As one of the world’s leading suppliers of automotive steel, ArcelorMittal knows that every automotive supply chain is analyzed in great detail. Our customers need to know which operation in which mill makes the steel from which each of their parts is manufactured. Any change in where the part originates, whether it's the mill or an operation within the mill, requires the whole process of qualification and validation to be done again.
So imagine the intense planning and complex logistics that had to occur to enable our company to transfer 4,200 parts, or 2.7 million tons of steel, without affecting our customers or losing any business.
The strategy to transform the USA business began with the asset optimization plan, which is a large part of Action 2020 in the USA. Action 2020 is ArcelorMittal’s global strategy plan to deliver real structural improvements unique to our business. The goal is to generate Ebitda per ton of steel produced in excess of $85, and to increase shipments to 90 million tons by 2020. In 2015, our Ebitda per ton was $62, and we shipped just under 85 million tons of steel.
We wanted to make improvements that would better align our capabilities with our customers’ current and future needs. The 2014 acquisition of AM/NS Calvert in Alabama (a joint venture with Nippon Steel and Sumitomo Metals Company) was key. We realized that streamlining our assets and process flows would be the key to our transformation. In order to accomplish this, we first had to face the enormous and multifaceted challenge of moving nearly three million tons of steel production.
Planning and mobilization for the parts transfer endeavor began in early 2015. Teams were created to address each of the stakeholders in the complex project, with customers top of mind. It was very important for the company to make this entire experience seamless for our customers.
The transfer teams were built out and brought up to speed, while further vetting of the original plan continued throughout the year. Customer communications, which were critical in this effort, were rolled out in November of 2015.
Leadership at the United Steelworkers union were made aware of our efforts to create a more sustainable company and were supportive. The new basic labor agreement, signed in 2016, allowed for the free transfer of parts within the ArcelorMittal facilities in the U.S.
In the first quarter of 2016, the No. 1 aluminizing line at ArcelorMittal Indiana Harbor was shut down, followed by 5GCL and the 84-inch hot strip mill. All of these activities were performed on time, with personnel relocated and steel production shifted to other ArcelorMittal facilities – all without losing a single customer.
The project would not have been possible without the close cooperation of our group of stakeholders:
• commercial group
• corporate quality assurance and customer technical services
• information technology
• leadership team
• outside processing group
• planning groups
• plant operations
• plant quality assurance
• research and development
Our successful parts transfer project is a piece of our larger sustainability story. Global overcapacity, a flood of cheap imports and relatively flat demand for steel during 2013-2015 weakened our country’s steel industry and we had to take action. Our leadership at ArcelorMittal USA took a hard look at our operations and formulated the asset optimization plan that would help the company be more sustainable.
The original footprint optimization plan is now nearly complete, with No. 2 steel producing shutting down in the first half of 2017. This means ArcelorMittal can use its existing assets more efficiently with no loss in total production or market share, creating a healthier, more sustainable company for the future.