Company restructuring: The Danish Steel Works
Iron and steel production belong to the traditional industries in Denmark, although this industry has not been a dominant player in the European market. Nonetheless, changes in the sector at European level over the last 20 years have negatively impacted on the industry in Denmark and contributed to the poor economic situation of the Danish Steel Works at the beginning of this decade. In June 2002, it became evident that the company would have to cease operations. This case study documents the context and details of the closure of the Steel Works, including actions taken at local and national level, and presents the restructured enterprise, DanSteel, that subsequently emerged.
The Danish Steel Works, including the Steel Rolling Mill, was founded in 1940. It is situated in northern Zealand, in the outskirts of the town of Frederiksværk, which is an area recognised for its natural amenities. The operations of the Steel Works have therefore been subject to strict environmental regulations since its establishment.
The operation - including the electric steel plant (Elektroværket) and the production of sectional iron (Kontiværket) divisions - was owned by two large and dominant shareholders: the state and the family-owned Danish group A.P. Møller. Throughout its existence, the Steel Works have been affected by fluctuations in the market price for steel which led to several crises for the company over the years. In June 2002, it became evident that the Danish Steel Works would have to cease operations. At that time, it proved impossible for the two former owners to prevent the company from declaring bankruptcy.
Case study topics
The case study of the Danish Steel Works documents the context and details of its closure, including actions taken at local and national level, and presents the restructured enterprise, DanSteel, that subsequently emerged. It examines the following aspects:
- company profile and its role in the region with regard to employment and environmental protection;
- the statutory framework of managing a company’s closure due to bankruptcy in Denmark at the beginning of this decade, focusing on the role of various organisations at national and local levels;
- actions taken at national and local levels to provide support, information and guidance to the affected employees concerning financial assistance, training and new job opportunities;
- the emergence of a new steel company, DanSteel, the recruitment strategy put in place and the company’s perspectives;
- the success factors as outlined by former managers and employees of the Danish Steel Works, managers and employees of DanSteel, trade union representatives, and a representative of the local employment agency.
EMCC: Key messages
EMCC: Access Information
The case study can be downloaded free of charge as a PDF file by clicking on the link below.
This case study highlights how a company’s closure due to bankruptcy can be smoothly managed through the close cooperation of various stakeholders at national and local levels. The set-up of a network involving national and local organisations was a key factor in providing affected employees, partly holding very industry-specific qualifications, with the necessary information and guidance to benefit from further education or training, or new job opportunities. The case study also outlines how a strong local commitment to maintain a steel industry in the area has created favourable conditions for a new steel company to emerge and become viable.