Krupp to bear brunt of 8,000 job cuts after merger

A merger of the steel divisions of Krupp Hoesch and Thyssen will cost 8,000 jobs but both German companies yesterday promised striking workers that they would not impose any compulsory redundancies.

Thyssen said it would announce details of the merger today after a compromise averting a hostile takeover bid launched by Krupp last week.

"Workforce reductions will definitely be carried out with social compensation," said Hans-Wilhelm Grasshoff, chairman of steel unit Krupp Hoesch Stahl. "We rule out any forced lay-offs under this steel plan."

Ekkehard Schulz, chairman of Thyssen Stahl, which will take a 60 per cent stake in, and industrial control of, the new company, also said he did not plan compulsory redundancies and added that the brunt of the job cuts would hit Krupp.

"We will not sign the merger contract if one thing is not guaranteed by Krupp Hoesch by tonight," Mr Schulz said as he sought to assure a workforce that has protested for a week throughout the Ruhr Valley.

"The costs that arise by ruling out forced lay-offs must not be borne by the new company or by Thyssen," he added, a clear indication that Thyssen would seek to make Krupp pay for its unwanted takeover bid.

Half of the planned job reductions have been agreed in areas where the two firms already co-operate. The additional 4,000 job cuts would largely hit Krupp Hoesch's Dortmund steel works.

The merger would take four years to complete and create a producer with an annual capacity of 15 million tonnes of crude steel, putting it third in Europe behind British Steel and France's Usinor-Sacilor. It would become Europe's biggest maker of flat steel products, whose key customers are Europe's car makers.

The new company, to be named Ruhrstahl, will have a workforce of around 18,000, compared with a combined total of 26,000 now. It will transform Thyssen's Duisburg steel works into one of the world's biggest and most modern integrated mills, while Krupp Hoesch becomes more of an extended workbench for the new firm.

Wolfgang Clement, economics minister in the state of North Rhine-Westphalia where Krupp and Thyssen are based, said he expected a memorandum of understanding on the merger to be signed soon.

Mr Clement, who intervened to stave off Krupp's DM13.6bn ($4.9bn) cash bid for Thyssen, said the two companies would invest up to DM1bn in Krupp's Dortmund steel works.