Voest-Alpine Stahl AG

views updated

Voest-Alpine Stahl AG

A-4031 Linz
(0732) 585-2907
Fax: (0732) 585-0116

State-Owned Company
1945 as Vereinigte österreichische Eisen- und Stahlwerke AG
Employees: 31,309
Sales: Sch45.70 billion (US$4.34 billion)

Effectively, the Austrian steel industry consists of one company, Voest-Alpine Stahl AG, which manufactures bulk steel and special steel productsalthough there are still a few independent steel producers in Austria. The company has been in the public sector throughout its history, but there have been changes in its affiliations with other companies in the public sector. The company was founded in 1938 as the Reichswerke Hermann Goring in Linz, Austria, as an affiliate of the state-owned Berlin Göring-Werke. Construction of a large steelworks began in 1939 and continued throughout World War II; the first two blast furnaces were completed in 1941, and by 1944 the complex included open hearth and electric furnaces for steel conversion, and a nitrogen plant. Allied bombing caused severe damage to the works in 1944.

In 1945 the U.S. military government in Austria changed the name of the company to Vereinigte österreichische Eisen-und Stahlwerke AG (The Austrian Iron and Steelworks), of which Voest is an acronym. Reconstruction of the works commenced, and production began again in 1945. In the following year, 1946, one million tons of crude steel were melted in the companys electric furnace.

Between 1947 and 1950 the reconstruction and expansion of the works continued apace. In 1947 the first blast furnace, the first open hearth furnace, and the first coke ovens started production. The company commenced production of steels for highly stressed welded structures in 1948. In 1949 Voest decided to build the worlds first steel mill with oxygen converters; Voest led the world steel industry with this development and by the 1970s oxygen converters dominated world steel production, replacing both open hearth furnaces and Bessemer converters. The oxygen process is considered by many steel industry experts to be the most important innovation in steelmaking in modern times. Voest played a leading part in the development of the process, and this development was important in the growth of Voest. The company gained an advantage for its own steel production and created a downstream business supplying other steelworks with steelmaking equipment.

Oxygen converters, which involve the blowing of oxygen at high velocity onto the surface of molten metal in a furnace, greatly reduce the cycle time for melts and thereby increase capacity and reduce the costs per ton of the steel produced. Although the advantages of using oxygen rather than air in steelmaking furnaces had long been recognized, the development of oxygen converters had been delayed owing to the lack of cheap supplies of oxygen. The nitrogen plant that had been built at Linz during the war produced oxygen as a by-product, and the plant engineers at Linz decided to take advantage of this oxygen production to carry out a systematic program of studies.

At first the Voest engineers arranged for oxygen to be blown into the space above the iron melt in an open-hearth furnace. Although they succeeded in accelerating the conversion of iron to steel in this way, the increased flame temperature destroyed the root of the furnace and the regenerators for preheating air became clogged with dust. In the experiments which followed, they tried feeding oxygen into an electric furnace, but the heat again proved destructive and ruined the electrode holders. At this point the Linz engineers consulted the Swiss engineer Robert Dürrer who, with Heinrich Hellbruegge, was conducting experiments using oxygen in a two-ton Bessemer converter and in an electric furnace. They were injecting a jet of oxygen into the molten iron through a water-cooled lance placed just above the surface of the metal.

The first trials of the Dürrer system at Linz failed; the heat destroyed the lance, the stream of oxygen blown deep into the melt caused damage to the bottom and other refractories of the vessel, and the treatment failed to remove enough of the phosphorus impurity from the iron. Then the Linz engineers made their breakthrough. Abandoning the accepted practices of the time, they reduced the impact pressures of the oxygen jet by using a different nozzle and raising the lance further from the surface of the melt. The new approach worked well; steel of good quality was produced and there was no damage to the equipment.

The initial experiments in 1949 were made with a two-ton vessel, but the Linz engineers went on to make further tests with larger units, and in late 1952 they built process units on a fully commercial scale with vessels of 35-ton capacity. In 1953 a second plant with oxygen converters was installed at Donawitz in the ironmaking district of Styria in Austria. The oxygen converter system has since been called the LD process, from the initials of the Austrian towns Linz and Donawitz where the first two plants were installed.

The development of the oxygen process by Voest is an example of a small companyin terms of the world steel industry-making a decisive technical breakthrough and leaving large U.S., German, Japanese, and U.K. companies following in its wake. By 1988 Voest and its associated companies had installed 140 oxygen converters in steelworks around the world. Another strategy adopted by Voest was to develop a broad range of downstream engineering businesses; in 1950 the engineering shops started production of lathes, and the development of water power plants began. The combination of electric steelmaking capacity, access to cheap electricity, and the oxygen converters made Voest a leader in high quality steel production and made its costs highly competitive at a time when the European steel industry was expanding rapidly and was competitive in world markets. During the early 1950s a new slabbing mill and cold rolling stand were added to the works. At the same time, downstream expansion continued with the establishment of an industrial plant construction division.

The company continued to expand rapidly between 1955 and 1960. In 1955 a third oxygen converter was completed, and in 1959 a second LD steel mill with two 50-ton converters started production. In 1958 Voest collaborated with the German company Krupp to build an LD steel mill at Rourkela in India. Blast furnace output passed one million tons for the first time in 1955. A new 4.2 meter plate mill was added in 1958 and a new coke oven battery in 1959.

In the first half of the 1960s, several state-owned businesses were transferred to Voest, extending the companys downstream activities. Notable LD developments were the placing of a Soviet order for an LD steel mill in 1963 and the supplying of 300-ton oxygen converters to a steel mill at Taranto, Italy.

The latter half of the decade saw the spread of activities of the process plant contracting division. Examples showing the range of contracts obtained by the division were the construction of a fertilizer plant in Poland in 1965, supply of a palletizing plant for iron ore in Brazil in 1966, and of a fertilizer plant in France in 1969. In the same year an ethylene plant was completed for öMV, another company in the Austrian public sector. Expansion of steel production continued, and in 1969 crude steel production capacity was increased from 2.3 million tons to 3.1 million tons a year. In 1966, production of special steels began and a sixth oxygen converter started up. A first continuous casting machine started trials in the second LD steel mill in 1968, and in 1970 a multi-roll stand was added, which made possible the production of very thin steel sheets.

For Voest, the 1970s began with reorganization and technical development. In 1972 Voest became part of the holding company öIAG, Austrias largest industrial group. In 1973, as part of the reorganization, Voest merged with the other leading Austrian steel producer, Alpine, which operated the Donawitz steelworks. The year 1972 was a high point for investment activity. A second continuous casting machine was added to the second LD steel mill, while a third LD steel mill with a 120-ton converter and a third continuous casting machine were under construction. The wide strip mill was extended, and a cold rolling mill and a wide-strip galvanizing plant were added to the complex. Finally, a new apprentice-training shop was built. The new plants started production in 1973 and 1974.

By the time the new plants which had been started in the early 1970s were completed, the first oil shock had occurred and the European steel industry had entered a serious downturn. The cyclical fall in demand was reinforced by a switch away from steel towards other materials; greater efficiency in the use of steel, involving the substitution of thinner gauges of steel; serious recession in some European steel-using industries, such as shipbuilding; and the emergence of new low-cost steel producing countries. The change in the industrial environment affected the Austrian steel industry. In 1975, the Austrian special steels industry was concentrated at the company VEW, followed in 1976 by a merger of the separate nationalized units of the Austrian steel stockholding trade to form Voest-Alpine Stahlhandel.

Technical rationalization followed. In 1976 the open-hearth steel mill at Linz was closed, and in 1977 the first LD steel mill was shut. However, new developments were occurring at the same time. In 1979, the development of the harbor on the Traun river made possible the shipment of components for process plants weighing up to 750 tons. In 1979 and 1980 a wire mill and a continuous caster were built at the Donawitz works, which had been added to the group, and a seamless tube mill was added to the Kindberg works, another works which had been incorporated into the group. An electronics plant was opened at Engerwitzdorf in 1979 marking a new diversification for the group.

The industrial climate for the steel industry in the 1980s was far removed from the expansion of the early postwar period. The decade started with the second oil shock and recession. Between 1979 and 1985, the Austrian government helped the öIAG group with financial transfers, and the largest share of these went to the steel companies Voest-Alpine and VEW. By the end of the 1980s, a recovery had been achieved. Over the decade some updating of equipment took place. In 1981 a fourth continuous casting machine was commissioned. In 1982 a tubeworks for tubes used in oil fields was completed at Kindberg. In 1983, the worlds largest plasma melting furnace was started at the Linz works, and in 1985 an electrolytic strip coating plant was built.

The tougher industrial environment of the early 1980s exposed the weaknesses of the policy of diversification into a wide range of engineering and other industries. In 1985 the companys trading losses reached Sch 12 billion, as the result of an unsuccessful microchip venture, participation in the unsuccessful Bayon Steel Corporation in the United States, and disastrous losses at a subsidiary which became involved in speculative oil deals. This series of events led to the resignation of the chief executive and the formulation of a restructuring plan which involved 10,000 job losses. The new management team was led by chief executive Dr. Herbert Lewinsky.

Changing political perceptions of the efficiency of large conglomerate corporations led to more fundamental reorganization; in 1988 öIAG, the holding company which had controlled Voest since the end of 1972, was reorganized into seven separate companies, of which Voest-Alpine Stahl AG was one. The Austrian government had decided to partly privatize öIAG. The new Voest-Alpine Stahl AGs activities include steel making at the Linz works, steel rolling at the Linz and Donawitz works, the manufacture of special steelshigh speed and tool steelsby the Bohler companies, which are subsidiaries of Voest-Alpine Stahl at Kapfenberg and at Dusseldorf in Germany, and steel stockholding and steel scrap processing. The reorganization was designed to make the companies in the old öIAG group more efficient, to bring management decision-making nearer to the market, and to expand the businesses internationally. In April 1990 a tie-up between the Swedish company Uddeholm and Bohler, to form a strategic alliance between the two special steel producers, was announced.

Since the reorganization, Voest-Alpine has specialized in making and shaping steel; the downstream activities which Voest developed or acquired, including the process plant activities, have been hived off into separate companies. In 1989 Voest-Alpine produced 3.35 million tons of crude steel and 2.76 million tons of flat rolled products at Linz. The company had a wide range of steel finishing equipment; apart from rolling mills, it had equipment for making tubes, rails, and wire; drop forging facilitieswhich make shapes through the progressive forming of sheet metal in matched dies under repetitive blows of a hammer; and a steel foundry. The companys main investments in 1989 were designed to improve the quality of the products of the rolling mills; in addition, a second galvanizing plant was constructed.

The company estimates that high tech products now account for about 10% of turnover, and it aims to raise this share to 30%. The companys research-and-development program, which will play a part in achieving this target, includes work on new steelmaking processes, improvements to existing processing technology, and applications. One speciality is surface-treated products, including galvanized steel and plastic-coated strip steel. Evidence of the companys commitment to training is its employment of nearly 500 apprentices, equivalent to 4% of its work force.

Austria is a relatively small country, and Voest has to export in order to sell its output; 70% of its 1988 turnover came from exports. Its principal export market is the European Economic Community, followed by Comecon; only 5% of turnover is exported overseas, outside Europe and Comecon. Voest is well located to share in the demand for steel that will be generated by investment in the former East Germany and in Eastern European countries. In the postwar period, Voests success was founded on electric furnaces with access to hydroelectric power and on its brilliant breakthrough with oxygen converters. It is close to markets, and has developed specialties such as coated steels. Whether these factors will be enough to ensure the companys success in the 1990s remains to be seen.

Principal Subsidiaries

Voest-Alpine Stahl Linz; Voest-Alpine Stahl Donawitz; Bohler Kapfenberg; Bohler Dusseldorf (Germany); Voest-Alpine Stahlhandel; Voest-Alpine Rohst-Handel.

Further Reading

McGannon, The Making, Shaping and Treating of Steel, Pittsburgh, United States Steel Corporation, 1971; Cockerill, A., The Steel Industry, Cambridge, Cambridge University Press, 1974; Nasbeth, L. and G.F. Ray, The Diffusion of New Industrial Processes, Cambridge, Cambridge University Press, 1974; Hogan, W.T., World Steel in the 1980s, Lexington, Lexington Books, 1983; Jones, K., Politics vs Economics in the World Steel Trade, London, Allen & Un-win, 1986; Hudson, R. and D. Sadler, The International Steel Industry, London, Routledge, 1989.

Cliff Pratten