Ispat-Sidbec : Entering North America
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The Turnaround Contd...
As billet output increased, Sidbec turned its
attention to increasing the production capacity at its bar and rod
rolling mills in Contrecoeur and Longueuil. Sidbec had spent C$25
million to upgrade its rod mill in the early 1990s prior to the
takeover. So large new investments were not required there. |
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Sidbec?#8364;™s 75,000-ton/year pipe mill in Montreal used hot-rolled steel. The
company also sold input materials to other pipe producers. Up to 500,000
tons per year could be cold-rolled on Sidbec?#8364;™s two Sendzimir
cold-rolling mills, one of which was installed in 1992. A significant
amount was galvanized at Soreveco and Co. Ltd., a hot-dip joint venture
with Dofasco in Coteau-du-Lac, Que.
In 1995, the first full year under Ispat ownership, Sidbec recorded
profits of C$104 million, resulting in an average payout of C$2,600 per
employee. Sidbec had invested in the rod-mill upgrades, new Sendzimir
mill, and Soreveco to move its products up-market. This trend continued
under Ispat. Between 1994 and 2000, Ispat Sidbec modernized its rod
mill, increased the capacity of its pickling line, added a second
Sendzimir cold mill, and entered into a joint venture to make galvanized
sheet ?#8364;œto make maximum use of DRI?#8364;™s advantages" for producing
higher-value products.
By using a higher percentage of DRI in the furnace, Sidbec could melt
cheaper grades of scrap, with the pure iron units diluting the residuals
in the scrap. This became all the more important with new EAF capacities
coming on-stream in the U.S, which increased pressure on the
low-residual-grade scrap.
With a crude steel capacity of 1.6Mt/y by the turn of the century, Ispat
Sidbec was undertaking a debottlenecking and cost reduction programme,
involving an increase in capacity to 1.8Mt/y and was concentrating on
increasing the proportion of (higher-margin) speciality steels
manufactured at its Contrecoeur works.
In 2000, Ispat Sidbec posted slales of US$592M, but its gross and net
operating margins fell as a result of higher shipment volumes. The
margin decline reflected primarily the impact of higher energy costs. As
profits increased, employees also gained. In 2002, Ispat Sidbec's
operating profit was $41 million on sales of $534 million compared with
a profit of $5 million on sales of $463 million in 2001. Net sales at
Ispat Sidbec increased 5% to $149m, mainly due to an increase in
shipments of semi-finished products, slabs and billets. Sales of flats
remained stable and wire rod sales were lower because of limited exports
to the US.
By the close of financial year 2003, Ispat Sidbec shipped an estimated
1.6 million ton of finished steel. It was manufacturing various products
which included hot, cold and galvanized sheets, wire rods, bar and
pipes. These products were sold mainly in the US.
Between August 1994 and December 2003, Ispat Sidbec invested $193
million towards capital expenditure. Ispat Sidbec?#8364;™s total shipments grew
from approximately 1.3 million tons in the year prior to acquisition to
1.6 million tons in 2003.
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