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 early 2014.
"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."