LONDON, Oct 21: The workers at Tata Steel’s Netherlands unit have expressed concerns over a memorandum of understanding (MoU) signed between the Indian steel major and the German giant Thyssenkrupp to combine their European steelmaking operations into a joint venture.
The Central Works Council (CWC) of Tata Steel Netherlands (TSN) said in its newsletter this week that it was concerned about the lack of its involvement in the ongoing negotiations and the fear of job losses at the Netherlands site.
“The number of jobs will be greatly reduced, and will go beyond the suggested figure of 4,000 job losses across the joint venture (JV) as a whole. Current indications are that the new company plans to outsource large swathes of the support services to low-wage countries,” the CWC said.
“The CWC believes that this envisaged 50-50 joint venture (JV) will be a very difficult business to manage because both parties, in the Netherlands and in Germany, will do all in their power to defend their interests against this new business. The resistance to this JV in Germany is at least as great as in the Netherlands, and this does not augur well for the future,” it noted.
Tata Steel workers also believe it remains unclear how the new business will be financed and where the liabilities will be placed in the business.
It also highlighted the support offered by the Netherlands unit to Tata’s troubled UK operations as a factor to consider.
“TSN has remained a healthy business despite the continuous support it has provided in the form of dividend payments to the shareholder in order to enable its sister company in the UK to continue operating,” it notes.
The CWC has warned the board that it will not “simply roll over and accept decisions” by the shareholder which are not good for the company’s employees in the Netherlands.
Works councils are considerably powerful entities in Europe and their approval will prove critical for Tata Steel and Thyssenkrupp to clinch a final deal.
Last month, the two companies announced plans to merge their European steelmaking operations and creating a new JV of around 42,000 employees, with 10,000 based in the Netherlands.
“The joint venture offers us the opportunity to create a stronger new business which is able to grow and produce more hi-tech and high-quality products for the world’s most demanding customers,” said Hans Fischer, CEO of Tata Steel European operations, in response to the CWC’s objections.
He said the company had entered a period of due diligence when all the concerns of all stakeholders will be taken on board.
“Tata Steel will follow due process in consultation with all relevant stakeholders as we progress in the transaction. Our employees have worked hard to make our European business more sustainable over recent years and we have achieved a lot through improvement programmes,” he said.
Both companies believe the merger will help tackle over- capacity in Europe’s steel market in the face of cheap imports from countries like China and subdued construction demand. (PTI)
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