Reducing steel production: If we don't do it, the insolvency administrators will eventually do it

The German steel industry faces a critical restructuring phase as production levels remain below historical norms despite a slight increase. Industry expert Gerhard Erdmann emphasized that without proactive measures, the decline will eventually be managed by bankruptcy administrators rather than through coordinated efforts. The current situation reflects broader structural challenges within energy-intensive sectors, with the steel industry struggling to maintain profitability amid rising energy costs and stringent climate regulations. Production figures have shown a marginal rise, yet this does little to address the underlying issues. The sector’s output has remained historically low since last year, and negative reports from key industries such as automotive and machinery manufacturing suggest no immediate return to sustainable production volumes of around 40 million tons annually. Erdmann noted that while the slight uptick is positive, it fails to resolve fundamental problems affecting the industry's long-term viability. Germany’s steel industry continues to operate under the assumption that there exists a viable business model, given its essential role in supporting other industrial sectors. Without domestic steel production, many value-added industries would struggle to sustain themselves, relying instead on imports from countries like China. However, the future shape of Germany’s steel industry remains uncertain, with questions surrounding technological advancements, production scale, and sustainability practices. Erdmann outlined that the industry is likely to shrink significantly, citing job losses in the Duisburg-Niederrhein region alone. Over 10,000 jobs are projected to disappear, representing more than 12% of the total workforce in the sector. Considering the multiplier effect, this could lead to up to 30,000 to 40,000 additional industrial jobs being lost in the region. Further reductions are anticipated in other areas, contributing to a broader employment crisis. A major initiative involves transforming existing blast furnaces into hydrogen-based or electric arc furnace systems, which align with green steel production goals. Currently, five of the 14 liquid-phase facilities in Germany, operated by companies including Salzgitter, Thyssenkrupp, Saarstahl, and newly launched HKM, are undergoing conversion. Whether these transformations will be sufficient to ensure the industry’s survival remains unclear, as further investments and policy support will determine the outcome. Erdmann stressed the need for preparation for substantial job cuts, emphasizing that this does not signal the end of the steel industry. Instead, it underscores the necessity of addressing these changes responsibly. He called for collaboration between social partners, particularly the IG Metall union and employer associations, to manage the transition effectively. This cooperation is crucial to avoid unnecessary disruptions and to provide support for affected workers. Without such collective action, Erdmann warned that the process of decline will ultimately be handled by insolvency administrators, potentially leading to chaotic outcomes. The role of social partners extends beyond merely negotiating individual layoffs; they must actively shape the transformation of the industry. This includes leveraging tariff policies to guide the entire sector towards a sustainable future, ensuring that the necessary adjustments occur in a structured and socially responsible manner. As the industry moves forward, the focus will shift toward determining how much of the traditional steel sector can be preserved while adapting to new environmental and economic realities.