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AK Steel weighing growth options: Wainscott

Jun 18, 2014 | 06:10 PM | Michael Cowden

Tags  AK Steel, James Wainscott, joint ventures, alliances, JFE Steel, Severstal North America, Saikat Dey, Steel Dynamics SDI


NEW YORK — AK Steel Corp. could look to joint ventures, affiliations or even mergers and acquisitions if it decides to expand beyond its current footprint, the company’s top executive said.

The West Chester, Ohio-based steelmaker is comfortable as a "niche player" with a strong regional presence and customer base, AK Steel chairman, president and chief executive officer James L. Wainscott said during an interview June 17 on the sidelines of the Steel Success Strategies XXIX conference in New York, sponsored by AMM and World Steel Dynamics Inc., Englewood Cliffs, N.J.

"There are some who like us for our size. ... But there are some that would like to see us have a greater presence, whether that’s through (merger and acquisition) activity, joint ventures or affiliations. I think there are a variety of ways that can happen," he said in response to a question about how AK Steel, a regional steel player, might fit best into an increasingly global automotive supply chain.

AK Steel, for example, has had a technical alliance with Japan’s JFE Steel Corp. that dates to when the "K" in "AK" stood for Kawasaki Steel, Wainscott said.

Kawasaki merged with Nippon Kokan K.K. in 2002 to form JFE.

The alliance between JFE and AK Steel has been beneficial for AK Steel, as it has diversified its portfolio of automotive accounts so that no automaker represents more than 10 percent of the company’s business, Wainscott said. "We’ve renewed (the alliance) from time to time, refreshed it, and it’s alive and well," he said.

Such alliances, while not new, could remain the best way forward, especially given risks of building new capacity. "There’s plenty of capacity, so it’s more how you align that (existing capacity), how you can get together with others to use it efficiently—that’s the smartest way to go," Wainscott said, declining to comment on whether AK Steel—rumored to be among the companies interested in the assets of Severstal North America Inc.—might be eying the Dearborn, Mich.-based steelmaker.

AK Steel and Steel Dynamics Inc. (SDI) have been said to be pursuing a joint bid for the company, which would see AK Steel take Severstal NA’s Dearborn facility and Fort Wayne, Ind.-based SDI the company’s mill in Columbus, Miss. (amm.com, May 27).

Severstal NA chief executive officer Saikat Dey and SDI president and chief executive officer Mark D. Millett, when asked about the matter during a June 17 panel discussion, also declined to comment on whether Severstal’s North American assets were for sale and, if so, whether any of the panelists—whose ranks also included Wainscott—might be interested in acquiring them.

"The option is always there" of joint ventures, and mergers and acquisitions in general, Wainscott said after the panel.

"And if there are assets that are available for sale—like some that are rumored—we’re foolish not to look," he said, without revealing which assets might be involved.

But whatever approach AK Steel might take, the company is likely to use caution, Wainscott indicated. "Certainly we continue to look," he said. "But oftentimes it’s just as good to look and not do deals as it is to look and do them."




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