In 1970 the first stone was laid of what, within a few years, was to become the first Acerinox Europa factory, in Palmones, Algeciras. It was designed to produce ten times more stainless steel than the total amount consumed in Spain that year.
The above clearly shows to what extent Acerinox was founded with an eye cast on foreign markets, with a focus predominantly on exports.
At that time, a business plan so dependent on other markets and such a distinctive vision as a global company were not just ground-breaking concepts; they also entailed a great risk in a field such as the steel industry, which requires significant investments of time and money and whose returns are almost always visible only in the long term.
Acerinox remains a pioneering company in our country, a pacesetter in the internationalization process, a window through which other regions of the world can view Spain and a role model for profitability and management in international markets.
Five years after that first stone was laid, having built only a part of what was to become the most efficient stainless steel factory in Europe, the company began its international expansion with the opening of a sales office in Paris. Just like an industrial process, once the machinery had been started up and the process had been tested, the production line of offices abroad never stopped, resulting in the company currently conducting sales in more than 80 countries, operating in 40, manufacturing at six factories on four different continents, selling through 31 sales offices and having a network of 18 service centres and 26 warehouses around the world.
Acerinox is one of the world's largest companies, with a 6% share of production, and it owns three factories with an integrated process for the production of flat products: Campo de Gibraltar (Spain, 1970), the first to exceed one million tonnes per year (2001), North American Stainless, N.A.S. (Kentucky, USA, 1990), also fully integrated since February 2002, and, finally, Columbus Stainless (Middleburg, South Africa), which joined the Acerinox Group in 2002. In 2008 construction began on what was to become the fourth integrated factory of the group, Bahru Stainless, in the Straits of Johor (Malaysia).
All the above forms part of Acerinox’s global strategy, which has led to the company to become one of Spain's most internationalized companies, with more than 90% of its sales coming from outside the country and more than 60% outside Europe.
This year, owing to this degree of internationalization and for the first time since the creation of the company in 1970, more than half the Group’s employees work outside Europe. The Acerinox workforce, as of 31 December 2015, was made up of 6,506 people, of whom 3,134 (48.2%) performed their duties on the European continent. Specifically, Acerinox has 1,406 employees in America (21.6%), 1,345 in Africa (20.7%) and 621 in Asia (9.5%). Commercial companies, both domestic and foreign, account for 628 of the workers.
Internationalization has long formed an essential part of the seed which ultimately grew into Acerinox. In the late 1960s, a small group of engineers and entrepreneurs entered into discussion with the Japanese Nisshin Steel and Nissho Iwai companies to negotiate the founding contracts of the Spanish Stainless Steel Manufacturing Company, based in Spain and currently known as Acerinox. Japanese technology was essential for the process and the collaboration and exchange of learning between the two cultures were decisive factors, as was the participation of Banesto.
Exporting as the adaptation to the environment
Exporting has always been an intrinsic concept within the company, in response to a global ambition, but above all, it is due to an adaptation to the global market. Acerinox managed to adapt to survive while it was still in the making. In the early 1970s, when Acerinox Europa began increasing its production capacity, the European Coal and Steel Community (ECSC) imposed severe export quotas on European producers. These were limits which could not be exceeded, at the risk of significant fines.
Since there were considerable drawbacks for selling its product in Europe, the company looked to other markets to find outlets for its steel. Thus, by 1980 Acerinox was already operating in five countries on three continents (Spain, France, Chile, Argentina and Hong Kong), from which it supplied customers in more than 20 countries. The offices in Germany and the United States were added shortly afterwards. The latter, located in New Jersey, was the forerunner, as we will see below, of the North American Stainless (NAS) factory, as a result of which Acerinox is currently the leading company in the United States, with a large share of the market. 50% of the stainless steel cast in the United States comes from NAS.
With the exception of NAS, more than half the production of the company’s four major factories focuses on exports. One just has to take a look at the list of the 10 countries with which the greatest number of sales are conducted (the United States, Spain, Germany, South Africa, Canada, the United Kingdom, Italy, France, Malaysia and Mexico) to get an idea of the extent of the company’s internationalization. The list contains nations on four continents (Acerinox is the clear leader on two of them). They include many of the most advanced economies in the world and, together, they make up a market of over 900 million people with access to the finest stainless steel. The sales the group makes in these 10 countries account for 81% of the company’s total turnover.
Each year these exports have grown at a similar pace to the consumption of stainless steel, which is one of the few products whose use throughout the world has increased at a rate of 6% per year over the last five decades. And forecasts suggest it will continue to do so in the immediate future. According to the International Stainless Steel Forum (ISSF), consumption in 2016 will rise by 2.8% in Europe, 1.7% in the United States, 2% in China and 5% in the rest of Asia.
Expanding abroad, a major challenge full of advantages
The powerful inertia in exporting at a large company like Acerinox is often the key to smaller companies entering new markets. This experience has been seen time and again in each of the major projects for the integrated factories located in the United States, Columbus and Johor Bahru. In the latter and most recent case, about twenty Spanish companies have since entered the Malaysian market as a result of our investment in the Johor Bahru factory, with 680 million dollars approved since the start of the project.
The construction and maintenance of highly advanced integrated stainless steel production factories require a large number of key services for their execution and Acerinox seeks to promote, wherever it operates, both the collaboration with local companies and the arrival of Spanish companies. We should also mention that the experience the company acquires in these new territories is very useful for new exporters, as comprehensive legal and economic studies are performed to assess the domestic market conditions prior to making deployments there.
Acerinox has always given particular importance to the stability of a country's legal framework and the advice of the local authorities with regard to their guidance in the field of taxation and the study of fees, licences and duties. A guarantee of stability is essential for ensuring the viability of a steel project, due to its long-term orientation.
All these joint activities form a constant source of information, a particularly valuable asset. The Group has in-depth knowledge of the market throughout the world and enjoys a certain edge in the forecasting of economic cycles in different areas. The recent years of recession are a good example of this. That is why geographical diversification has allowed the Group to reduce the major risks it faces.
Thus, for example, in the latest Strategic Plan approved last December by the Board of Directors, Acerinox revealed its willingness to bolster its efforts in Europe and the United States through significant investment.
Acerinox will continue with its plans for expansion. The political and social changes which are taking place in different areas of the world are opening up new markets to the entry of products such as stainless steel and, as has traditionally occurred, the Group will remain at the forefront of the expansion.
From the start of exports to a global network
Barely 50 days. This was the time which had passed between starting up the facilities of the first production phase of the Acerinox Europa factory and its first sale abroad. More specifically, it was the period between April and June 1973, the months during which the two events occurred. The first Spanish stainless steel to be sold abroad only travelled from Algeciras to Portugal, but ventures studying new markets were taking place at the same time, in Germany, France, Italy, the United Kingdom, Finland, Denmark, Greece and Argentina. The first exports to the USA and Asia began just one year later.
It was the beginning of a process which ultimately led to giving Acerinox its true competitive dimension, exporting all kinds of stainless steel products following the starting up of its steel production facilities in 1977 and the entry into service of its hot rolling mill in 1986. It was from that moment on that Spain, which until then had traditionally been an importer of stainless steel products, became one of the world’s leading and most competitive exporters in the industry.
Following the immediate success of its export activity, it became evident there was a need for a permanent presence of personnel in these markets. It therefore began to build up its own commercial network which, as mentioned above, ultimately extended to the 31 sales offices, 18 service centres and 26 warehouses which exist today.
The process of creating subsidiary companies abroad has remained constant since the beginning and, in recent years, it has undergone considerable development, enabling the company to reach almost every market in the world.
This extensive network dates back to May 1975. Just two years after that first sale to Portugal, Acerinox set up its first foreign sales subsidiary in Paris (Acerinox France), which was followed by others in Europe and America.
The company remains at the forefront of the search for emerging markets, having launched in recent years commercial companies and offices in Vietnam, Thailand, the Philippines, Taiwan, Dubai, Mainland China, Indonesia, India and South Korea.
The acknowledgements Acerinox has received for all this international work, rewarding its endeavours to open up new markets, include the award granted in 2002 by His Royal Highness, the then Prince of Asturias and the current King Felipe VI, when he presented the Internationalization Award for Spanish Companies, organised by the Business Circle, to the President at that time, Rafael Naranjo.
Building factories in other continents: the great leap
With its international experience and ensuing market knowledge, Acerinox decided to set about conquering the stainless steel world with the construction of production plants on other continents, a challenge which still remains today and which can be divided into three stages: internationalization (NAS, in the United States), world expansion (Columbus, in South Africa) and globalization (Bahru, in Malaysia).
The most efficient factory in the world opens in Kentucky
The starting point of this process dates back to April 1990 with the setting up of a new company, North American Stainless (NAS), where Acerinox and the US Armco company each had a 50% share (Acerinox later acquired 100%). It was a major commitment to the US market, with the construction of an integrated factory, for whose execution 400 hectares of land were purchased in Kentucky, by the Ohio River.
The acquisition of the land, the construction of the infrastructure and the preparation of all the necessary facilities to start up a factory with the capacity to produce 200,000 tonnes of flat products per year represented the greatest investment in history the Spanish industry had made in the United States up to that point.
The technology developed throughout the years of industrial experience in Los Barrios (Cádiz) was applied to the construction process, together with the advances acquired with its Japanese partners which, thanks to the Spanish engineers, were improved upon and exported to the US plant.
Acerinox undertook this major challenge with the assurance of the experience it acquired in the United States and its in-depth knowledge of the market, to which it began exporting in 1974 and where it had had a subsidiary since 1982 (the company in New Jersey mentioned above).
NAS thus became Acerinox’s first global achievement, making it fully multinational, providing it with a vision of the future and fuelling its desire to row in the direction of growth, which was to be the following step.
Geographical distribution (by continents) of Acerinox’s turnover in the last 10 years.
We should highlight that this process, as well as those that followed, were only possible as a result of a team of young, committed, imaginative and resourceful professionals who faced these challenges and ultimately built what is regarded as the most competitive stainless steel factory in the world and the leader of the US market.
Following a comprehensive study, Acerinox concluded that there were major arguments in favour of locating the factory in Kentucky. It is four hours’ drive from Chicago, nine hours from the Midwest, six hours from the east coast and eight from South Carolina, all by truck. The factory can ship its products and receive raw materials via the Ohio River, there is a rail connection and containers pass through the city. As a result of the above, 70% of US consumption is one day, or less, from distribution. These are great advantages which lower costs and reduce delivery deadlines, factors essential for maintaining leadership in such a demanding market. The factory included all the phases of production, thereby becoming integrated, twelve years after the process began.
NAS is the most efficient stainless steel factory in the world, supplying about 40% of the American market and leading the manufacture of this material on the continent. It is at the forefront of technology and materials and has implemented the most sophisticated systems and plans for the optimization of production processes. All this is due to the constant investment in its facilities. In the latest phase, barely a year ago, the company announced it would put 116 million euros towards developing a bright annealed steel line and a cold roller in order to increase production capacity and to extend its range of end products.
NAS’s work was acknowledged last April with the CiCi (Corporate Investment and Community Impact) prize, awarded by the Trade & Industry Development magazine. The winners (NAS, General Motors and Ford) were selected from among companies throughout the United States.
In the case of North American Stainless (NAS), the CiCi presented the award to the company for the continuous investment programs it has carried out since 1990 and its latest approved project, consisting of 116 million euros and announced by the company in March 2015, for the construction of a bright annealed steel line and a cold roller in order to increase production capacity and to extend the factory’s range of end products.
This factory supplies stainless steel flat products to the whole of the United States, as well as Canada and Mexico.
Columbus to conquer the southern hemisphere
With the experience acquired in Algeciras and NAS and the completion of almost all the latter’s initial investment, Acerinox set about the following challenge to expand its brand and products throughout the world. To do so, it acquired the Columbus Stainless factory in South Africa in 2002.
Columbus is the only stainless steel factory in Africa and is located in the South African region of Mpumalanga, just 100 kilometres from Johannesburg.
In order to acquire it (thereby constituting an exception to the traditional policy of organic growth), the company assessed its location and good connections, the price of energy, which would reduce the cost of production, its proximity to sources of basic minerals as raw materials in the manufacture of the product and the ease of supplying large markets across the Atlantic and Indian oceans.
The company’s shareholders include the South African government, with 24% of the capital held by its Industrial Development Corporation (IDC).
Columbus supplies virtually the entire African continent and its products are also distributed throughout the Middle East and areas of Asia and South America. Exports of products from this factory account for almost 70% of production, with South Africa consuming the remaining third.
Through Columbus, Acerinox supplies about 80% of the stainless steel consumption needs of the African continent.
Bahru Stainless: the great challenge of globalization
Having taken a step towards internationalization by moving into the United States and developing its expansion towards the southern hemisphere with Columbus, there remained the challenge of addressing the globalization of the company. For this purpose, in February 2008 Acerinox, S.A. made the decision to undertake a new project in Malaysia. It was agreed to develop it in phases with a constant process of implementation of production lines and, following a thorough feasibility study in which other alternatives were included, the construction of an integrated production plant took place in Johor Bahru (Malaysia).
The land acquired, covering 140 hectares, has direct access to the sea and is situated in the Straits of Johor (one of the busiest routes in the world), opposite Singapore and a strategic location of enormous value for distribution and commercial work.
On 15 January 2009 the definitive agreement was signed to carry out the project, for which Acerinox holds a 67% stake. Just a month later the ceremony to lay the first stone of the factory was held and, on 2 December 2010, the first coil was processed on the finishing lines.
Thus began the process to build the factory, from which Acerinox can supply one of the most populated areas in the world, whose countries have the highest current-day rates of growth. Malaysia, Indonesia, Vietnam, Mainland China, Korea, Laos, the Philippines, Thailand, Singapore and India are the major markets to which the Bahru products are sold.
It is one of the most modern factories in the world and a technical and technological benchmark in the sector. The investments and processes which have been applied, owing to the know-how of the Group and its previous experience, make it one of the factories with the greatest potential in the world.
In 2012 the process for the construction of the second phase began, whereby the annual production capacity was increased to 400,000 tonnes. It specializes in specific types and reduced thicknesses, products with a higher added value.
The final phase of the project will involve an integrated stainless steel factory with a capacity for one million tonnes of steel and 600,000 tonnes of cold rolling.