The German steel industry is fighting for survival. Companies like Thyssenkrupp are pulling the emergency brake. And Germany is falling further behind.
Essen – After a difficult first quarter, the steel company Thyssenkrupp is announcing consequences. Due to weak demand, the group wants to cut jobs. In addition, the production capacities of the steel division are expected to decrease. Thyssenkrupp is by no means alone in this – the symptoms of a weakening industry are evident everywhere in Germany.
Thyssenkrupp is reducing production – the steel industry is wobbling
As part of its “APEX” program, the Essen-based steel giant wants to save costs on a large scale and get out of the red. This seems urgently needed: between October and December 2023, the net result was minus 314 million euros. Last year there was a profit of 75 million euros on paper. The group blamed the weakening global economy for this development.
The reaction follows quickly: Thyssenkrupp recently announced that it would cut jobs and reduce production capacity in the steel division. On April 11, the group said that capacity would fall from 11.5 million tons per year to around nine to 9.5 million tons. There was also talk of “far-reaching restructuring” – specifically, that probably meant job cuts. It is not yet known how many jobs will be affected by these measures. “These measures will also involve job cuts that have not yet been quantified, which will also affect the downstream value processing stages as well as the administration and service areas,” said Thyssenkrupp.
Biggest challenges in Germany: Weak recovery in the European steel industry
The reasons for this development are diverse. According to the Steel Association, the biggest challenges currently lie in the European Union (EU) and Germany. Although demand for steel within the Federal Republic is currently recovering, the level had previously fallen to such an extent that industry representatives remain skeptical. “The weak recovery in the EU and especially in Germany is in contrast to the USA, where demand for steel is expected to increase by a total of 20 percent between 2020 and 2025,” says Martin Theuringer, Managing Director of the Steel Association.
The situation in Germany is still serious. “Despite the global economic recovery, we are not making any progress in this country. This is bad news that extends far beyond our sector,” explained Kerstin Maria Rippel, Managing Director of the Steel Association. The demand for steel is an indicator of the general condition of Germany as an industrial location. “In order to bring Germany forward as an industrial location again, the necessary steps must be taken now.” This absolutely includes Germany and the EU finding appropriate answers to the location policies “that are currently making other regions of the world strong and moving forward.” In the USA, for example, the Inflation Reduction Act ensures that many companies are relocating.
“Our companies are losing strength in competition”
Companies like Thyssenkrupp are also suffering from a massive flood of cheap imports from Asia. China's government is pumping massive subsidies into industries such as car manufacturing or the solar industry, and the companies - although hardly productive - are moving to Europe because demand in China is too low. This has gone so far that countries such as the USA and India have already imposed punitive tariffs on Chinese products. The competitiveness of entire industries is crumbling due to Chinese price dumping.
And finally, the conversion of steel production to “green steel” is depressing company figures. The explanation behind it: Because the entire EU is pursuing ambitious climate goals, all economic actors must come up with new strategies in order to adhere to the required values. Steel that companies produce by using green hydrogen is considered “green” steel. Politicians had promised that there would be support from the state during the changeover. An example of this is the 2.6 million that the federal government is using to support the Saarland steel industry.
A comparison with the international competition makes it clear how far behind Germany is. “Our companies are losing strength in competition,”
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quoted the IHK Lower Rhine managing director Stefan Dietzfelbinger. “If the steel industry weakens, it affects the entire economy.” Jobs, purchasing power and added value are lost.