this consensual approach may be breaking down.

"Hiesinger knew exactly the tradition of the company he was coming to, with its roots in steel," he said. "If he's always calling into question whether steel belongs in our company or not then he can't be our man." Hiesinger has been CEO since 2011.

A spokesman for Thyssenkrupp Steel Europe said the process of considering more restructuring had only just begun, meaning there could not be plans for plant closures at this stage.

He cited Goss as telling the conference: "We are using every lever to drive our steel business back to sustainable profitability, in the course of which we are also examining further restructuring measures."

Thyssenkrupp Steel Europe's operating profit almost halved in the three months through June from a year earlier, it said on Thursday, but it said the outlook was improving and that rising prices would feed into its results in coming quarters.

($1 = 0.8939 euros)

(Reporting by Georgina Prodhan; Editing by Susan Fenton)