The battle for engineering giant ThyssenKrupp’s steel unit just got political.
With ThyssenKrupp close to concluding merger talks with the UK’s Tata Steel, the Social Democratic Party is making the deal a campaign issue as the clock ticks towards the September 24 election.
Last week Social Democrat and Foreign Minister Sigmar Gabriel held talks with IG Metal, Germany’s metal processing union, in a clear bid to appeal to blue collar voters. He suggested there might be an internal solution to avoid ThyssenKrupp shedding its steel division, while SPD chancellor candidate Martin Schulz said the steel industry was being “driven into the ground” by Chancellor Angela Merkel’s Christian Democratic Union.
“Once a steel mill has closed down, it will never come back,” he recently told the daily Westdeutsche Allgemeine Zeitung, playing on fears of Indo-British company Tata cutting from 27,000 German jobs if the merger goes through.
Some critics are suggesting that a new German steel conglomerate would be a better alternative to a foreign sale.
Jürgen Grossmann, head of mid-sized German steel company Georgsmarienhütte, or GMH Holding, suggested German competitors in the industry band together to snap up ThyssenKrupp’s steel division from under Tata’s nose. However the GMH’s books show it doesn’t have the cash to buy the steel works, estimated to be worth €6.2 billion, or $7.4 billion. The company is also bound by a loan agreement not to take on debt in excess of €165 million before the end of 2017 and by the end of 2015, it had €109 million in debt on its books.
So Mr. Großmann has been seeking backing from the government of industrial state North Rhine-Westphalia to make the purchase. However the state’s economics minister Andreas Pinkwart has eschewed from offering help, saying government interference in the steel deal could undermine competition and innovation.
Meanwhile the SPD is getting grilled for its campaign tacts. FDP leader Christian Lindner accused the Social Democrats of ruining the German steel industry with its own ideological energy policy in the first place, considering Mr. Gabriel was minister for economics and energy from 2013 until he became foreign minister in January. Meanwhile the CDU has accused the SPD of misleading voters by holding out hope of a domestic bid for Thyssen’s steel unit.
“The SPD is just desperate considering its low ratings,” said Michael Fuchs, the CDU’s floor leader, adding that the German steel market had too many players with diverging interests to make a “Deutsche Steel” solution work.
This might be the only chance the SPD has to make a real fuss about anything, let alone steel. After an initial high following his nomination, Mr. Schulz’s approval has been falling. Ms. Merkel and her conservative party are expected to win 38 percent of seats, to the Social Democrats’ 23 percent. It is uncertain if the SPD would again be tapped as a junior partner in a ruling coalition.
Following a year of merger talks, ThyssenKrupp and Tata are expected to decide on a possible deal by the end of September, meaning it could still put candidates on hot coals before the election.
Heike Anger is an economics and politics editor for Handelsblatt. Dana Heide and Dietmar Neuerer cover politics from Berlin. Thomas Sigmund is the Berlin bureau chief. Christoph Schlautmann covers the logistics and waste management sectors. To contact the authors: firstname.lastname@example.org; email@example.com; firstname.lastname@example.org; email@example.com; firstname.lastname@example.org