The HySteel expert commission set up by the German Hydrogen and Fuel Cell Association (DWV) has published the results of a study on the impacts on the labour market resulting from the transformation of the primary steel industry. Alongside the labour market in the steel industry, the study also investigates the impacts upstream on renewables and hydrogen as well as downstream on the automotive and wind power industries.
It begins by providing an in-depth analysis of the number of people directly employed in the primary steel industry and how this employment is structured and distributed regionally. In addition, it calculates employee numbers on an indirect basis at upstream organisations as well as via income effects. The study was commissioned by Q&A Unternehmensberatungs GmbH in partnership with wmp consult – Wilke Maack GmbH and the HSBA Hamburg School of Business Administration.
Clemens Orlishausen, HySteel project manager at DWV, has offered his thoughts on the results of the study: “From a business standpoint, the study results make it clear that it will be possible to produce green steel competitively and profitably in Germany in the future. For that to happen, the right environment has to be put in place, allowing for a complete transformation, including the pig iron stage. If, however, there is only a partial transformation in one part of the value chain – the pig iron stage – there is a risk that there will be a significant negative impact on employment and value creation in Germany. To this end, the HySteel expert commission will enter into a dialogue with political decision-makers and continue to campaign for the preservation of the domestic steel industry and well-paid industrial jobs in Germany.”
The study explains the transformation of the primary steel industry in three different scenarios and maps out its effects on employment and value creation for the first time.
Three scenarios for the labour market
The baseline scenario assumes an employment-neutral transformation involving the construction of direction reduction facilities, covering all production capacity.
Scenarios 2 and 3 assume partial transformations of 66% and 50% of blast furnace capacity. These result in projected job losses of 57,000 and 97,000 respectively. In these cases, the employment effects are influenced by the proportional drop in pig iron production and partial compensation through HBI imports and resulting cutbacks in upstream and downstream activities. For reference, over 64,000 people are employed in the primary steel industry. In addition, there are estimated to be more than 230,000 employees at suppliers and service providers and just under 84,000 people employed thanks to induced effects, resulting in a total of 378,000 staff.
“Transformation-induced” employment and value creation effects
Successful transformation has a human component in terms of motivation and skills levels among the workforce and recruitment of staff, which must not be overlooked.
There is significant job and value creation potential in the “transformation-induced” effects on employment and value creation stemming from the primary steel-related expansion of renewable energy use and the hydrogen economy. The steel industry has the ability to become a catalyst for the development of a hydrogen cluster in Germany.
The primary steel industry is interdependent with the end-user industries wind power and automotive. An incomplete transformation in the primary steel industry may have an impact on the sourcing strategies employed in downstream industries. The advantages of closed value chains in Germany are close supplier relationships and stable logistical costs.
In big-picture terms, the transformation of the steel industry is an environmental and technical challenge as well as a national economic, structural and social one. This study provides an important foundation when it comes to the upcoming political decisions on the transformation of Germany’s energy system, ramping up the hydrogen market, and safeguarding important and well-paid industrial jobs in the country.
