Mark Milner in London
WORKERS in Europe’s steel industry are not having an easy time. In the United Kingdom, British Steel, rated as one of the world’s most efficient steel-makers, acknowledged it will be making deep cuts in its workforce over the next few years, although how deep it is not yet saying.
In part, the cuts are associated with the strength of sterling, which has hit the company’s exports as well as opening the door to imports into its home market, but they may also be taken to represent an acceleration of the company’s ongoing slimming-down process.
What are the prospects, then, for workers in the steel divisions of Germany’s Thyssen and Krupp-Hoesch? The companies are locked in negotiations over a possible merger – having been brought to the negotiating table by what amounts to Krupp-Hoesch’s blunderbuss tactics of threatening a hostile bid for its bigger rival.
If a steel deal does go ahead, it will be seen as good news for their shareholders. A Krupp/Thyssen steel company would be Europe’s third-largest, behind British Steel and France’s Usinor Sacilor. Other steel companies will not wring their hands, even if they will not ring any bells, either.
For a merger to make sense, a Krupp/Thyssen combine will not only shed jobs but also will have to reduce capacity. At least that is what the industry collectively will be hoping. Without cutting capacity, Europe’s steel-makers will continue to struggle for the kind of return on investment other industries take for granted.
The snag is that, although the industry has shed jobs, it has been less successful in cutting capacity. Some experts believe Europe’s steel industry can make some 20- million tons more than its customers want to buy. To put that in context, the two biggest manufacturers have a total capacity of 31-million tons, that is, little more than half as much again as the estimated minimum that needs to be shut.
To complicate the issue, steel is one of the products that Central and Eastern European countries are keenest to export to Western Europe.
Supporters of rationalisation are pinning their hopes on the growing importance of the private sector. Privatisations have transformed the ownership structure of the industry, and market forces may now be allowed greater play without politicians getting in the way.
None of this will provide any comfort for German steel workers. Krupp boss Gerhard Cromme has already been labelled the “jobs killer”, following the Krupp/Hoesch merger in 1991, and Krupp’s Dortmund plant is being pencilled in as the most likely candidate for the post-merger axe.
The expected job losses are likely to bring workers out on the streets. There, they may meet workers from Renault’s Belgian plant, doubly incensed because they believe their plant was shut because it was outside Renault’s home base in France.
Cross-border closures are not yet on the steel industry’s agenda. Restructuring must mean that they cannot be far away, however, and it is not just the German and British industries that will need to steel themselves for further job losses.