This year has been one of celebration at Steel & Tube. It has marked 60 years since the business began, and delivered on some of the most significant internal changes in our history.
We organised a range of activities to commemorate the anniversary, providing opportunities for us to engage with long-standing customers, thank them personally for their loyalty and acknowledge their contribution over the years.
Sixty years is a long time for any company to remain successful. That kind of longevity doesn’t happen by accident. It requires adaptation, re-alignment and adjustment to stay ahead of market changes, and respond to ongoing and shifting customer requirements.
Over capacity in steel manufacturing is a continuing issue. Despite some older mills closing, and domestic demand across Asia softening, China continues to increase its output.
The result is we are seeing both raw material and finished steel prices softening. And with competition intense across many key products and market sectors, margins remain restrained.
Agility is key
All of this underlines the ongoing need for industry operators to remain agile, flexible and open to new opportunities and new ways of working to satisfy increased customer requirements for quality and traceability, while balancing the need to keep costs down.
Steel & Tube opted to tackle the issue head on in 2009 when we began redefining our operating model by introducing the One Company ethos and moving from 11 separate product divisions to two. The initiative has enabled us to better align our operations to deliver an enhanced service in a highly competitive market.
To augment that, this year we acquired S&T Stainless, formerly a division of Tata Steel International, one of the world’s largest steel producers. Both businesses are seen as highly complementary. Although both enjoy extensive geographic coverage, S&T Stainless leads in plate, sheet and coil offerings and Steel & Tube in long products and fittings. Stainless also brings with it some unique products – ComFlor is one – supported by specialist expertise.
The acquisition is a natural coupling for Steel & Tube, complementing our long-running re-invigoration, begun in 2009, which has its outcome in an all-of-product offering. It means that, depending on their project or sector, customers can now source their requirements via a single point of contact – from reinforcing through to structural and stainless steel, purlins, fire suppression systems, ventilation systems, fastenings, cladding, profile metal roofing and rural products.
The One Company concept has provided the potential to profoundly alter customer expectations and their perception of the steel industry.
Managing supply chain issues
To underpin its capability, we looked to our supply chain operation to address the issues faced by customers as they sought to reduce supplier numbers. Operating under the One Company model means we’re better placed to source and supply any number of product lines and, where possible, combine shipping, thereby offering cheaper freight costs and faster delivery times.
Our geographical footprint, made up of 48 facilities around the country, offers customers local access to a national product range running to more than 50,000 lines.
At around the same time as we began the One Company remodeling, the Christchurch earthquakes of 2010 and 2011 prompted a wake-up call for the building and construction industry, and a rethink of several building standards across the sector.
Increased customer expectations
As changes to the New Zealand Building Code were introduced, the industry faced increased customer expectations – fundamental to a market now looking to service the Canterbury rebuild – around product capability, traceability and lifecycle. Our range of Seismic SE offerings provided an easy match to the specifications listed in the steel reinforcing standard.
Each sheet of reinforcing mesh is tested and tagged with an identifier that relates to its test certification, date of manufacture and quality control data. Designers, specifiers and contractors select the correct reinforcing directly from the standard, without worrying about conversion factors or equivalent product specification. The tag remains with the sheet throughout the life of the product, so performance can be tracked years after its installation.
The initiative prompted us to enhance our traceability capability to include identity numbers, manufacturing line codes, batch test certificates, third-party chemical analysis – in fact, all the way back to the mill certification where the material was originally produced.
The way companies connect with their customers continues to advance and having astute systems and processes accessible, particularly through sales tools technology, is fundamental to good customer service.
Back in the early 90s, Steel & Tube was one of the first companies to introduce an online business process system. Now we’re introducing a unified communications platform with mobile voice, instant messaging and telepresence capabilities. A centralised customer database will offer access to key customer information, current orders, product volumes and purchasing history. By profiling industries and product categories of interest, it offers us the ability to notify customers when new lines become available and suggest and new solutions.
The way ahead
So what of the future? In the short term, the steel industry – in New Zealand and globally – remains highly competitive and against a global backdrop of softening raw material and finished steel prices, pricing remains subdued.
Add to this investments made in Australia and Brazil for iron ore exports, creating further excess capacity and driving down iron ore prices in the international markets. Spot prices have fallen from US$135 per tonne in 2013 to below US$70 per tonne at the time of writing.
But while steel prices in US dollar terms may have stagnated, a weaker kiwi dollar has actually increased the landed price of imported steel. Our industry will be looking to recover the costs in the coming months, therefore increasing steel prices in the domestic market.
Longer term, there are two key issues: Firstly, though we welcome the Crown’s construction investment, which continues at unprecedented levels, its All-of-Government (AoG) purchasing initiative has the potential to bring further pressure to bear on supplier margins.
Steel & Tube has made considerable efforts into the Ministry of Business, Innovation and Employment’s (MBIE) AoG initiative, as an individual company and in contributions via our industry representative bodies, HERA and Metals New Zealand. We acknowledge its decision to exempt steel from the process at this stage but our industry should be on notice that this could change.
Secondly, pre-fabricated steel imported from off-shore suppliers has the potential to erode the domestic fabrication industry, and create more administrative work around proving compliance with relevant codes.
This is likely to impede the efficiency goals we are striving for in the New Zealand construction industry while at the same time increasing the potential for quality-related issues.