Germany steel workers protest over Thyssenkrupp-Tata steel merger plan
Germany steel workers protest over Thyssenkrupp-Tata steel merger plan
Just two days before general elections in Europe’s biggest economy, the demonstrators protested against up to 4,000 job cuts that will be made should the joint venture go ahead. This would be about 8 percent of the combined workforce.
Thyssenkrupp and Tata this week said they had signed a memorandum of understanding for a 50-50 joint venture that would create Europe’s second-biggest steelmaker after ArcelorMittal, with combined sales of about €15 billion (SR67.28 billion).
Thyssenkrupp Chief Executive Heinrich Hiesinger says a joint venture will be the best solution to what he sees as the main issue in Europe’s steel industry — overcapacity — but politicians and labor leaders fear further cuts.
“We want guarantees for all employees and locations,” said Detlef Wetzel, deputy supervisory board chairman of Thyssenkrupp Steel Europe.
Hiesinger depends on the support of labor representatives, which hold half of the 20 seats on the supervisory board of Thyssenkrupp AG, and have fiercely opposed the Tata deal.
If all of them vote against the deal, the board’s chairman could still push through the plan with his casting vote but it is Hiesinger’s declared goal to get labor leaders on board.
Wetzel said he was not overly optimistic after initial talks with Hiesinger and that he expected further cost cuts.
“2020 — that’s when things will really get going,” he said, referring to the date when Hiesinger has said a fundamental review of operations would take place after initial cost trimming.
IG Metall said about 7,000 workers took part in the protest in the Ruhr valley city.
Thyssenkrupp’s supervisory will discuss the plans at a meeting on Saturday even though the MoU has already been signed. It will decide on the plans early next year, Thyssenkrupp said on Wednesday.
Europe’s steel market has an annual production capacity of about 200 million tons, while actual production is about 160 million tons.
“I am not convinced by the merger plans at all. Without guarantees the labor side will not agree to it in the supervisory board,” said German Labour Minister Andrea Nahles, a leading member of the Social Democrats.
“You can put that idea right out of your head, Mr.Hiesinger.”
Opposition from Thyssenkrupp’s workforce could mean prolonger negotiations with management and delay any approval of the plan by the supervisory board. The two steel firms say the would like to close the deal in late 2018.
Thyssenkrupp’s management and labor leaders are in for tough negotiations over the next months, before a contract could be signed early next year.
“I feel like I’ve been dumped on, screwed over, but I’m in a combative mood nonetheless,” said Guenter Back, head of Thyssenkrupp Steel Europe’s works council.
“There is nothing good about this deal. And that’s why we have to reject it.”
World Bank shareholders approve $13 billion capital increase
- Capital increase follows three years of negotiations
- Increase of $7.5 billion for main institution and $5.5 billion for IFC
World Bank shareholders approved a “historic” increase in the bank’s lending capacity late on Saturday after the United States backed a reform package that curbs loans and charges more for higher income countries like China.
World Bank President Jim Yong Kim said neither China nor any middle income countries was happy about the prospect of paying more for loans, but they agreed because of the overall increase in funds available.
The agreement, which also increase shares and voting power to large emerging market countries like China, was “a tremendous vote of confidence” in the institution that came after three years of tough negotiations, Kim said.
“World Bank Group bureaucrats don’t often jump around and high-five and hug each other,” Kim told a small group of reporters following the Spring meeting.
He said the increase was needed because even with the end of the global financial crisis, the bank has been called on to provide funding to address a new series of challenges facing poor countries, like climate change, refugees, pandemics, “all new things for us.”
The increase provides an additional $13 billion in “paid in” capital: $7.5 billion to the main institution and $5.5 billion to the bank’s private financing arm, the International Finance Corporation.
Kim said the increase will allow the bank to ramp up lending to an average of $100 billion a year through 2030, from $60 billion in 2017 and an expected $80 billion in 2018.
Countries will have five years to provide the funds, but can ask for a three-year extension. The last increase occurred in 2010 and added $5 billion to the bank’s capital and $200 million for the IFC.
The United States, the institution’s biggest shareholder, rejected the World Bank request in October and the administration of US President Donald Trump has argued that multilateral lending institutions should graduate countries that have grown enough to finance their own development, like China.
But US Treasury Secretary Steven Mnuchin on Saturday said Washington supports the increase because of the reforms to lending rules.
“I look at this as a package transaction... we support a capital increase on the World Bank, along with the associated reforms that they’re talking about making,” Mnuchin told reporters.
The increase requires legislative approval, but Mnuchin said he was hopeful Congress would back the plan. Kim also said he has had contact with representatives from both parties and received strong support.
In a statement to the World Bank’s governing committee, Mnuchin applauded the plan to “significantly shift lending to poorer clients.”
While he did not mention China by name, Mnuchin applauded the shift to a “new income-based lending allocation target and the re-introduction of differentiated pricing” for loans — meaning wealthier countries would pay higher interest rates.
“The latter will incentivize better-off, more creditworthy borrowers to seek market financing to meet their needs for development,” he said.
Mnuchin said the new arrangement, including for the IFC, “frees resources for countries that don’t have sustainable access to private capital markets.”P
China’s Vice Finance Minister Zhu Guangyao said Beijing supported increasing World Bank resources but had reservations about the agreement for changes in lending policies.
“We are concerned about some of the policy commitments in the capital package, such as those on graduation, maturity premium increase for loans and differentiated loan pricing based on national income per capita,” he said in a statement.
“We hope that the management take different national circumstances into full account in the implementation of the graduation policies... to ensure that these policies will not impede cooperation between the (bank) and upper middle income countries.”
Kim acknowledged that lending to China would decline, but only gradually. That means “whatever borrowing they do has to be as impactful as possible.”
And he noted that because of the capital increase, “we will be able to maintain volumes for middle income countries as a whole.”
Zhu said the capital increase is “a concrete measure to support multilateralism” at a time when “anti-globalization sentiments, unilateralism, protectionism in trade” were creating uncertainties in the global economy.