NEW YORK Turkish tube and
pipe producer Borusan Mannesmann plans to compete in the
domestic market on technology, efficiency and expertise rather
than price when it completes its planned 300,000-ton-per-year,
$150-million welded oil country tubular goods (OCTG) mill in
"We feel that we have value to
give to a customer, and we absolutely will not compete on
price. If anyones hoping that were going to be the
low-cost provider in the market, theyre going to be
disappointed," Buddy Brewer, chief executive officer of
subsidiary Borusan Mannesmann Pipe U.S. Inc., said on the
sidelines of AMMs 6th annual Steel Tube and Pipe
Conference in Houston.
Having a team with significant
experience in the U.S. tube and pipe industry should help the
company enter the market as a domestic producer, he said.
"We think that the people issue,
the talent issue, may be one of our biggest advantages," Brewer
said, noting that the senior management team at Borusan U.S.
collectively has more than 170 years of experience in the tube
and pipe business.
Additionally, "Borusan has been
selling product into the U.S. for a number of years and has
established itself as a quality producer. We have a great
name out in the market and out in the oil patch," he said.
The Istanbul-based company plans
to source coil both from domestic and foreign suppliers.
"Itll be both," Brewer
said, adding that the purchasing arm of the new company has
"great relationships with the American coil producers, so again
we can hit the ground running there."
Borusan has already purchased
most of the equipment it will need for its expansion, and is
considering locations in either Texas or Oklahoma.
"Our pipe mill was actually
purchased 14 months ago, and it (will) be ready to ship next
month," Brewer said.
The mill is expected to be
successful despite the competition it will face from a number
of other new OCTG projects and expansions announced recently
amm.com, Feb. 1).
"We still feel with our
combination of efficiency, technology, knowledge and customer
service that we will find our niche in this market, no matter
what else is out there," Brewer said.
The positive long-term outlook
for OCTG spurred the companys decision to invest.
"The drivers for our business as
far out as anybody can see are going to stay good. Demand is
going to go up, drilling is going to continue. Everybody sees
an increase in demand and consumption per rig. If you look at
the fundamentals, its going to be a good market in the
future," Brewer said.
However, the outlook for 2013 is
a bit more cautious, he said.
"It just looks like from our
contacts that 2013 is going to be a little soft. At 1,750 rigs,
thats still a decent business level, but I dont
think anybody is expecting a boom," Brewer said. "But by the
time our mill comes online (in 2014), a lot of people are
expecting things to pick back up. So we actually think our
timing is really good."