Dec 3 2010
Under its forward strategy ThyssenKrupp Nirosta is working extensively to maintain its international competitiveness.
Among other things the strategy calls for the development and optimization of the company’s production sites. A key element of the plan is now to be put into action: Over the next few years, production at the Benrath plant in the south of Düsseldorf will be transferred step-by-step to Krefeld. This was decided by the Supervisory Board of ThyssenKrupp Nirosta at its meeting today. The measure involves three-digit million euro investment at the Krefeld site, partly to upgrade equipment. The Benrath plant currently employs 534 people. They will be offered jobs in Krefeld or socially acceptable solutions. There will be no compulsory redundancies.
“The consolidation of our sites is unavoidable; it is the only way to secure the viability of the Nirosta group as a whole,” explained Clemens Iller, Executive Board Chairman of ThyssenKrupp Nirosta and Chairman of the Stainless Global business area. “Significant competitive disadvantages compared with other areas of Europe, for example with regard to energy costs, mean that we have to make major cost savings if we are to continue producing stainless steel in Germany on a long-term basis.” The employees in Benrath have already been given extensive assurances about their future. All necessary personnel measures will be carried out in a socially responsible way. Employees who do not leave through full or partial retirement will be offered jobs at the Krefeld plant. The apprentice training capacities at the Benrath site will be maintained. Management and works council will continue their discussions on implementing these assurances. The aim is to reach a joint agreement for the future of Nirosta.
There are various reasons for the transfer of production: Stainless steel customers are switching more and more to so-called ferritic grades. As these materials do not contain any nickel they are not subject to such major price fluctuations. Demand for ferritics, which are used for example in dishwashers, water pipes and elevator construction, has grown significantly in recent times. Production structures are now to be adapted in line with this change in demand to better serve customer interests. At present, Krefeld mainly produces nickel-containing austenitic grades, which are used in facades, food containers and the chemical industry. Combining the two product lines at the Krefeld site will lower processing costs and allow production to be geared more quickly and flexibly to market requirements.
Another reason for integrating the Benrath cold rolling mill into the Krefeld plant and expanding the production of ferritic grades there is that the current setup entails complicated logistics which result in high transportation costs within the Nirosta group. Compared with competitors, the traditional division of production over the four locations Bochum (melt shop and hot rolling mill), Krefeld (melt shop and cold rolling mill), Dillenburg (cold rolling mill) and Benrath (cold rolling mill) is outdated. It causes significant cost disadvantages within the group which will be reduced through the planned transfer.
The transfer will involve total investment in the three-digit million euro range, which will include the targeted upgrading of equipment in Krefeld. Work on the project will commence in Krefeld in the coming year. The transfer of the Benrath site will be spread over a period of around five years. “This measure will strengthen the overall Nirosta group,” said Iller.
Last year, the Executive Board and Supervisory Board of ThyssenKrupp AG decided to develop the Stainless Global business area and its lead company ThyssenKrupp Nirosta independently as part of a stand-alone strategy. As part of this, numerous operating measures were initiated and implemented, including more flexible shift patterns at all plants in response to market volatility. This has sustainably improved Stainless Global’s competitive position, as reflected in the earnings figure for the 2009/10 fiscal year, which showed a roughly 800 million euro improvement from the prior year. To follow up these measures, work is continuing on the overall plan to further consolidate the positive trend and secure the future of Stainless Global.