Executives with Finland's Outokumpu Oyj said that its acquisition of ThyssenKrupp AG's stainless steel unit will not affect the stainless steel operation in Calvert, and that the ramp up of the new melt shop there will proceed as planned.
Mr Mika Seitovirta CEO of Outokumpu said that "We see considerable growth opportunities by joining forces, especially in the Americas and Asia."
Outokumpu's North American operations and ThyssenKrupp's Calvert facility appear to complement each other. Outokumpu makes stainless steel pipes, bars and plates in America, but it imports from Europe the stainless steel coils it sells here. The Calvert facility specializes in making stainless steel coils.
A source with ties to the local ThyssenKrupp operation said executives there don't expect any negative consequences. The source said that "They're looking on this very favorably and positively."
The deal values ThyssenKrupp's global stainless division, which it renamed Inoxum last year, at EUR 2.7 billion. Outokumpu will pay ThyssenKrupp EUR 1 billion cash and ThyssenKrupp will get 29.9% of Outokumpu's stock.
Outokumpu also will make a loan to ThyssenKrupp worth EUR 235 million and take on EUR 422 million of ThyssenKrupp debt. The deal requires regulatory and other approvals. Officials with both companies said that they expect it to be complete by the end of 2012.
Neither company addressed management of the Alabama operation. Mr Ulrich Albrecht Frueh, who leads the stainless operation in Calvert, was named to the global management team for Inoxum last year. He is in charge of technology for the unit. One of the reasons given by ThyssenKrupp for selling its stainless unit is that a glut of over capacity in Europe has hurt profit margins.
Outokumpu said today that it planned to cut 850 ThyssenKrupp stainless jobs in Germany; 600 of those affected would be offered other jobs at ThyssenKrupp. Outokumpu would shut down a melt shop in Germany by the end of 2013, and other possible redundancies will be examined after 2015, it said.
In Calvert, ThyssenKrupp Stainless USA shares a USD 5 billion facility with ThyssenKrupp Steel USA, which makes carbon steel for automakers and others. The stainless facility currently employs 550 people, and ThyssenKrupp had planned to grow the work force to 900. The company is currently working to finish the stainless melt shop there, the last major piece of the new facility.
Ms Bridget Freas, a Chicago based analyst with Morningstar Inc, who follows ThyssenKrupp, said she expects Outokumpu will stop importing stainless coils from Europe and instead sell the ones made in Alabama. She added that "That way you're not locking it in several months in advance. You always prefer from the buyer's perspective to buy local."
She said it is unclear whether Outokumpu will use the stainless melt shop in Calvert to feed its other American operations. The melt shop was made with the rolling mill in Calvert in mind, and it's unclear whether the steel made there would be suitable for other products. It's also possible that the mill in Alabama will be so busy that there wouldn't be any steel left over for other mills.
(Sourced from www.al.com)
