London
CNN
 — 

Thyssenkrupp Steel has announced plans to eliminate 11,000 jobs by the end of this decade — about 40% of its workforce — becoming the latest German industrial giant to opt for drastic action to prop up its fortunes.

The company said Monday that it is aiming to cut around 5,000 roles by 2030, through reducing production and streamlining administration. A further 6,000 jobs will be transferred to external service providers or shed through the sale of business units.

“Increasingly, (global) overcapacity and the resulting rise in cheap imports, particularly from Asia, are placing a considerable strain on competitiveness,” Thyssenkrupp Steel said in a statement. “In addition, urgent measures are needed to improve Thyssenkrupp Steel’s own productivity and operating efficiency, and to achieve a competitive cost level.”

The news is the latest blow to Europe’s biggest economy, where storied manufacturers face a perfect storm of competition from Chinese rivals, traditional disadvantages such as steep labor costs and high taxes, and energy costs driven higher by Russia’s full-scale invasion of Ukraine in 2022.

Germany’s economy shrank last year for the first time since the onset of the Covid-19 pandemic. And it is set to contract again this year, according to forecasts from the European Union’s executive body, the European Commission, earlier this month.

Thyssenkrupp, Germany’s largest steel producer, joins the country’s biggest manufacturer Volkswagen in setting out a major overhaul to cut costs and bolster competitiveness.

Volkswagen said earlier this month that it would reduce employee pay by 10% to protect jobs and safeguard the company’s future. The German automaker also plans to close at least three factories in its home country and lay off tens of thousands of staff.

Although not a German company, fellow carmaker Ford (F) said last week that it would cut almost 4,000 jobs in Europe over the next three years, mostly in Germany and the United Kingdom.

The US company has urged the German government to improve market conditions for automakers, including through lowering costs for manufacturers and increasing public investment in charging infrastructure for electric vehicles.

The troubles at Thyssenkrupp and Volkswagen reflect worsening conditions in the broader private sector in Germany.

According to a recent study commissioned by the Federation of German Industries, an umbrella organization for business lobby groups, one-fifth of Germany’s industrial output may disappear between now and 2030, primarily due to high energy costs and shrinking markets for German goods. Industrial output encompasses sectors such as manufacturing and the production of chemicals, among other activities.

“The lead that the country has built up over decades in areas such as combustion technology is losing importance, and the German export model is increasingly under pressure due to growing geopolitical tensions, global protectionism and locational weaknesses,” notes the report, co-authored by Boston Consulting Group and the German Economic Institute.

“Locational weaknesses” include high energy costs, onerous red tape, and outdated physical and digital infrastructure.

The study concludes that the German economy needs “the biggest transformation effort since the post-war period,” requiring additional investments in everything from infrastructure and research and development, to education and green technologies of around €1.4 trillion ($1.5 trillion) by 2030.