March 28, 2018 / 3:02 PM / a month ago

Thyssenkrupp, Tata Steel venture faces fresh union opposition

DUESSELDORF/FRANKFURT (Reuters) - Plans by Thyssenkrupp (TKAG.DE) and Tata Steel (TISC.NS) to combine their European steel operations face renewed opposition from German unions, who say the companies’ labor agreement in the Netherlands goes too far in protecting work and sites there.

A logo of ThyssenKrupp AG is pictured outside the ThyssenKrupp headquarters in Essen, November 23, 2017. REUTERS/Thilo Schmuelgen

Last month Tata Steel guaranteed its Dutch division it could continue to operate as an independent company within the planned joint venture with ThyssenKrupp, with control over its own profits and an independent supervisory board.

The plant in IJmuiden would remain a “fully integrated steel company”, Tata Steel Netherlands said. Tata Steel also operates a plant in Port Talbot, Britain.

“It is not acceptable that only we in Germany are to be responsible for the risks of the joint venture and the Dutch entity is dodging responsibility,” Thyssenkrupp supervisory board member Tekin Nasikkol told Reuters, adding German employees would not accept this.

“We will not accept a free state of IJmuiden.”

The planned tie-up will be discussed at an extraordinary meeting of Thyssenkrupp’s supervisory board on April 12, a person familiar with the matter told Reuters.

Thyssenkrupp and Tata Steel last year announced plans to combine their European steel operations to create the continent’s second-largest player after ArcelorMittal (MT.AS), including up to 4,000 job cuts.

    Thyssenkrupp and Tata have said the deal will help them tackle overcapacity in Europe’s steel market, which faces cheap imports, subdued construction demand and inefficient old plants.

    The signing of the deal was originally planned for the beginning of the year but a key condition is still lacking: a final labor agreement between Tata Steel and its workers in Britain and the Netherlands.

    Last month, steel workers at Germany’s Thyssenkrupp voted in favor of a labor agreement that will safeguard jobs and plants in a planned joint venture with Tata Steel until 2026, removing a key hurdle for the tie-up.

    Dutch union members still have to approve a similar preliminary agreement with Tata Steel, and are waiting for a positive opinion from Tata’s Dutch workers representative committee before they give their final consent.

    “That will probably still take several months,” Peter Boeseken, a spokesman of Dutch union CNV, said, adding Tata and ThyssenKrupp could proceed with the joint venture without consent “as long as no irreversible measure are taken”.

    Tata Steel and Thyssenkrupp declined to comment.

    Although not essential to the creation of the planned joint venture, workers’ approval of the labor agreement is seen as a precondition to getting the deal done as it removes the risk of strikes and potential delays.

    Additional reporting by Bart Meijer in Amsterdam and Maytaal Angel in London; Editing by Maria Sheahan, Victoria Bryan and Mark Potter

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