North American mills have the capacity to
supply nearly all the steel needs of the "new domestic"
automakers-even higher value-added and advanced high-strength
Nucor Corp. supplies material to the new
domestics as well as the Detroit-area Big Three automakers,
said John Ferriola, chief operating officer of the Charlotte,
N.C.-based mini-mill steelmaker. "We have not failed to be able
to produce a type of steel that has been requested," he said,
touting the capacity of the company's Berkeley, S.C., mill to
provide a range of dual- and complex-phase steels that are both
strong and formable.
Some in the industry claim that the new
domestics are easier to work with than the Detroit automakers
because they plan further ahead and communicate more clearly
with their suppliers. "That statement was true many years ago,"
Ferriola acknowledged. "Today, frankly, we've worked very
hard-as have other companies-to improve communications between
the steel users and the steel producers."
U.S. Steel Corp., Pittsburgh, thinks it knows
what both the new domestics and Detroit automakers are looking
"They want the unattainium," joked Jody Shaw,
manager of automotive marketing for the big steelmaker. "It is
stronger than steel, it is very formable so they can shape it
into whatever shape they want to make, it is completely
weldable and it is cheaper than dirt."
But until metallurgists master unattainium,
Detroit and the new domestics like Toyota Motor Corp., Honda
Motor Co. Ltd. and Nissan Motor Co. are placing more and more
orders for advanced high-strength steels like dual-phase 590,
780 and 980 to reduce weight and keep strength.
Supplying the new domestics isn't much
different from supplying the "old" domestic automakers, Shaw
said. But U.S. Steel needs to have a solid understanding with a
customer that a new grade will have a solid market before it
will commit to making an advanced grade of steel. "We develop a
lot of these grades for a customer at their request," he said.
"It's a fairly big investment, and when we go down a path like
that we want to be sure we are going to have a market when it's
done." The company has developed between 20 and 30 grades of
advanced high-strength steels in recent years, and only one or
two have yet to find a home.
The catch some of the advanced high-strength
steels aren't as formable as customers would like, and
traditional methods of testing whether a grade will stand up to
the production process don't always work with the newer-breed
steels. "This unknown failure criteria is a big issue. It's
slowing the process of integrating these grades in the vehicle,
and we need to get our arms around this thing," Shaw said.
The industry is investing heavily in studies
to understand the formability issues arising with advanced
high-strength steels. "About 15 years ago, when we went from
mild steels to high-strength steels, we had the same kind of
growing pains and worked our way through it," he said. "We're
re-experiencing that with these advanced high-strength
ArcelorMittal SA, Luxembourg, which serves
both U.S. and new domestic automakers and has supplied Honda
and Toyota since the 1970s, said advanced high-strength steels
are a growing business as automakers seek to reduce weight to
meet more-stringent fuel economy standards while at the same
trying to keep up with stricter safety standards.
"Pretty well all the grades they are looking
for are available here in North America for their plants over
here," said Paul Schurter, principal engineer of advanced
engineering at ArcelorMittal's automotive product applications
And both U.S. and new domestic automakers are
moving steadily up the high-strength-steel food chain, he said.
"With each new platform that's launched, they're all moving
into higher levels of advanced high-strength steels. A few
years ago you saw them using dual-phase 590 grades, and now
you're seeing dual-phase 780 and dual-phase 980."
Martensitic and transformation-induced
plasticity (TRIP) grades also are starting to be applied. "They
need to meet those fuel economy and crash requirements without
cost penalties, Schurter said. And even advanced high-strength
steels, which are more expensive than traditional mild steels,
offer a "big, big cost advantage compared to aluminum or any of
the other light metals."
The new domestic automakers might import
steel in isolated cases, Schurter allowed, but it could hardly
be called a trend.
Severstal North America Inc., Dearborn,
Mich., also is seeing growing business with most of the new
domestics, according to Chris McCarthy, the company's vice
president of sales and marketing. "Most of the material is
sourced here in North America. Raw materials have shot up in a
big way, particularly overseas, and the value of the dollar
makes us very competitive."
"You take freight rates and currency rates,
which I think are a long-term phenomena, and great increases in
productivity, and North America is a great place to
manufacturer," McCarthy said. And with exports currently
driving the economy to some extent, there also are signs that
exports of vehicles from North America could increase.
Severstal thinks it has a leg up on its
competition, particularly given its massive investments in
North America. Severstal has poured $1 billion into
improvements at the former Rouge Steel Co. in Dearborn, Mich.,
including a new cold-reduction mill in addition to a new
hot-dipped galvanizing facility that will produce galvanneal
and other advanced coated steels for exposed automotive
products, McCarthy said. The company also has launched full
production at SeverCorr LLC, an electric furnace operation in
Columbus, Miss., and recently acquired the Sparrows Point, Md.,
mill of ArcelorMittal for $810 million. "There will be
significant capital expenditures made at Sparrows Point," he
The Dearborn facility is well located to
supply automakers in the U.S. Midwest as well as southern
Ontario, SeverCorr is in a prime position to serve the southern
United States and Mexico and Sparrows Point has a strategic
spot on the East Coast, McCarthy said.
Severstal supplies hot-rolled products for
wheels and frames, cold-reduced products for roofs and
body-in-white parts and hot-dipped galvanized products for
hoods, doors and fenders, McCarthy said. Cold-reduction
facilities produce substrate that can be coated or
electrogalvanized not only for the current basket of advanced
high-strength steels but also for steels that are just now
being developed, he added.
"The equipment we're putting in will give us
superior products that will have unique capabilities that our
competition won't," according to McCarthy, who declined to
specify exactly what those capabilities or products might