Labour Chief Warns Thyssenkrupp Over Steel Merger Talks

30 April 2016

Thyssenkrupp's (TKAG.DE) powerful labor chief warned its leaders not to go ahead with steel merger talks without consulting its works council first, saying steelworkers were ready to fight for their future.

Wilhelm Segerath, who represents the works council on Thyssenkrupp's supervisory board, was responding to media reports that the German industrial group is in exploratory talks with other steelmakers including Tata Steel.

Segerath said he did not believe concrete talks were happening yet, and demanded that Chief Executive Heinrich Hiesinger explain to the works council why a merger would make sense before embarking on any such negotiations.

"Consolidation talks cannot and will not take place without us, the works council, and trade union IG Metall," Segerath told Reuters on Friday. "If they are taking place, which I don't believe, then there will be big trouble."

Steel-to-elevators group Thyssenkrupp has said it wants to play a role in any consolidation of the European steel market, which is plagued by excess production capacity and a weak demand outlook.

Expectations of such mergers were stoked by Tata Steel's (TISC.NS) decision to sell its loss-making British business, leaving it with just its profitable Dutch operations - which are compatible with Thyssenkrupp's - in Europe.

But Thyssenkrupp's works council, which represents 28,000 steelworkers, has made clear it will resist any move that could cost jobs or see the firm abandon its 200-year-old steelmaking roots, a view also aired by some top German politicians.

"We showed impressively with our steel action day that steelworkers are ready to fight for their future," Segerath said, referring to demonstrations earlier this month in which half of Germany's steelworkers took part.

Labour representatives constitute half the members of German companies' supervisory boards, and in the case of steel companies have special rights that mean they can effectively veto strategic decisions.

Thyssenkrupp's Hiesinger said this month he would go to the relevant committees, which include the works council, if and when management believed it had a "viable" concept.

Segerath questioned the rationale for merging Europe's steelmakers, which he said would only lead to an increase in imports from China, do nothing for the environment and have little impact on global overcapacity.

A key gripe of European steelmakers is EU environmental legislation, which they say puts a high price on carbon emissions and makes European steel more expensive to produce, leading to the import of more steel made in laxer regimes.

"Instead of speculating about mergers, the steel bosses and politicians should ensure that the regulatory requirements make it possible that steel can continue to be produced in Germany," Segerath said.


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