Thyssenkrupp Reaches Deal With Trade Union IG Metall On Tata Merger

2017-12-25

Dec. 22, 2017 - German industrial conglomerate ThyssenKrupp AG said that it reached a collective agreement with trade union IG Metall on the planned merger of its European steel business with Tata Steel Ltd, applying to all of Thyssenkrupp's German steel sites.

The agreement is to come into force with the start of the joint venture and apply for around 8 years until September 30, 2026.

Thyssenkrupp had announced the formation of a joint venture of its European steel activities with Tata Steel Europe in September. 

The settlement 'assures the continuation of employment until September 30, 2026,' the German company said, adding that the 2,000 job cuts that it announced previously will be carried out in a manner that is socially responsible.

Far-reaching assurances for site continuation have also been given. The future of the majority of sites is assured until September 30, 2026. Within these site assurances, it will still be possible to make changes to individual lines and units. For specific operational units in Bochum, Eichen and Hüttenheim we have agreed that a profitability analysis will be carried out at the end of 2020 to decide whether they should be continued; independently of this, these units will continue to operate until the end of 2021.

Investments will continue to be made in the German sites at the present level. The goal is to invest at least €400 million per year, among other things in the enhancement of production facilities.

thyssenkrupp will hold an interest in the joint venture for at least six years. At the same time a change to the shareholder structure, possibly as the result of an IPO, is not ruled out during this period.

The agreement provides for the establishment of an Employee Executive Committee (EEC), in which the board and employee representatives of the joint venture will discuss strategic issues three times a year.

As part of the ongoing due diligence, independent expert opinions on the viability of the joint venture and the UK pension liabilities of Tata Steel Europe are being drawn up. Following completion of due diligence, the signing of the joint venture agreement is targeted for early 2018. Once regulatory approval has been received, the closing could take place at the end of 2018.