Ongoing economic pressure: Swiss Steel Group to cut 800 full-time jobs

Swiss Steel Group has announced a series of significant workforce and operational adjustments in response to the ongoing economic challenges and a persistently weak demand environment. The company will reduce its capacity across both domestic and international locations, impacting around 800 full-time positions. The measures come as part of the Group’s ongoing strategic and restructuring plan, SSG 2025, aimed at ensuring long-term stability and efficiency.

Economic Pressures Necessitate Change

The decision is driven by weak demand in the European manufacturing sector and declining prospects in key industries, particularly the automotive sector. The ongoing market downturn has necessitated further streamlining of Swiss Steel’s workforce. “We must adjust our structures to the worsening market situation,” said Frank Koch, CEO of Swiss Steel Group, in an interview with the Frankfurter Allgemeine Zeitung (F.A.Z.). He emphasized the gravity of the economic situation: “The cuts are painful but unfortunately unavoidable.”

Swiss Steel has already been actively reducing costs through various measures within the SSG 2025 program, resulting in substantial financial savings. These latest workforce reductions include cutting 530 full-time jobs outright and reducing the equivalent of 270 positions through shorter working hours, primarily in Germany. At Deutsche Edelstahlwerke, weekly working hours will be reduced by 15% to manage capacity without resorting to layoffs. These changes are expected to take full effect in 2025, lowering the company’s headcount to under 7,000 employees.

Impact Across Switzerland, Germany, and France

In Switzerland, the adjustments will primarily affect the Emmenbrücke plant, where 130 of the current 750 jobs will be eliminated. Of these, 80 positions are expected to result in layoffs, spanning both production and administrative departments. A consultation process is already underway to discuss these changes with employee representatives. Koch acknowledged the workforce’s concerns and noted that wherever possible, the company will seek alternatives to direct layoffs, such as relying on natural attrition and not renewing temporary contracts.

In Germany, the reductions will impact Swiss Steel’s facilities in Witten, Krefeld, Siegen, and Hagen. Specific details have not been disclosed, but Witten and Krefeld are expected to bear the brunt, with capacity utilization at the Witten site reportedly below 50% for years. These cutbacks are part of a broader effort to achieve cost savings in the hundreds of millions of euros. Measures include a significant reduction in working hours, a move that replaces the traditional use of short-time work under the terms of existing collective labor agreements.

Continued Uncertainty in the Steel Industry

The restructuring comes at a time of general instability in the steel sector. Swiss Steel closed the previous year with a 41-million-euro operating loss and a 295-million-euro net loss, with revenue falling by 20% to 3.2 billion euros. “We expect a continued volatile and subdued second half of 2024,” Koch remarked, acknowledging the challenging outlook for the near term. Additionally, he hinted at the possibility of further adjustments should market conditions deteriorate: “If the situation worsens, we will have to make further changes.”

Source: Swiss Steel Group / FAZ, Photo: Fotolia