Workers at Tata Steel’s Dutch arm oppose Thyssenkrupp merger

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Throwing a spanner in the works of the proposed merger between Tata Steel Europe and Thyssenkrupp’s steel business, the influential workers council representing the Tata group’s Netherland steel unit on Saturday vowed to block it in its present shape.

Works council chairman Frits van Wieringen told Reuters that, after viewing the two companies’ memorandum of understanding, he was concerned they intend to dissolve the Dutch subsidiary, which would strip away legal protections, and then lay off workers.

“Make no mistake, the Germans are also opposed to this as it stands,” he said.

Tata Steel Netherlands forms the heart of Tata Steel’s European operations, contributing more than 7 million tonnes in steel making capacity, especially after it divested some of its UK steel units recently where it has over 4 million tonne steel capacity.

The Wieringen said the works council expects to hear more detailed plans from Tata and Thyssenkrupp early next year. For now it has notified the supervisory and management boards of Tata Steel Netherlands that it will oppose the JV.

“They are talking about 10 percent of jobs being lost, but we think it will be much more than that,” he told Reuters.

IJmuiden plant of Tata Steel Netherlands is one of the company’s most efficient and profitable units. CWC particularly said it “must unconditionally continue as an integrated steel company and not become a business focusing on a limited market or portfolio.”

Tata Steel reacted to the news cautiously. In a late night statement, issued by Tata Steel, Hans Fischer, CEO of Tata Steel’s European operations, said: “We have held a number of meetings and have had constructive discussions and briefings with groups representing our employees – including the European Works Council, the Central Works Council in the Netherlands and the UK Steel Committee – as well as the Supervisory Board and Board of Management of Tata Steel Netherlands.

These discussions are a priority for us as we seek their support for the joint venture. Tata Steel will follow due process in consultation with all relevant stakeholders as we progress in the transaction.”

“The joint venture offers us the opportunity to create a stronger new business which is able to grow and produce more hi-tech and hi-quality products for the world’s most demanding customers,” he added.

“Our employees have worked hard to make our European business more sustainable over recent years and we have achieved a lot through improvement programmes. This has helped us lay a solid foundation for a strip-focused steel company with a strong focus on value creation for our customers, our employees, our shareholders and other stakeholders, Fischer said.

In September, the two companies announced plans to merge their European steelmaking operations.

Works councils in the Netherlands and Germany have significant powers and their approval is required for a change of corporate structure to be carried out, Van Wieringen said. The European workers unions have the influence to block mergers and acquisitions and the most recent case was when they opposed the sale of Ducati motorcycles by Volkswagen group.

Source: Reuters