Tata Europe union ‘unconvinced’ over ThyssenKrupp merger

Vidya Ram London | Updated on June 11, 2018

A view of ThyssenKrupp steelworks in Duisburg, Germany

European Works Council points to lack of information on financial structure of the deal

The body representing workers at Tata Steel’s European operations has raised concerns about the planned merger with ThyssenKrupp, including the potential prioritisation of “shareholder dividends over the long-term development of the joint venture” and “significant gaps” in their understanding of proposed venture.

It has urged better engagement from ThyssenKrupp and commitments on five key tests from the two companies, warning that they remained “unconvinced’ that the deal as it stood represented the best interests of Tata Steel Europe operations and employees.

The statement from the European Works Council came after a June 7 meeting in IJmuiden in the Netherlands, which was held to consider the findings of Syndex, trade union consultants, hired by the council to analyse the deal and propose steps forward.

While the companies’ ongoing consultation process with employees had been conducted “in the right spirit” and “extensive efforts” had been made to disclose information, there were still “significant gaps” that made it hard to reach definitive conclusions, the EWC said on Monday.

It pointed to the lack of information on the financial structure of the deal and “continued unwillingness” by ThyssenKrupp to engage with the EWC and its advisors. “This situation is deeply regrettable.”

While recognising the “industrial rationale” of the joint venture, Syndex recommended that the unions opposed the current business plan. “Syndex concluded that given the huge financial power of the JV the planned synergies on capex, jobs and R&D are completely unacceptable,” said the EWC.

While the EWC did not go as far as to express opposition to the business plan, they called for commitments including a moratorium on job reductions till 2022, maintaining the research and development budget at the very least at the current combined level of the two companies and for none of the Tata Steel sites to be closed before 2026. They also called for a rethink on the decision to sell the Cogent Electricals steels business as part of a wider strategy to focus on core markets.

A spokesperson for Tata Steel said they welcomed the EWC’s recognition of the industrial rationale for the joint venture.

“We believe in the business plan for the proposed joint venture and we are committed to delivering the joint venture without the need for compulsory redundancies,” they added.

“We will continue to engage in constructive dialogue with our employee representatives throughout the process of creating the proposed joint venture.”

Last year, Tata Steel and ThyssenKrupp signed a memorandum of understanding to create an equal joint venture after over a year of negotiations and after Tata Steel reached an agreement with the UK authorities to reduce its UK pension scheme liabilities.

The non-cash transaction will create Europe’s second largest steel maker and generate pro forma sales of around €15 billion a year, with some 48,000 employees.

At the time of the announcement, the companies estimated that the deal will generate some €600 million in synergies a year through the integration of research and development, commercial functions and the optimisation of procurement and logistics.

Published on June 11, 2018

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