NEW YORK The
new management team at Severstal North America LLC has set its
sights on making the steelmaker more profitable and
sustainable, according to its top executive.
"Weve come to
the realization, quickly, that ... the needs of the business
have kind of moved on from what they used to be a couple of
years back," Saikat Dey, the Dearborn, Mich.-based
steelmakers new chief executive officer, told reporters
during an Oct. 3 conference call. "I dont think of it
(management changes) as a new direction, but a prioritization
of our focus."
Severstal NA has seen
a major overhaul of its executive team in recent weeks,
including the departure of then-chief executive officer Sergei
amm.com, Sept. 3). Dey said the moves reflect a
changing marketplace, particularly because the old team worked
on larger capital-intensive projects and the new team will work
on profitability and cost savings.
"The team that
preceded was very good at a couple of things which was needed
for the timebuilding new assets, investing in Dearborn
and creating a brand-new infrastructure," he said. "They
maintained and grew the automotive business and did a lot of
big mergers and acquisition deals, including the divestment for
RG Steel (LLC)."
Critics said that
losing the old executive team has meant a loss of institutional
steel knowledge and a loss of solidified relationships with
service center and end-market customers. While Dey acknowledged
that the company, a subsidiary of Moscow-based OAO Severstal,
has lost some ground in that area, he insisted the new
management team is committed to filling in any holes.
"In terms of the team
we have in place right now, it is a pretty strong team," he
said. "Its a team thats got solid academic
credentials, as well as very good backgrounds. Most of them are
excellent problem solvers, and I believe well introduce a
new frame of thinking to the steel industry which will be fresh
Severstal NA, which
has an integrated facility in Dearborn along with a mini-mill
in Columbus, Miss., has established five "pillars" for its
business strategy: better engagement of its employees, more
targeted sales and marketing efforts, better quality and
customer delivery, enforcing a strict cash discipline and
making its assets more reliable.
The outlook for the
steel industry is bright, Dey said, noting that a growing
construction sector and continued strength in the automotive
market mean 2014 will be on the upside. "In terms of steel
pricing, its fairly positive for us. We still think
its a good year coming now for various reasons," he said,
although he acknowledged that while flat-rolled demand is on
the upside, "pricing is still in the toilet."
Imports also have been
a concern for the steel producer, with Dey saying that foreign
product was the main reason behind the companys margin
erosion. "As overcapacity looms larger, some products are more
affected than others," he said, without specifying particular
product groups or country origins. "With specific trade cases,
that just distributes imports into other parts of the value
chain. That 300 million to 400 million tons of overhang
(globally) isnt going anywhere."
As for its own mills
in the United States, Dey said Dearborn and Columbus are
effectively running at or near full capacity, although the
producer would not have enough market power to "change a penny"
in the overall supply and demand balance.