German Election Shaken Up by Thyssenkrupp-Tata Deal

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Just four days before Germans head to the polls, the prospect of job cuts at one of the country’s most iconic companies has galvanized political opposition.

Thyssenkrupp AG, 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 Steel Ltd. to instead focus on manufacturing products such as elevators and ships. The headquarters of the new venture will shift to the Netherlands, and the move could see 4,000 steel jobs cut from a combined workforce of 48,000.

“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.”

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

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. 

Threat to SPD

Widespread job cuts would be especially painful for the labor-friendly Social Democratic Party, whose heartland is in the industrial centers of North Rhine Westphalia, including cities like Gelsenkirchen, Dortmund and Duisburg where Thyssenkrupp has plants. Thyssenkrupp’s facilities around Duisburg are Europe’s largest steel production site.

The SPD already faces the possibility that it may slump on Sunday to its worst national election result since World War II after four years as junior partner to Chancellor Angela Merkel’s Christian Democrats. It lost control of the state government in May. Discontent among SPD voters might see them drift away on Sunday to the anti-capitalist Left party or the populist Alternative for Germany.

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 party’s candidate for chancellor, Martin Schulz, is making a scheduled campaign stop later Wednesday in Gelsenkirchen, where the SPD attracted more support in 2013 than anywhere else in Germany. The party has backed the union’s calls for job and site guarantees and wants to keep the headquarters of a new company in the state.

“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.

‘Skilled Laborers’

“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.”

Economy Ministry spokesman Korbinian Wagner told reporters at the government’s regular news conference in Berlin that the deal was a decision for the companies. The issue wasn’t discussed in Wednesday’s cabinet meeting, deputy government spokesman Georg Streiter said. 

Thyssenkrupp developed stainless steel in 1912; the material’s resistance to corrosion, acid and heat contributed to the growth of Germany’s chemical industry. But the company also has a dark history. It employed tens of thousands of forced laborers during World War II and supplied the Nazi war machine with steel products.

— With assistance by Rainer Buergin


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