Tata Steel and thyssenkrupp have today decided on the members of the futureManagement Board for the planned European steel Joint Venture between thetwo companies.
Andreas J. Goss, currently Chief Executive Officer (CEO) ofthyssenkrupp‘s Steel division, will be the future Chief Executive Officer (CEO) of the planned Joint Venture. In this role, he will position the new Joint Venture thyssenkrupp Tata Steel in the European market. Before joining thyssenkrupp in 2012, Gossheld a number of international management assignments within Siemens in the USA and Great Britain. In his most recent function, he was Chief Executive responsible for Siemens UK and the region North-West Europe.
Hans Fischer will be the Deputy CEO & Chief Technology Officer (CTO) of the Joint Venture and responsible for research and development. Fischer studied mechanical engineering at Eindhoven university and embarked on this professional career when he joined the then steel company Hoogovens. In 2001 he became technical Managing Director of Salzgitter where he was appointed member of the Executive Board later on. In 2010, he took over as CEO of thyssenkrupp Steel Americas. Since 2012, Hans Fischer has been CTO of Tata Steel Europe and was appointed CEO in 2016.
Premal A. Desai will be the Chief Strategy Officer (CSO) of thyssenkrupp Tata Steel. In this position, he will be responsible for the integration of the two companies, digitization as well as the development of the business model. Desai studied business administration and economics and then worked for ten years for the management consulting firm Boston Consulting Group. He joined thyssenkrupp in 2006 and became member of the Management Board of thyssenkrupp Steel Europe AG in 2015.
Sandip Biswas is the designated Chief Financial Officer (CFO) of the Joint Venture. Biswas was born in 1968 and studied economic sciences at Calcutta university. After working many years in the financial services sector, Biswas joined Tata Steel in 2005 where he held various executive functions. Biswas is currently Group Executive Vice President Finance, and is closely involved in the European steel business of Tata Steel.
Apart from the above appointments, it is planned to announce the next management level for the Joint Venture early in the new year. The Management Board and the future top leadership team will be responsible for the planning and execution of the post merger integration and the long term business strategy after the planned Joint Venture has received the necessary regulatory approvals and after closing.
Until the completion of the Joint Venture process, thyssenkrupp Steel Europe and Tata Steel in Europe will continue to operate as separate companies and as competitors and the incumbent organisation of the respective companies will continue to operate as currently. The members of the designated Management Board will continue in their existing roles within their businesses until the formation of the Joint Venture post all regulatory approvals.
The most important facts in brief
thyssenkrupp and Tata Steel signed a memorandum of understanding to combine their European steel activities in a 50/50 joint venture on September 20, 2017. That means a new joint company is to be established in which thyssenkrupp and Tata will hold equal interests.
The negotiating partners granted each other access to business documents to the extent permitted between competitors. In addition internal and external experts exchanged information on specific topics. In parallel with the due diligence, the first concrete contract negotiations took place with Tata.
The company and the codetermination representatives agreed on a collective agreement on December 21, 2017. The members of the IG Metall union at the German sites approved this negotiation result by a clear majority. The collective agreement will come into force at the start of the joint venture and remain valid until September 30, 2026. It includes the following points:
• Site safeguards until at least 2026 - profitability analyses will be carried out for individual operations at the end of 2020.
• Employment safeguards until 2026. The announced reduction of up to 2,000 jobs at Steel Europe will be made in a socially responsible way.
• Investment at the sites will remain at the current level: the target is for at least 400 million euros per year.
• Existing codetermination structures will be retained (incl. coal and steel codetermination at thyssenkrupp Steel Europe AG). Decisions relating to the German sites will continue to require the approval of the German bodies.
• Existing apprentice and further training capacities will be retained.
thyssenkrupp and Tata Steel signed the contract to establish a joint venture with the name thyssenkrupp Tata Steel B.V. on June 30, 2018.
The examination by the authorities – which must approve the establishment of the joint venture – begins.
Tata Steel and thyssenkrupp have decided on the members of the future Management Board for the planned European steel Joint Venture between the two companies.
The steel business will be carved out of the thyssenkrupp Group and prepared for the joint venture.
Following approval by the antitrust authorities the contract will be closed and the new company established.
The step-by-step integration of the two companies begins.
What impact will a joint venture have on jobs?
The new company is financially well positioned.
Annual synergies of 400-500 million euros are expected. The new company will achieve these synergies e.g. through joint purchasing incl. logistics services, higher equipment utilization and reduced administrative expense. But even with the joint venture the steel business will be unable to avoid job cuts. In the joint venture as a whole it is expected that up to 2,000 administrative jobs and possibly up to 2,000 jobs in production will have to be cut in the coming years. These reductions would be shared roughly evenly between thyssenkrupp and Tata. So overall up to 2,000 jobs at thyssenkrupp could be affected. The agreement between thyssenkrupp and the IG Metall union provides employment safeguards up to September 30, 2026. That means that the previously announced necessary reduction of up to 2,000 jobs will be carried out as in the past in a socially responsible way. The existing apprentice and further training capacities will be retained and thus form a cornerstone for the success of the joint venture.
Will all processes and investments now be put on ice until we know where the journey will take us?
We will continue to do our best.
We will go on with processes such as daproh Steel, and we will continue to invest in our equipment and projects. Our business is not coming to a standstill. However, we will also be reviewing our major investment projects to ensure our resources are put to the best use in our partnership. Under the collective agreement between thyssenkrupp and IG Metall, investments will continue to be made in the German sites at the present level. The aim is to invest at least 400 million euros per year, which will be used among other things to upgrade production equipment.
Why did the process from memorandum of understanding to signing take so long?
We took the time required by a transaction of this size.
It was important to us to develop a sustainable solution with the employee representatives. Tata achieved this for the Netherlands and the UK, as we did for Germany. For this we were prepared to accept that the process took longer than originally indicated.
Could the joint venture still fail?
With the signing thyssenkrupp and Tata Steel have created the contractual basis for a joint venture.
So we are confident that we can establish a joint venture. The tie-up must now be examined thoroughly and independently by the responsible authorities. That is only right and proper. We must await the result of these examinations.
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Complete recording of the press conference (July 02, 2018) is available here.
Summary of the press conference (September 20, 2017) is available here.
Complete recording of the press conference (September 20, 2017) is available here.
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