Evonik's Crucial Labor Negotiations Intersect with Corporate Restructuring

Evonik's pivotal wage negotiations with IGBCE union directly impact its 'Tailor Made' restructuring, aiming for €400M savings via 2,000 job cuts, as weak ROCE adds pressure.

As it navigates a significant corporate transformation, German specialty chemicals group Evonik faces pivotal wage negotiations. The third round of talks between the IGBCE union and the BAVC employers' association is scheduled for March 24 in Bad Breisig, following two prior inconclusive sessions. The outcome is far from a mere formality for the company.

The negotiations carry exceptional weight because they are directly intertwined with Evonik's "Tailor Made" transformation initiative. This program aims to eliminate up to 2,000 positions globally, with approximately 1,500 of those cuts occurring in Germany. Personnel expenses are expected to account for roughly 80% of the targeted annual savings of €400 million. A higher wage settlement would immediately pressure this cost-reduction calculus.

Financial Metrics Amplify the Stakes

The restructuring comes at a challenging operational moment. Evonik's Return on Capital Employed (ROCE) for 2025 stood at just 6.1%, significantly below its medium-term target of 11% and also down from the previous year's 7.1%. Its adjusted EBITDA for 2025 reached €1.87 billion, barely meeting the company's own forecast. Guidance for 2026 anticipates a result between €1.7 billion and €2.0 billion—a range that indicates limited flexibility.

Further complicating matters, the company has been operating without a permanent Chief Financial Officer since September 2025. A permanent appointment is expected by the Annual General Meeting on June 3, 2026. This vacancy represents a notable gap in leadership during a period dominated by cost discipline and restructuring.

Negotiating Positions Remain Far Apart

The starting positions for the talks are entrenched. Leading the negotiations for the BAVC, Matthias Bürk cites elevated energy prices, an economic slowdown, U.S. tariffs, and global overcapacity as major burdens on the chemical industry. Conversely, IGBCE negotiator Oliver Heinrich argues that the employer's current offer falls well short of addressing the living realities of the roughly 585,000 employees in the chemical-pharmaceutical sector.

With both sides holding firm positions, a swift agreement is not guaranteed.

Market and Operational Implications

Evonik's share price currently trades approximately 35% below its 52-week high of €21.09. A successful wage agreement in Bad Breisig would, at a minimum, enhance planning certainty for the ongoing corporate overhaul. Should the third round of talks also fail, uncertainty regarding the future cost base will persist.

The company's next significant test follows shortly thereafter, with the Q1 2026 quarterly report scheduled for release on May 8.