DUISBURG, Germany Half of Germany's steelworkers poured onto the country's streets on Monday in protest against the dumping of Chinese steel, EU climate regulations and industry consolidation they fear will cost them their jobs.
More than 40,000 downed tools to take part in protests against a backdrop of on-and-off steel merger talks between Thyssenkrupp (TKAG.DE), the country's biggest steelmaker, and Tata Steel (TISC.NS), which is retreating from Europe.
Workers fear they could face a similar fate to their peers in Britain, where Tata has put its entire steel business up for sale, endangering thousands of jobs.
The size of the demonstrations, organised by powerful trade union IG Metall and supported by Economy Minister Sigmar Gabriel, showed the depth of Germany's attachment to steel and the strength of likely opposition to any merger.
"Consolidation, if it is necessary, can't happen only in Germany," Gabriel told a rally of 17,000 at Thyssenkrupp Steel's headquarters in the city of Duisburg in Germany's Ruhr Valley industrial heartland.
"It can't be that we worry nervously about consolidation, we are the ones who lose the jobs and others don't even take part."
Thyssenkrupp has sought a way to exit steelmaking since Heinrich Hiesinger took over as chief executive in 2011, presiding over a retreat from the United States where the group had sunk billions in an ill-fated expansion.
At first quietly and then more explicitly, with activist investor and 15 percent shareholder Cevian in the background, top management has signalled its keenness to shed steelmaking to concentrate on steadier and more profitable businesses like elevators and car parts.
Now, events including the taking of full control of its Brazilian steel plant and Tata's planned sale of all of its loss-making UK steel activities gives the German industrial group a unique chance to do just that.
IG Metall-backed labour representatives are already preparing for a fight.
"We know that our top-paid managers are engaged in a kind of secret diplomacy and are forging plans for consolidation," Guenter Back, head of Thyssenkrupp Steel Europe's central works council, told workers at the rally in Duisburg. "We are not prepared to be bystanders."
Without support from politics and labour, Thyssenkrupp will find it almost impossible to push through any merger.
Unlike in Britain, in Germany steel is still a critical part of the economy.
The industry employs about 87,000 directly and 3.5 million indirectly, supporting key industries such as automaking and generating about 40 billion euros ($46 billion) in turnover in 2014, roughly 1.4 percent of gross domestic product.
"Moving from one conglomerate with a very strong track record and history in German steel (Thyssenkrupp) to another with a weak history in EU steel (Tata) with absolutely no affiliation to the Thyssen or Krupp name and legacy we think could be a very tough sell," Credit Suisse analysts wrote in a note on Monday.
The bank rates Thyssenkrupp stock "outperform".
One in three German steelworkers are employed at Thyssenkrupp, which has 200-year-old roots in the industry.
Steel was so crucial to the German First and Second World War efforts that a law was passed in 1951 giving mining, iron and steel workers special rights in the co-determination of their companies' strategy with management.
Unlike for other German companies, where the chairperson - appointed by the capital side - has a casting vote in the case of an impasse between capital and labour on the supervisory board, for companies in these sectors absolute parity rules.
A neutral arbitrator must be agreed by both sides to decide any issue where they cannot agree.
To bring workers on board with management strategy and avoid outright conflict - as well as to address past compliance issues - Hiesinger made it his mission to change Thyssenkrupp's culture when he became CEO.
With the aim of building mutual trust, respect and a performance culture after a difficult period in the company's history, Hiesinger instigated company-wide surveys about Thyssenkrupp's direction and values and held managers to public account when their team members flagged problems.
The exercise - important for a company that is dominant in the Ruhr Valley and has only 1-2 percent annual staff turnover in Germany - has had some success, according to a straw poll of demonstrators on Monday.
"There are some positive things," said Joerg Kallweit, a 59-year-old production coordinator at Thyssenkrupp Steel in Duisburg who has been with the company for almost 30 years.
"Thyssenkrupp wants to understand itself more as a technology group. Steel isn't viewed that favourably," he said. "At least current management is dealing with it more openly."
(Editing by Susan Fenton and Susan Thomas)
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Published Date: Apr 11, 2016 11:06 pm | Updated Date: Apr 11, 2016 11:06 pm