October 20, 2017 / 4:50 PM / a year ago

UPDATE 1-Workers at Tata Steel's Dutch arm oppose Thyssenkrupp merger

(Adds comment from Tata)

AMSTERDAM, Oct 20 (Reuters) - The works council of Tata Steel Netherlands said on Friday it opposed preliminary plans by Tata Steel and Thyssenkrupp to combine their European steelmaking operations into a joint venture (JV) and would fight to block it if necessary.

Works council chairman Frits van Wieringen said that, after viewing the two companies’ memorandum of understanding, he was concerned they intend to dissolve the Dutch subsidiary, which would strip away legal protections, and then lay off workers.

“They are talking about 10 percent of jobs being lost, but we think it will be much more than that,” he told Reuters.

In September the two companies announced plans to merge their European steelmaking operations. The JV would have 42,000 employees, with 10,000 in the Netherlands.

The companies said last month the deal would help tackle over-capacity in Europe’s steel market, which faces cheap imports, subdued construction demand and inefficient legacy plants. The merger would also result in up to 4,000 job cuts, or about 8 percent of the joint workforce, they said.

Works councils in the Netherlands and Germany have significant powers and their approval is required for a change of corporate structure to be carried out, Van Wieringen said.

“Make no mistake, the Germans are also opposed to this as it stands,” he said.

He said the works council expects to hear more detailed plans from Tata and Thyssenkrupp early next year. For now it has notified the supervisory and management boards of Tata Steel Netherlands that it will oppose the JV.

Hans Fischer, CEO of Tata Steel’s European operations, said: “We have also held a number of meetings with groups representing our employees. These discussions are a priority for us as we seek their support for the joint venture.”

“We have now entered a period of due diligence with Thyssenkrupp. Tata Steel will follow due process in consultation with all relevant stakeholders as we progress in the transaction,” he said in a statement.

Additional reporting by Maytaal Angel in London; Editing by Adrian Croft

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