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ThyssenKrupp cuts back European steel division

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(Globalpost/GlobalPost)

German heavy industry giant ThyssenKrupp unveiled plans on Friday to axe more than seven percent of the workforce at its Steel Europe division to make the business more competitive.

ThyssenKrupp said in a statement it would axe "more than 2,000 jobs" out a total workforce of 27,600 at its Steel Europe division in a 500-million-euro ($671-million) cost-cutting drive.

"Overall, the workforce of Steel Europe will be cut by more than 2,000 from around 27,600 at present as part of an optimisation programme," the statement said.

"A further 1,800 jobs could be cut via possible divestments," it added.

The unit's administrative headquarters in Duisburg, western Germany, would bear the brunt of the cuts, which management hoped would not entail any forced redundancies.

Pending approval by the supervisory board and consultations with unions and labour representatives, they would be implemented by its 2014/2015 business year, the statement said.

ThyssenKrupp, which runs its business year from October to September, said the cuts were "a first step in improving the position of our European steel business in a difficult competitive environment."

They would contribute to a large group-wide programme to save as much as 2.0 billion euros across all of its activities by 2015.

Alongside steel, ThyssenKrupp also makes elevators, industrial plant technology, submarines and car parts.

But it is the highly cyclical steel business which has been causing ThyssenKrupp the most headaches recently.

The group ran up a year-end loss of 4.7 billion euros, largely as a result of massive writedowns on new steel mills in Brazil and the United States.

ThyssenKrupp is currently looking for a buyer for its US steel business and there has even been speculation that it might pull out of steel altogether.

But chief executive Heinrich Hiesinger told shareholders at the group's annual meeting last months that there were no plans to sell its European steel operations.

The European steel industry "faces major challenges," ThyssenKrupp diagnosed.

"The steel market climate in Europe is worsening due among other things to high raw material and energy prices, trading in carbon emission certificates, Russia's accession to the World Trade Organization, and in particular economic uncertainties and sharply reduced consumption levels above all in south west Europe," it said.

Investors appeared sceptical about the job cuts and ThyssenKrupp shares were showing a loss of 0.34 percent in a generally firmer market on the Frankfurt stock exchange.

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http://www.globalpost.com/dispatch/news/afp/130208/thyssenkrupp-cuts-back-european-steel-division