German conglomerate Thyssenkrupp to cut 3,000 jobs at steel unit by 2026

The German elevator-to-car parts conglomerate Thyssenkrupp will cut 3,000 jobs at its steel unit by 2026 as part of a wage deal it struck with powerful labour union IG Metall, it said on Wednesday.

Jobs will be cut in a socially responsible way, with no forced layoffs until March 31, 2026, Thyssenkrupp said.

The deal also has an immediate "corona crisis package" that includes shortened working hours, which will be implemented over the coming weeks, the company said.

As a result of the pandemic, Thyssenkrupp said it will make production adjustments in its steel business.

"We will have to go into short-time work at many locations in the coming weeks. This will initially affect production-related areas," Oliver Burkhard, executive board member said.

The package also requires Thyssenkrupp Steel Europe's operations to increase short-time work pay to 80%, according to the statement.

The company on Monday scrapped its 2019-2020 profit outlook, blaming the economic downturn triggered by the fast-spreading coronavirus.

The agreement with the labour union applies to all of Thyssenkrupp's steel locations in Germany, it added.

Steel strategy 20-30: #thyssenkrupp reaches agreement with @IGMetall and focuses on leading technology position in steel. Investments and cost reductions passed / forged redundancies to be avoided / immediate "Corona" crisis package agreed. https://t.co/5Dx0x0Hzon pic.twitter.com/JSrSoRLmis

— thyssenkrupp EN (@thyssenkrupp_en) March 25, 2020

Covid-19 impact

Thyssenkrupp has suspended production at its German elevator factory until the end of the month after two employees tested positive for the rapidly-spreading coronavirus, the conglomerate said in an e-mailed statement.

Production at the Neuhausen plant near Stuttgart was halted on March 16 for a period of 14 days, the company said in the statement. Administrative staff have been asked to work from home until April 9, the world's fourth-largest elevator maker, said.

The firm declined to say how many workers are employed at the site.

The news came as Germany's Volkswagen , the world's No.1 carmaker, suspended production at factories across Europe, also blaming the coronavirus pandemic that has hit sales and disrupted supply chains.

Thyssenkrupp last month agreed to sell its elevator division to a private equity consortium of Advent, Cinven [CINV.UL] and Germany's RAG foundation for 17.2 billion euros ($18.9 billion) to raise funds and cut debt.

Shares in the stricken conglomerate have since collapsed along with the broader market and are hitting record lows on a daily basis. At 1425 GMT, shares were 5.8% lower, giving the steel-to-submarines group a market valuation of just 2.4 billion euros.