CALVERT, Ala. -- North American auto plants soon should see an improved and greater supply of the high-strength steels needed to reduce vehicle weight and improve fuel economy, thanks to a change in ownership earlier this year of an advanced steel-finishing plant here, 35 miles north of Mobile, Ala.
Originally built by ThyssenKrupp AG, the four-year-old plant was sold in February for $1.9 billion and is now operated as a joint venture between ArcelorMittal and Nippon Steel & Sumitomo Metal Corp.
The new owners are working to expand the plant, known as AM/NS Calvert, and to bring it up to its full output capacity of 5.3 metric tons of steel a year.
With the backing of the new owners, the plant “can really deliver what car companies want going forward,” said Andy Harshaw, executive vice president of ArcelorMittal USA. “To me, it’s all about next-generation steel. We’ll be able to produce that here.”
In particular, the new owners intend to ramp up production of a product known as press-hardenable steel, which ArcelorMittal markets under the name Usibor, and an energy-absorbing, high-strength steel it calls Ductibor. AM currently makes those types of steel at a facility in Indiana, its only source of them in the Western Hemisphere.
This week, the new owners said they are spending $40 million on the plant’s slab yard to increase the number of raw steel slabs that can be held before they are processed into finished coils.
ArcelorMittal and Nippon Steel also are putting $6.7 million into the plant’s coating operation, key to producing aluminum-silicon-coated steel favored in automotive applications.
ThyssenKrupp’s plan to build a $4 billion, state-of-the-art finishing plant in Calvert was announced amid much fanfare in 2007, with $850 million in tax incentives and other subsidies from the State of Alabama. The German steelmaker constructed a highly advanced facility and expected to fill its order book by selling steel to BMW, Mercedes-Benz and Volkswagen.
But the economic recession and downturn in the auto industry dashed its plans. ThyssenKrupp also was hurt because it was importing steel slabs from Brazil, an operation that proved unfavorable because of the rise in the Brazilian currency and the country’s economic volatility.
Together, ArcelorMittal and Nippon Steel bring a different business model to the Calvert plant. They will bring in slabs from plants in Mexico and Indiana and expect to fill their order book by expanding the customer base beyond the German-owned auto plants in the U.S.
“We have relations with the [Detroit] automakers and the Japanese automakers, and [ThyssenKrupp] didn’t,” Harshaw said.
Since the February acquisition, the plant has begun supplying steel to Southern plants owned by Honda and Hyundai. It continues to supply the German-owned plants that ThyssenKrupp had primarily served.