Downsizing in the struggling Swiss steel industry
Published: Wednesday, Mar 27th 2024, 16:50
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The Swiss steel industry is in crisis. It wants to reduce losses with closure measures in Gerlafingen and France.
The floundering steel manufacturer Swiss Steel has suffered a further blow. The plan announced in December to sell three steelworks in France, which would have reduced losses, has fallen through. The subsidiary Ascometal has broken off sales negotiations with the Italian Acciaierie Venete, Swiss Steel announced on Wednesday.
As a result, the insolvent Ascometal is now seeking court protection from its creditors. The French subsidiary has applied for court-ordered restructuring proceedings for each Group company, explained Swiss Steel. The aim is to preserve the liquidity of the Ascometal companies in order to gain time for the search for buyers for each of the sites.
Swiss Steel wanted to divest itself of three Ascometal plants in France: Those in Hagondange (Département Moselle), in Custines (Département Meurthe-et-Moselle) and in Le Marais (Département Loire). The court restructuring proceedings now affect all five Ascometal plants, as a Swiss Steel spokeswoman announced on request.
Swiss Steel is now pulling the plug on Ascometal. Group CEO Frank Koch no longer wants to pump fresh money into the loss-making French company. The company should never have been bought, Koch said two weeks ago. Since it has been on board, Swiss Steel has lost significant three-digit million sums there.
Important money search
Swiss Steel fears "no net negative financial impact on the remaining business" from the breakdown of the negotiations and in the event that court-ordered reorganization proceedings are opened. The announced capital increase and refinancing are also not affected by this.
Swiss Steel was in urgent need of fresh money: the Central Swiss steel group posted a huge loss of 294.8 million euros in the 2023 financial year, which dragged down its equity.
The hole is now to be plugged with a capital increase of at least 300 million euros. This is secured by major shareholder Martin Haefner, who holds a good third of Swiss Steel. According to media reports, the other major shareholder Peter Spuhler does not want to participate. Shareholders will now have to make a decision at an extraordinary general meeting next week.
Stahl Gerlafingen closes production line
The second Swiss steelworks in Gerlafingen SO is also taking restructuring measures. One of the two production lines will be closed, the company announced on the same day. The move was already announced in mid-March and now affects a maximum of 95 jobs.
Due to the "distorted competition" in the European steel market, the measures were unavoidable, explained Stahl Gerlafingen, which is a subsidiary of the Italian Beltrame Group. The closure is intended to secure the future of the steelworks.
Stahl Gerlafingen has been "effectively confronted with an EU import ban" since mid-2023. According to the company, there are also "massive" support measures for the European steel industry, which are causing sales and margins for the Swiss plant to shrink.
"In addition, the now horrendous energy prices and the still record-high grid charges on energy in Switzerland compared to Europe have left Stahl Gerlafingen's balance sheet deep in the red," the company wrote.
Political intervention required
Meanwhile, the steelworks itself, the Kombistrasse, the ring center and maintenance work will be largely exempt from the upcoming measures. This would protect those parts that are systemically relevant for Switzerland and that ensure the supply of strategically important steel products.
The steelworks uses domestic steel scrap to produce around 50 percent of the construction steel required in Switzerland each year. If it were to be shut down, the Swiss steel scrap would have to be transported abroad.
The trade unions Syna, Unia and the Kaufmännische Verband called for political intervention. The latter must draw up a Swiss industrial policy. The unions are calling on the management to extend the consultation period in order to allow sufficient time to work out a viable solution.
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