Dillinger and Saarstahl launch joint future-oriented program: proactive, carbon-free, efficient.
29 October 2019
Saarland’s steel industry is realigning. “We are doing this in a completely integrated process at Dillinger and Saarstahl with the long-term goal of continuing the intergenerational contract,” said Tim Hartmann, Chairman of the Board of Management of Dillinger and Saarstahl.
- Dillinger and Saarstahl: with an integrated strategy
- Conversion to carbon-free production
- Targeting double-digit profitability (EBITDA margin)
- Cost savings amounting to EUR 250 million
- Socially responsible reduction of 1,500 jobs and outsourcing of 1,000 jobs
“We produce premium steels that are among the best in the world and that are sought by our customers. We will continue to work together with our customers to further develop our products. We will be launching a comprehensive sales offensive. The commitment of our employees is high. At the same time, our costs are too high when compared with our competitors. We will be adjusting our structures and processes accordingly in the coming months. The goal is double-digit profitability that gives us sufficient scope for growth investments. In addition, we are clearly aligning the entire company in the direction of carbon-free technologies. We meanwhile expect politicians to provide a fair competitive framework and sufficient funds in the short term to implement the transfer process. We want the most state-of-the-art steel industry to be here in Saarland.”
The ongoing structural crisis in the global steel market and the partial economic downturn in demand in segments such as the automotive industry and machine manufacturing, as well as the rising costs of the carbon certification system, have prompted us to set up an integrated strategy process to develop and implement measures to safeguard the future.
The first results of the ongoing strategy process were presented today to the supervisory bodies of the companies. Information events will also be presented today and in the coming days to explain the strategy to employees.
Proactive and carbon-free
“For the first time, teams of experts from Saarstahl, Dillinger and SHS have worked together to develop the strategic goals for the future,” explained Tim Hartmann. He added: “The result of the process is clearly defined objectives and a detailed action plan for the next few years. We are convinced that this will enable us to cope with the identified challenges and to secure our future.”
A central component is a proactive realignment of the business strategy that calls for consistent management toward innovative and high-quality products for our customers. The implemented measures will help us become more robust, more profitable and more future-focused. As part of the ongoing development of a carbon strategy, options are being formulated for the gradual conversion to carbon-free production. We call on political leaders here to very quickly enable a clear planning capability and create the conditions for fair competition as well as for the necessary financial assistance.
Cost savings and socially responsible job cuts
We have set a goal of cutting costs by EUR 250 million per year. We will achieve 60% of this through savings in the cost of materials and external services and 40% in personnel expenses. This will involve the reduction of 1,500 jobs and the outsourcing of 1,000 jobs in Saarland.
We are achieving these job-related measures by changing processes and structures, increasing our productivity, eliminating duplicate structures and closing or outsourcing areas, among other things. We intend to implement the above-mentioned personnel measures in a socially responsible manner over the next three years and are prepared to refrain from dismissing employees for operational reasons if mutual agreement is reached on the relevant instruments. Discussions with the co-determination bodies on this subject will be initiated soon.
“With the jointly developed package of measures, we are confident we will successfully cope with the identified challenges and make our companies future-proof,” Tim Hartmann said. “We stand by the intergenerational contract and need the support and the will of all employees to accept the challenges and to shape the transformation with courage and determination.”
Background: current market environment
The steel industry in Europe is experiencing an economic crisis and – more seriously – a protracted structural crisis. The primary reasons for the increasingly challenging environment are growing worldwide protectionism and the associated tariffs, which make the products of the Saarland steel industry more expensive, large overcapacities and high imports into the EU that continuously depress price levels, and heavy competition. In the future, the increasing costs of the carbon certification system will also burden the companies Dillinger and Saarstahl. In addition to the structural problems, the current economic downturns and upheavals in core consumer segments such as the automotive industry and mechanical engineering are also affecting the economy. As a result, Saarstahl has been operating with short-time work schedules since September.
About the SHS Group
SHS - Stahl-Holding-Saar GmbH & Co KGaA (SHS) is the management holding company for both of Saarland’s major steel companies – Aktien-Gesellschaft der Dillinger Hüttenwerke (Dillinger) and Saarstahl Aktiengesellschaft (Saarstahl) – which are among the leading quality manufacturers in their markets. Dillinger is the world’s leading manufacturer of heavy steel plate for steel construction, machine manufacturing, and for offshore, offshore wind power and line pipe applications. Saarstahl is the world's leading manufacturer of wire rod and bar steel for the automotive industry, the construction industry and for general machine manufacturing. Around 14,000 employees worldwide work under the SHS umbrella, generating total sales of around EUR 4.5 billion.