Whether it’s Bosch, Schaeffler, Volkswagen, or now Thyssenkrupp Steel – management boards everywhere are resorting to drastic measures, planning massive job cuts. The fact that Germany’s industrial base is faltering is hardly news. However, when thousands of industrial job losses are announced daily, alarm bells must ring.

Of course, each case is different, but at least in the cases of Volkswagen and Thyssenkrupp, one thing stands out: boards and supervisory councils have denied reality for years. Now, it’s the employees who are left to bear the brunt of these missteps. That is a bitter pill to swallow. That said, this doesn’t mean that employee representatives, including the powerful IG Metall union, bear no responsibility for the crisis. On the contrary, their focus on preserving existing privileges has also prevented timely corrective action.

Thyssenkrupp’s steel division is a prime example. Every attempt to transition the business to a future-proof structure has been undermined. From the 2018 (!) proposed merger with Tata Steel – ostensibly blocked by EU Commission requirements – to talks with Salzgitter about an equal partnership.

One of the key problems has been evident for years: the global steel market suffers from overcapacity. Without significant reductions in production capacity, some manufacturers will not have a future. It’s clear who will be the first to exit the market: producers with uncompetitive cost structures.

The analysis for Thyssenkrupp’s steel division is sobering. Over the past five years, the operating profit margin has averaged a mere 0.4%. At the same time, 900 net full-time jobs were added, even though capacity utilisation has been low for years. This occurred despite an agreement in 2019 to shed 3,000 jobs.

That was before the Covid-19 pandemic and the energy price shock following Russia’s war on Ukraine exacerbated the situation. This added fundamental changes to the already numerous self-inflicted problems. Above all, energy-intensive industries have since been groaning under high electricity prices, which are uncompetitive not only globally, but also within Europe.

But the responsible parties in Thyssenkrupp Steel have turned a blind eye to reality. The fact that money was being burned year after year seemingly didn’t matter, as the sale of the elevator division had injected 17 billion euros into the company’s coffers. However, the laissez-faire approach of recent years is now taking its toll. The job and capacity cuts are therefore all the more severe. Over the next five years, the workforce is to be reduced by 40%, and production capacity by over 20%.

The new board plans to continue building the first and likely only direct reduction plant for producing „green“ steel. But conditions in Germany for green electricity and green hydrogen remain uncompetitive.

Without question, the steel board’s roadmap for the future includes many harsh measures that the workforce and unions are rightly reluctant to accept. However, the reality is that structural change cannot be ignored or „protested away“. Adaptation is essential – those who fail to adjust will disappear from the market.