Thyssenkrupp Steel, Germany’s largest steel producer, announced plans to eliminate 11,000 jobs—40% of its workforce—by 2030 in a bid to stabilize its operations. The move underscores the intensifying challenges facing German industry, as global competition and domestic pressures weigh heavily on manufacturing giants.
A Two-Phase Workforce Reduction
Thyssenkrupp Steel’s job cuts will unfold in two phases:
- 5,000 jobs will be cut directly through reduced production and streamlined administrative operations.
- 6,000 roles will be transferred or eliminated via the sale of business units or outsourcing to external service providers.
“Increasingly, global overcapacity and the resulting rise in cheap imports, particularly from Asia, are placing a considerable strain on competitiveness,” the company said in a statement. The cuts are part of a broader strategy to enhance productivity, reduce costs, and improve operating efficiency.
Broader Pressures on German Industry
The announcement comes as Germany’s industrial sector faces a confluence of challenges:
- Cheap imports from Asia: Overcapacity in global markets has allowed Chinese competitors to flood the market with lower-priced goods.
- High labor and energy costs: Traditional disadvantages like steep labor costs and rising energy prices—exacerbated by the 2022 invasion of Ukraine—continue to erode competitiveness.
- Economic contraction: Germany’s economy shrank in 2023 and is forecast to contract again in 2024, marking a period of prolonged difficulty for Europe’s largest economy.
Thyssenkrupp Joins Volkswagen in Cost-Cutting
Thyssenkrupp is not alone in restructuring to weather these challenges. Volkswagen recently announced its own overhaul, including:
- A 10% reduction in employee pay to protect jobs.
- Plans to close at least three factories in Germany, resulting in tens of thousands of layoffs.
Volkswagen’s cost-cutting measures highlight the shared struggles of Germany’s industrial giants as they adapt to a changing global market.
Even international firms like Ford are scaling back in Europe. The U.S. automaker plans to cut 4,000 jobs in Germany and the U.K. over the next three years and has urged the German government to lower costs and improve infrastructure for electric vehicles.
A Perfect Storm for German Industry
The difficulties at Thyssenkrupp and Volkswagen reflect broader trends in German industry. A recent study by the Federation of German Industries, co-authored by Boston Consulting Group and the German Economic Institute, paints a stark picture:
- One-fifth of Germany’s industrial output could disappear by 2030 due to high energy costs and shrinking global demand for German goods.
- Locational weaknesses: Germany suffers from high energy prices, excessive red tape, and outdated infrastructure—both physical and digital.
The study warns that Germany requires a transformative effort equivalent to the post-war reconstruction period. It calls for €1.4 trillion ($1.5 trillion) in investments by 2030 to revitalize infrastructure, promote research and development, and transition to green technologies.
Thyssenkrupp Steel’s decision to cut 11,000 jobs is a sobering reflection of the broader challenges facing German industry. As global competition intensifies and domestic pressures mount, companies are being forced to make drastic changes to remain viable. Without significant investments and reforms, Germany risks losing its position as a global manufacturing powerhouse.
