“Success depends on our transformation.”
The steel industry is undergoing a transition. In this interview, our chief officers talk about how they are meeting market challenges, what opportunities they see, and what global megatrends have to do with the future direction of SMS group.
WHAT WERE THE GREATEST CHALLENGES FOR SMS GROUP IN 2018?
Burkhard Dahmen: The market we operate in is becoming more challenging than ever worldwide. On the one hand, it rewards the best and the boldest, on the other hand, it punishes those who aren’t willing or able to move with the times.
Torsten Heising: In general, SMS group is on course to get back to our former strength. Financially, we are gaining ground, and if we maintain our discipline and commitment to our Task Force ʼ21 program, we’ll achieve our goal of profitable growth and an operating result of seven percent.
Prof. Dr.-Ing. Katja Windt: Digitalization in the metals industry is certainly one of the major innovation drivers for the future. At an early stage, and in dialog with our customers, we started creating groundbreaking and innovative solutions in this area. Today, we already offer new products and services based on digital technology that can significantly boost our customers’ efficiency.
Prof. Dr.-Ing. Hans Ferkel: SMS group has also defined its goals in other areas as well. When you enter new territory, you have to try especially hard to keep up. But that doesn’t put us off. The latest examples are our investments in green steelmaking, the production of e-fuels, and the utilization of waste heat from steelmaking.
“The changing market makes demands on us that we must face up to.”
Torsten Heising, CFO, SMS group GmbH
AS “THE LEADING PARTNER IN THE WORLD OF METALS,” SMS GROUP CONSTANTLY SETS NEW BENCHMARKS FOR THE ENTIRE INDUSTRY. WHAT WERE THEY IN 2018?
Michael Rzepczyk: One highlight was definitely the commissioning of the world’s most powerful and modern pull-down hydraulic closed-die forging press for the OTTO-FUCHS-Group at its Weber Metals location in California. SMS group used some 9,000 tons of steel in its construction. That’s a totally new dimension for the future of forging. Shandong Iraeta also set a new record thanks to us: Its newly developed ring rolling machine can seamlessly roll rings up to a diameter of 16 meters.
Prof. Dr.-Ing. Hans Ferkel: Paul Wurth’s participation in Sunfire GmbH is a significant move. The company develops and manufactures high-efficiency electrolysis and fuel cells. This is one way we are getting ready for the imminent transition of the steel industry to CO2-free steel production. Hydrogen will play an important role in the future. We are also proud of the development of a completely new design for spray heads used to cool dies in forging presses. The design, engineering, and use of 3D printing won it the German Design Award.
Prof. Dr.-Ing. Katja Windt: For a customer in Canada, we equipped an entire steel mill section with a new process optimization and planning system based on our X-Pact® process guidance solution. Big River Steel in the US and Shandong Iron & Steel Group Rizhao in China are further examples that show how we can digitalize the complete value creation chain from liquid metal to the finished product. In the field of port logistics we achieved an impressive advance. Together with DP World, we are developing a new, intelligent storage system for containers. Each container is stored in its own bay, yet is freely accessible at all times without the need to move any other container. This increases speed, energy efficiency, and safety while slashing costs.
WHAT ARE THE TOPICS SMS GROUP FOCUSED ON MOST IN 2018?
Burkhard Dahmen: In all our business activities, figures undoubtedly play an important role. Thanks to a consistently strong order situation, SMS group was able to maintain its financial independence. Technical service remains a focus for us because it forms the heart of our partnership with our customers. As our attention to megatrends shows, we are also tackling future topics such as digitalization, environmental protection, and New Horizon.
Michael Rzepczyk: In 2018, we started to focus on tighter project management – this effort is also reflected in our Task Force ʼ21 initiative. Projects are increasingly becoming smaller in scale, more complex, and more price-critical, so discipline in their processing is crucial. Important here are software and tools that help maintain a clear view of project-relevant aspects and interpret them correctly. That means project managers can detect and remedy any problems at an early stage.
“Technical service forms the heart of our partnership with our customers.”
Burkhard Dahmen, CEO, SMS group GmbH
TASK FORCE ’21 IS A TRANSFORMATION PROGRAM THAT AIMS TO STRENGTHEN OUR CORE BUSINESS. WHAT IS THE IDEA BEHIND IT?
Torsten Heising: The changing market makes demands on us that we must face up to. So we need to introduce new methods in the company that not only improve project processing but also cut costs. The various measures are being tackled in central projects. These define the frameworks and the responsible managers who focus on implementation.
THE PROGRAM IS DESIGNED TO INCLUDE ALL EMPLOYEES. YOU YOURSELVES ARE INVOLVED AS SPONSORS OF THE PROJECT. IS IT ALSO ABOUT STRENGTHENING THE CORPORATE CULTURE?
Torsten Heising: Yes, absolutely. We want all employees to be actively part of the transformation program. Because if they help shape this process, they are more likely to support the decisions made. That also means anchoring new methods and ways of working in practice.
Prof. Dr.-Ing. Hans Ferkel: That’s why it’s important to us that the employee interests that the Works Council distilled from the employee survey become part of the program. We take our employees’ criticism very seriously and want to achieve improvements together wherever there are difficulties.
“Good cooperation only works on an equal footing, on the basis of partnership.”
Michael Rzepczyk, COO, SMS group GmbH
WORKING IN PARTNERSHIP REMAINS APRIMARY ASPECT OF OUR COOPERATION WITH CUSTOMERS OF SMS GROUP. HOW FAR CAN THAT bE IMPLEMENTED?
Michael Rzepczyk: We have very good experience of this because we believe good cooperation only works on an equal footing, on the basis of partnership. We ensure a direct exchange with the customer to find out which specific solution is best in each case. The initial situation and the requirements are different from customer to customer. We take this into account every time.
Burkhard Dahmen: And we continue to take our position as the Leading Partner in the World of Metals very seriously. It’s directly connected with the four megatrends we turned our attention to in 2018. They show how changes will shape the future of society and what market developments we need to be ready for. Ultimately, our focus on megatrends gives us the instruments that will help us retain our market leadership in the future.
Torsten Heising: The megatrend urbanization is all about the growth of cities. Especially in large cities, building construction will have to meet higher requirements, and this demands even better materials. The steel industry must upgrade its equipment to meet this challenge. A good example is Maanshan Iron & Steel in China. With its flexible section mill, it can produce not only heavy but also ultra-heavy jumbo beams. They are necessary for the construction of especially tall buildings.
Prof. Dr.-Ing. Katja Windt: Digitalization and the related area of Industry 4.0 are today’s main development fields. Intelligent interconnection of data and machines provides the basis for added value creation. Our electrical and automation system solutions provide the vast volumes of data that are essential for extensive digitalization. To successfully support connectivity, we are developing new networking expertise for our customers as well as a holistic and systematic understanding of the current and future digital transformation.
Michael Rzepczyk: Mobility takes many forms. Rail, road, water, and air. Decisive for fast transport vehicles are lightweight materials. So it’s no wonder the demand for aluminum is growing. Thanks to two new electric submerged-arc furnaces, Press Metal Berhad, South-East Asia’s leading aluminum producer, has optimized its silicon production. This is a key element in aluminum alloys.
Prof. Dr.-Ing. Hans Ferkel: Sustainable plant operation is increasingly important in the steel industry. For a long time, we have been designing efficient solutions that reduce environmental impacts. One example is the revamp of the gas cleaning plant at Uddeholm AB in Sweden. Now, the plant extracts waste gases much more effectively, and no hazardous substances are generated during scrap drying.
“Our digitalization strategy aims to use data to create new value for our customers as well as within SMS group.”
Prof. Dr.-Ing. Katja Windt, CDO, SMS group GmbH
WHERE IS SMS GROUP HEADED IN THE FUTURE?
Prof. Dr.-Ing. Katja Windt: We have successfully developed and launched our digitalization strategy. Now we need some time to explain and discuss it internally. When we look at the opportunities offered by digitalization, we are not only thinking of major projects. We also implement our digital products even in small projects and revamps. And it’s especially important to us that every customer can create its digital future with us. The future success of our digital products and services portfolio also depends on our transformation into a digital company. We have a clear strategy and roadmap for improving our IT landscape and process quality. It will be implemented step by step, and will make our SMS group fitter for tapping into digital potentials now and in the future.
Burkhard Dahmen: Due to our current efforts, we are very optimistic. Driving ahead without our digitalization offensive, marketing our current and future New Horizon innovations, and acquiring valuable additions where they make sense makes us well placed to retain our leading position. We are confident this is how we’ll remain successful in our innovation-driven core business of sales, engineering, and service.
“Sustainable plant operation is increasingly important in the steel industry.”
Prof. Dr.-Ing. Hans Ferkel, CTO, SMS group GmbH
Our aim is to be the global leading partner for the metal industry. We believe it’s our duty to support the success of our customers along the entire value creation chain. Quickly, flexibly, and reliably, we develop custom, state-of-the-art solutions so our customers can successfully focus on their core business. We do this in four key fields of activity:
We offer our customers turnkey holistic solutions for innovative plant technology. All this comes in a complete package including buildings and infrastructure, tailor-made logistics, and the necessary auxiliary facilities.
Applying the latest innovation methods, metallurgical process know-how, and technology expertise, we develop new digital products that sustainably contribute to our customers’ success.
Drawing on our many years of experience and valuable knowledge, our modernization experts revamp yesterday’s plants so they meet today’s technology standards. They accomplish these results precisely and efficiently.
Technical service from SMS group is available at more than 50 locations worldwide. Our specialists provide highly effective service packages tailored to our customers’ needs along the entire metallurgical process chain.