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Deals with the predicament faced by the USX management regarding investment in new technology vs continuing with the old technology.
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USX CORPORATION
Anish Khandelwal 18/009
Manpreet Singh 18/145
Puroo Soni 18/158
Sanjit Sahoo 18/164
Sujit Kumar 18/170
COMPANY BACKGROUND
• Assembled in 1901 as the United States Steel Corporation through a series of mergers by JP Morgan and Judge Elbert Gary
• Core was Pittsburgh based Carnegie Steel Corporation
• A fully integrated company where supplies of iron ore, limestone, coal were extracted by mining divisions and transported to steel mills
• In 1917, USS was the first corporation inn America to burst through $1bn revenue barrier and employed 168000 workers
• In 1990, USS placed 2 other mills with capacity for 2.6mn tons of finished steel products in Ohio and California into JVs with Japan’s Kobe Steel and Korea’s Pohang Steel
• Currently producing hot and cold rolled sheets, strip and tin products
STEEL (FLAT) MANUFACTURING PROCESS
Reaction of iron ore with oxygen, limestone, coke in blast furnace
Remove carbon and other impurities by adding small amounts of alloying metals
Slabs were rolled into desired shapes – Hot Rolling technology
Step 1
Step 2
Step 4
Step 3
STEEL (FLAT) MANUFACTURING PROCESS (CONT..)
Blast furnace
Basic Oxygen
Converter
Ingot Molds
1-stand 44’’
slabbing mill
Roughing Mill
6-stand Finishing
Mill
Continuous Cold
Rolling Mill
Temper/Skin Pass
Mill
Hot dip - final
product
Rail transport
Capital Cost
[CSP> Thick slab]
Flexibility
[CSP> Thick slab]
Criteria for Evaluation
Criteria for Evaluation
Current Plan
Upgradation of the Mon Valley steelmaking
complex, as it required large modernization
investments
Keith Kappmeyer just about to sign the
agreement
$600 million investment to be made in 2 phases
1st phase : Design, building & installation of a continuous slab caster
at Edgar Thompson works, costing $250
million
2nd phase: Upgrading the Irvin hot rolling
mill, with an approximate cost of
$300 million
CONTINUOUS THIN-SLAB CASTING
Not yet commercially
proven
Being tried by Nucor Steel, the largest minimill
steelmaker at its new greenfield
site
Would require the caster to run at 4
to 5 times the conventional
speed
Two major innovations as part of Compact Strip Production
Coupling was a necessity, not an
option
Capable of reducing steel
thickness by 50% for fine grained
steel
Continuous thin slab casting
Coupling of rolling & continuous casting
Technological Process Alternative
18/04/2023
USX Corporation : One of the world’s premier integrated steel producers
Rapidly changing process technology in the steel industry
Increasing competition from “minimill” steel manufacturers, who enjoy the minimill cost advantage
Important to assure that USS maintains a strong competitive position in the hotly contested North American market for flat rolled steel products
Current investment would force USS to operate with the installed technology for at least a decade, before it considers replacement again
Situation Analysis
EVALUATION OF PROCESS ALTERNATIVES
Reduces final cost of sheet and strip steel productionCuts energy consumption by more than half during rolling process, cue to couplingLower capital costs involvedUsed equipment technically similar to proven thick slab equipment
Option still not commercially provenAdaptation of CSP to USS’s existing customer base would be difficultIssue in the conceptual configuration of CSP at Mon Valley, due to the physical distance between E.T. and Irvin MillsInvesting in CSP would cause USS to commit to the entire project at the outsetOperating cost savings through CSP were not encouraging
Posi
tives
- C
SP
Neg
ativ
es- C
SP
STEPS TO BE TAKEN FOR IMPLEMENTING CSP TECHNOLOGY
Install new thin-slab caster & build a new rolling mill at E.T. works
Design special rail cars to transport molten steel to Irvin
Install electric arc furnace at Irvin, to feed CSP system
Transport cooled thin slabs by rail, to re-heat & roll at Irvin
Build a new greenfield site with CSP facility
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999Total Market (mt) 85.5 91.4 63.8 72.2 83.7 81.4 77.5 82.9 87.9 85.7
USS's market Share (%) 21% 20% 16% 18% 17% 19% 12% 13% 16% 14% USS's Market (mt) 17.8 17.8 10.3 12.6 14.2 15.5 9.1 10.8 13.8 12.2 Sheet & Strip % 45% 64% 68% 62% 69%
USS's Sheet & Strip (mt) 8.0 9.1 7.3 8.6 8.4
Total Market of Sheet & Strip(mt) 38.1 41.2 32.4 41.8 46.7 45.6 44.6 46.9 47.4 47.2 48.3 49.4 50.6 51.8 52.9 54.2 55.4 56.7 58.0 59.4
Market share of USS in Sheet & Strip
19.5%
19.5%
15.6%
18.1%
17.8% 18% 19% 19% 20% 20% 21% 21% 22% 22% 23%
USS's required Output 8.84 9.29 9.75
10.24
10.74
11.26
11.80
12.35
12.93
13.52
SUFFICIENT CAPACITY TO CATER TO DEMAND
Microsoft Excel Worksheet
Required capacity in 1999=13.50 MTCurrent Capacity after upgradation=11+2.6=13.6 MT
RECOMMENDATION
Implement the first phase at E.T works to appease the workers and wait for the CSP to evolve
If CSP succeeds, start an electric furnace at Irvin mill without going to second phase
Else go to Phase 2
SIG
N
TH
E
PR
OPO
SA
L