Amid companywide cutbacks and thousands of layoffs, US Steel is making a strategic investment in one aspect of the steel business that has been steadily growing in recent years: advanced high-strength steels for lighter cars.
The Pittsburgh-based steelmaker spent $25.2 million to buy AK Steel’s interest in the Double Eagle Steel Coating Co. in Dearborn, Mich. The 700,000-ton electrolytic-galvanizing line, which will become part of US Steel’s Great Lakes Works in the Downriver Detroit suburbs, will increase the company’s ability to provide Advanced High-Strength Steel, including third-generation grades that are still under development.
The market for such metals is expected to grow to $22 billion by 2019 as automakers race to meet much tougher emissions standards, according to a Research and Markets study.
US Steel President and CEO Mario Longhi said last year the steel industry got off to a slower start developing lighter metals that are needed to meet a new federal mandate that vehicles must average 54.5 mpg by 2025. Aluminum and other lighter but more expensive metals have been stealing market share away from steelmakers as the car companies look to cut out excess weight.
The US Steel newly acquired finishing line in Dearborn will provide mostly automotive customers steel products with coatings of zinc or an iron/zinc alloy.
“Continuing investment into our operations to provide the highest quality product critical to our customers’ success directly supports US Steel’s ongoing transformation journey,” Longhi said. “We seek to create innovative solutions for our customers now and well into the future. By increasing our operational footprint at Great Lakes Works, we are creating special synergies with our automotive customers as they seek to reach critical safety and fuel economy standards.”
AK Steel employees will continue to work at the facility for a 90-day transition period, and then US Steel will decide how much staff it needs to run the operation.