Time for the strategy consultants?

In a remarkably frank and open article, the FT today reports JSW [India’s third-biggest private sector steelmaker] as acknowledging that their acquisition of a Texas-based pipemaker in 2007 was a mistake.

According to the FT, Mr Sajjan Jindal (JSW’s Managing Director) now considers that JSW have a competitive advantage in India and a competitive disadvantage in the US.

It is not often that we see such honesty reported in the international steel press. Surely it is time however for JSW to now bring in the strategy consultants?

For original FT report, visit http://www.ft.com/cms/s/0/d588cd92-d553-11df-8e86-00144feabdc0.html.

blogger@steelonthenet.com

Steel company 'diagnostics' service

Are you interested in an independent view of what ArcelorMittal might be doing in the next 5 years? Or in the probable future evolution path for Nippon Steel in Japan? Or in possible medium-term steel sector disposals by BlueScope Steel?

Steel experts MCI have put together a list of scenarios [which we think, are quite possible corporate trajectories] for more than 40 of the world's largest steel companies. This list is available for free, for all our site visitors to see, as part of a new 'Steel diagnostics' service. To see the full list and for further info about MCI's new service, please visit http://www.steelonthenet.com/swot.html.

Dr Andrzej M Kotas
Chief Executive
www.steelonthenet.com

Strategy and plant closures - Corus tinplate

This week saw an announcement from Corus concerning the possible reduction of capacity in Wales with the loss of up to 300 jobs at the steelmaker's tinplate operation in Llanelli [see http://icwales.icnetwork.co.uk/news/wales-news/2008/04/18/corus-to-lose-300-jobs-at-trostre-llanelli-91466-20784231/]. The planned reduction in capacity and headcount at Trostre it seems, is in response to overcapacity in global demand for tinplate.

The team at http://www.steelonthenet.com/ have for some time considered that - with no iron ore, a dependence on imported coal, high energy costs and expensive labour - there was little chance that UK iron and steelmaking would survive long-term. This view was reinforced by recent EU legislation concerning CO2 emissions, which can only result in further shifts of steelmaking from Western Europe to countries such as Brazil, Russia, India and China.

However, we always beleived that the future of UK steelmaking was in downstream steel products, where know-how, high value added, closeness to markets etc offset some of the economic disadvantages of making steel in the UK. The acquisition of Corus by Tata was, we also thought, a confirmation of our belief in the future of the UK steel sector downstream.

So this week's announcement about closure of downstream capacity at Corus comes as a bit of a surprise. With contraction of tinplate markets, and progressive relocation of automotive production and white goods manufacture to Central and Eastern Europe, it raises the question: what actually will Corus' new owners be left with in the UK, ten years down the line?

All clarifications / readers' comments concerning the strategic options for UK steelmaking welcomed!

blogger@steelonthenet.com