Production of 100K tons is the goal for Marcegaglia after acquisition of Novero
Following the acquisition of Novero by the Marcegaglia group we interviewed Roberto Ferrari, chief operations officer of Marcegaglia carbon steel tube division.
Marcegaglia is a leading company in the world of steel: how does the purchase of Novero strengthen its position and which development opportunities generate the new large production capacity in the sector of drawn tubes? These are operations aimed at increasing the production capacity of the group, and of Marcegaglia Carbon Steel, in particular, of the production of drawn tubes. Within the network Marcegaglia, tubes are processed at the establishment of Boltiere, realization of very high production performances (only in 2017 it registered a production level equal to six times the Novero output). Starting from these results we felt the need to expand production capacity and the group opted for the choice to acquire Novero SpA. Our goal is to get to produce 100 thousand tons of cold drawn tubes in Italy. Moreover, as emerged during due diligence, the operation assumes an important strategic value since Novero is already a customer of Marcegaglia Casalmaggiore, which produces the rough-hewn tubes that feed both the Boltiere and Novero production units. This is a positive choice in terms of production verticalization which, thanks to Novero’s planned production increase, allows a reduction in the costs of Marcegaglia Casalmaggiore.
Novero is based in Rivoli (TO): what are the consequences of this acquisition for the Piedmont area? Marcegaglia also has a factory in Dusino San Michele: what role does Piedmont play in the company’s production strategies? The acquisitions that contributed to tripling the production of the Dusino San Michele plant have in turn determined an increase in the number of collaborators. On this basis, even the Marcegaglia-Novero operation could generate an increase in the workforce. We believe that production in Piedmont is important for localization, even if both companies are heavily looking for exportations.
The steel world is getting ready to face new challenges, first and foremost that of tariffs: what are the possible scenarios in your opinion? On several occasions, our group has expressed itself against the protectionist positions that with the imposition of duties on aluminum and steel favor producers, as well as risk damaging heavily the occupation in our country. For our part, we work annually over five million tons of steel – we asked Federacciai to use the safeguard clause, applying a “global quota” to the import of hot coils in Europe in compensation of that direct in the United States, while in Eurofer it opts for a “per country” quota, which would penalize converters like us, raising prices for the processing industry. This is the reason that has generated our dissent towards the line that has been imposed in Federacciai, favorable to the introduction of quotas for the importation of steel different from country to country on the basis of the level of importation average in the last three years, as part of the production blocked by American duties (about 25%) will be poured into Europe. Marcegaglia is in principle opposed to duties, especially if practiced to favor producers. We must not lose sight of the fact that Italy is in deficit on the production-transformation scale, in the sense that it produces much less steel than what it transforms, with extra-European purchasing channels active for years. Protectionism usually leads to higher inflation and, therefore, to consumer harm.
Following the acquisition, a greater production of drawn tubes was announced, for a turnover exceeding 40 million euros. Why do drawn tubes play such an important role in the steel and tube industry? The drawn tube, from ERW welded pipe, is registering interesting growth rates as the demand for this product has increased by the automotive, cylindrical and many other sectors. Moreover, thanks to the innovations of the process, today it is possible to realize very particular drawn and very different shapes from the traditional round tube, which respond to the best market demands.