In an article published in Wall Street Journal on October 7th, 2013 where a report on world’s leading steel manufacturers Arcelor Mittal and Algerian State owned company, Sider is planning to increase their production capacity to double considering the rising demand from North Africa’s car manufacturing sector. The senior management of the Joint owned company, declared that the decision was taken to invest $763 Million in their jointly owned complex in order to increase thri production capacity in the Algerian Plant as the company invest heavy demand from African buyers who are now increasing their supply capacity and thus boosting steel demand.
The new product: The expansion plan of the company will look forward to make long and flat steel products especially for automobile industry.
In an overview of the economic analysis of their decision to expand their production capacity, the decision seems justifiable considering the decision of european car makers to shut down their unprofitable plants citing strict environmental regulations, economic downturn and high energy prices in euro zone and are thus moving out of europe to boost their profit figures. For Instance, Renault SR is working on its plan to build up a manufacturing unit in Algeria and so does Peuogot Citreon.
Thus, on an initial analysis although it seems that the decision to invest a humongous amount in their plant production and new steel products is encouragin but the actual scenario shall be disclosed after we conduct the economic analysis of the steel industry.
Objective of the Paper: My objective of the paper will be to analyze the expected demand for steel from India preferably from the State Owned Entities.
Introduction:
Present status of Indian Steel Industry and its performance during the 11th Five Year Plan (2007-12)
1.1 Global Status of Indian Steel Industry
1.1.1 Indian Iron and steel industry with its strong forward and backward linkages contributes significantly to overall growth and development of the economy. As per official estimates, the Industry today directly contributes 2 per cent of India‘s
Gross Domestic Product (GDP) and its weightage in the official Index of Industrial Production (IIP) is 6.2 per cent. Globally also, over the last two decades, the industry has been able to carve out a niche for itself. From a
country with a fledgling status of one million tonnes of capacity at the time of Independence, it has today become the world‘s 4th largest producer of crude steel preceded only by China, Japan and USA as shown below:-
For decades, the steel industry has been one of the toughest markets on a global scale with most steel corporations ending up in bankruptcy. Foreign and domestic competitors, management issues, environmental issues, political agenda’s and technology have had much to do with the demise and more so of the success of the steel industry. The issues that this case focus on Nucor Corporation was of:
Advances in technology can dramatically alter an industry’s landscape, making it possible to produce products at lower costs and opening up whole new industry frontiers. The management at Nucor believed they could use new technology to their advantage and make bolts as cheaply as foreign producers. The traditional integrated steel mills were outdated and inefficient compared to new electric minimills. Nucor embraced this new technology to produce steel. They became known for constructing state-of-the-art facilities at the lowest possible costs and for investing aggressively in plant modernization and efficiency improvements. New technology enabled minimills to triple their output in the 1990's. The new technology of twin shell electric arc furnaces helped minimills increase production, lower costs, and take additional market shares. Nucor’s use of advanced, efficient technologies enabled it to stay afloat when other companies could not. This use of technology also enables Nucor to lower many of the costs of maintaining environmental standards. With technological improvements to the plants and the production process, steel companies can better compete with each other. Because there is no real differentiation between products in the steel industry, companies will have to rely on technological innovation to profit in this industry.
Hoerr, J. P. (1988). And the wolf finally came : the decline of the American steel industry. Pittsburgh, PA: University of Pittsburgh Press.
...at the joint venture with U.S. Steel would hinder the quick decision making typical at Nucor. Iverson had gambled by committing to the first phase of the new process on his own, without first testing the process in a pilot plant on a small scale. The next stage was to complete the new process with a plant in the United States, relying on the high level of research and development skills at U.S. Steel and the ability of Nucor to pioneer new methods. Analysts wondered whether Nucor could coexist with U.S. Steel, with its large, hierarchical structure and strong union. This challenge was especially important since the new venture was felt to be the focal point for the continued growth of Nucor.
Research question: What is the impact of US's tariff on the steel industry in countries such as Japan, Russia, South Korea and Brazil?
The extraordinary power of the steel industry to shape the life of its communities and the people in them remain...
Industry Analysis – Nucor has established itself as a leader in the steel industry through efficiency and innovation.
In the near past, China exported 94 million metric tons of steel, more than the total output of the U.S., India and South Korea, the world’s third, fourth and fifth largest producers. Moreover, UBS analysts have estimated the world has excess steel-production capacity of 553 million metric tons a year, which is much of it in China. [3]
...k, John. "US Steelmakers in Continuing Crisis." Challenge.Vol. 47, no. 1, January/February. M. E. Sharp, INC. 2004. 86-106.
There are a lot of factors that determines whether or not a company will be successful. These factors are usually derived from economics. One factor that I plan to focus on is scale economies or better known as economies of scale. Firms that have expanded their scale of operations to obtain economies of mass production have survived and flourished. Whereas smaller firms who have not been able to expand have usually ended up as high-cost producers. The topic discussed will be the Italian automotive industry and how it is affected by economies of scale.
This is a case study on the series of negotiation between the Tata Steel (a part about TATA Group) which had acquired Corus, the Anglo-Dutch steel firm after a long eight month long negotiation over price and terms of acquisition because of the entry of a third party, Brazil's CSN. This is one of the most interesting acquisition cases in the recent decade due to the fact that the acquired company was nearly four times the size of the acquirer in terms of the total revenue. Here, Corus Group was acquired by Tata Steel in the month of April 2007 for £6.2bn. Tata Steel is India’s largest private sector steel company with 2005-06 revenues of US $5.0 billion and steel production of over 5.3 million tons across India and South-East Asia (as provided in the Annual Report 2006). Corus Group is Europe's second largest steel producer with the annual revenues of over £9.2 billion and a crude steel production of 18.2 million tons in 2005 (gathered from Annual Report Corus). This deal is supposedly the biggest deal ever from an emerging market. The deal is a powerful amalgamation of near to the ground cost upstream production in India with the far above the ground end downstream processing facilities of Corus.
Also, the competition between existing players in this industry is high. There are about 619,000 metal enterprises in the USA in 2005 (IBISWorld, 2007).There are many companies that produce different kinds of metal products in the market. Besides, the bargaining power of buyers is high because product difference for the buyers of the metal products is small. It is not easy to differentiate the quality of one metal product from another. In addition, the cost of switching for the buyers is low. The number of substitutes of metal products is also high thus the buyers have great bargaining power.
The automobile industry is a pillar of global economy. Globally automotive contributes roughly 3 % of all GDP output. It historically has contributed 3.0 – 3.5 % to the overall GDP in the US. The share is even higher in the emerging markets, with the rates in china and India at 7 % and rising. China produces the highest number of automobiles followed by US and Japan (oica.net, 2015). The industry supports direct employment of 9 million people to build 60 million vehicles and parts that go into them (oica.net, 2015). Many other industries such as steel, iron, glass, aluminium, textiles etc. are associated with the automotive industry and resulting in more than 50 million jobs owed to the auto
Automobile industry in the North America is a very established and was the world’s biggest automobile industry for many years, during the 20th century, which was started with a number of companies in the early 1900’s. But, as the time passed, many companies opted out the competition and some companies merged, and finally only three companies, namely Ford, General Motors, Chrysler stayed in the competition, taking advantage over other independent makers, because of their financial stability. The industry took different shapes and went through different phases-, the depression of the 30’s, the stricter government regulations for automobile manufacturing in the 1960’s
In order to drive such Transformation through the downstream Steel Industry, ArcelorMittal established the Industrial Steel Incubation Hub (The Hub) as a vehicle to develop and support the industry. “In order to optimise the impact of The Hub and align with government’s expectations of Transformation, we embarked on the establishment of The Hub, in collaboration with the Department of Trade and Industry,” reveals