Other Free Encyclopedias » Company History » Metal Manufacturing & Fabricating

Voestalpine Ag Business Information, Profile, and History

steel company stahl oxygen

Voest-Alpine-Strasse 1
A-4020 Linz
Austria

Company Perspectives:

Compared with other companies in the sector, voestalpine remains one of the few European companies reporting solid profits.

This is the result of a consistent strategy, to make the transition from a steel producer to a steel-processing Group. Not least, the close cooperation with customers, evident in a multitude of research and development projects with renowned automobile manufacturers, shows that voestalpine has taken advantage of the opportunity to differentiate itself from the large-volume steel producers as a comparatively small but flexible company by means of a targeted niche policy and customer orientation, and to establish itself in many different areas as the market or technology leader.

History of Voestalpine Ag

Formerly Voest-Alpine Stahl AG, voestalpine AG is a holding company for numerous subsidiaries, whose activities include the manufacture, processing, and sale of steel materials. Privatized in the early 1990s and listed on the Vienna Stock Exchange in 1995, voestalpine is among the largest industrial enterprises in Austria, with sales of EUR 3.17 billion and a workforce of about 16,000 in 2002. In recent years voestalpine has sought to distance itself from its image as a steel producer and increase its emphasis on steel processing activities, investing heavily in research and development for high-quality, high-profit steel products. The voestalpine Group is currently comprised of four divisions: Voestalpine Stahl, a high-quality steel producer; Voestalpine Railway Systems, which offers railway engineering and infrastructure planning services, as well as high-tech rail products; Voestalpine Profilform, which produces shaped tubes and hollow sections, as well as other components; and Voestalpine Motion Division, which develops and produces automotive components.

Company Origins: 1938-48

Effectively, the Austrian steel industry consisted of one company, Voest-Alpine Stahl AG, which manufactured bulk steel and special steel products--although there were still a few independent steel producers in Austria. The company was founded in 1938 as the Reichswerke Hermann Göring 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 company's 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 steel for highly stressed welded structures in 1948.

Leading the World Steel Industry with a Revolutionary Innovation in 1949

In 1949 Voest decided to build the world's 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 byproduct, 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 iron making 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 was an example of a small company--in 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.

Expansion and Diversification in the 1950s and 1960s

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 kept 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 expanded 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 company's 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.

Reorganization and Technical Development in the 1970s and 1980s

For Voest, the 1970s began with reorganization and technical development. In 1972 Voest became part of the holding company ÖIAG, Austria's 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 that 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 toward 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. New developments were occurring at the same time, however. 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 that 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 oilfields was completed at Kindberg. In 1983, the world's 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 company's 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 that was 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 that 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 partially privatize ÖIAG. The new Voest-Alpine Stahl AG's activities included steelmaking at the Linz works, steel rolling at the Linz and Donawitz works, the manufacture of special steels--high speed and tool steels--by the Bohler companies, which were 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.

After the reorganization, Voest-Alpine Stahl specialized in making and shaping steel; the downstream activities, which Voest developed or acquired, including the process plant activities, were split off into separate companies. In 1989 Voest 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 facilities, which make shapes through the progressive forming of sheet metal in matched dies under repetitive blows of a hammer; and a steel foundry. The company's 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 then estimated that high-tech products accounted for about 10 percent of turnover, and it aimed to raise this share to 30 percent. The company's research and development program, which would play a part in achieving this target, included work on new steelmaking processes, improvements to existing processing technology, and applications. One specialty was surface-treated products, including galvanized steel and plastic-coated strip steel. Evidence of the company's commitment to training was its employment of nearly 500 apprentices, equivalent to 4 percent of its workforce.

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

The Privatized VA Stahl Defending Its Autonomy in the 1990s

In the 1990s, as the European steel industry was being transformed by consolidation, Voest was intent on attaining sufficient girth to fend off acquisition by a larger company, and expansion into Eastern Europe offered critical opportunities for growth. To this end Voest scored a major victory in 1992 when it acquired half-ownership and managerial control of the Dunaujvaros plant in central Hungary, the country's largest cold-rolling mill. The investment gave Voest a foothold to the Hungarian market and furthered its quest to become the primary steelmaker in east-central Europe.

By 1993 Austria's ambitious program to privatize much of its industrial sector was finally underway. That year, with the breakup of the state holding company, Austrian Industries, Voest-Alpine Stahl and its sister company, Voest-Alpine Technologie, became independently established. VA Technologie AG, the engineering company, made its initial public offering on the Vienna Stock Exchange in 1994, and Voest-Alpine Stahl (VA Stahl) followed suit in 1995. VA Stahl's initial issue of 11.2 million shares--8.2 million shares offered by OIAG, the state industrial holding company, and three million new shares--at Sch 285 per share represented one of the biggest privatizations in Austrian history.

The struggle to maintain autonomy remained paramount for VA Stahl, and the company continued its strategy of international expansion. Not all of VA Stahl's acquisition attempts were fruitful, however. In 1997, the company attempted to purchase the steel division of Germany's Preussag but was rebuffed by Gerhard Schroder--then prime minister of Lower Saxony--who refused to admit a foreign takeover. Another of VA Stahl's major expansion opportunities fell flat in 1999, when the negotiations for its acquisition of the Sendzimira steel mill in Poland reached a stalemate, and VA Stahl was compelled to withdraw its bid.

More successfully, in 1998 VA Stahl acquired the Birmingham, England-based engineering company Metsec. Together, the companies would employ 1,800 people and produce roughly 450,000 tons of steel per year, an increase of 80,000 tons to VA Stahl's own output. Further, the acquisition broadened VA Stahl's portfolio of steel products for industrial and commercial building construction. Also in 1998, VA Stahl entered a joint venture with the German company Vossloh AG to acquire more than 90 percent of the shares of VAE AG, the Austrian world leader in rail switching equipment manufacturing.

By expanding its operations into niche markets, both the Metsec and the VAE acquisitions helped to insulate VA Stahl from the dramatic cyclical downturn that hit the steel industry in the late 1990s. Indeed, in addition to the cyclical volatility of the company's core steel business, expansion opportunities in this area were seen as extremely limited, and VA Stahl was keen to broaden its activities to include higher value, more profitable products in complementary areas of business. This initiative became central to the company's forward strategy for the new century.

To this end, the VA Stahl subsidiary Voest Alpine Stahl Linz GmbH launched a concentrated effort to develop its interests in processing activities, particularly in the area of products for the automotive industry. In September 2000, it acquired Rotec Zug AG, a Swiss manufacturer of precision steel pipes. Part of Rotec's specialty involved its ability to deliver products ready for installation. As such, about 60 percent of Rotec's output went to the automotive industry. VA Stahl Linz GmbH expected to realize significant synergies with Rotec, based on the companies' similar client structures.

Effecting an Image Change for the 21st Century

In the early years of the new century, as the problem of overcapacity in the worldwide steel market persisted, VA Stahl distinguished itself as one of the few European companies in the industry to report consistently solid profits. Continuing its strategic move away from steel production and toward steel processing, the company intensified its investment in the automotive supply industry. In June 2001, the company announced a restructuring plan whereby it would operate under four main divisions: automotive, railway systems, profiles, and flat steel. Further, VA Stahl resolved to return to its previous name, Voest-Alpine, in order to distance itself from its old image as a steelmaker. The company eventually settled on the name voestalpine AG. In 2001, the company announced plans to invest EUR 2 billion for external growth and diversification over the next five years, with half of this sum set aside specifically for future acquisitions. Once again, voestalpine appeared to be keeping pace with the changing competitive landscape.

Principal Subsidiaries: Voestalpine Grobblech; Voestalpine Giesserei Linz; Voestalpine Giesserei Traisen; Voestalpine Schmiede; Voestalpine Stahl Service Center; Voestalpine Stahlhandel Logistik Service; Voestalpine Rohstoffhandel; Voestalpine Rohstoffbeschaffung Voestalpine Personalberatung und -systeme; Polynorm; Voestalpine Matzner; Voestalpine Rotec; Voestalpine Europlatinen; Turinauto (33%); Sadef N.V.; Metsec plc.; Voestalpine Krems Finaltechnik; Roll Forming Corporation; Voestalpine Profilform; Präzisionsprofil; Voestalpine Schienen; TSTG Schienentechnik; VAE AG; Voestalpine Klöckner Bahntechnik; Railpro; Voestalpine Stahl Donawitz; Voestalpine Austria Draht; Voestalpine Tubulars (50%).

Principal Competitors: USX-U.S. Steel Group; Sumitomo Metal Industries, Ltd.; Nippon Steel Corporation; Gerdau SA; Usinor SA; Thyssen Krupp AG;

Chronology

  • Key Dates:
  • 1938: Voest is originally founded as the Reichswerke Hermann Göring in Linz, Austria, as an affiliate of the state-owned Berlin Göring-Werke.
  • 1945: The U.S. military government in Austria changes the name of the company to Vereinigte Österreichische Eisen- und Stahlwerke AG (The Austrian Iron and Steelworks), of which "Voest" is an acronym.
  • 1949: Voest builds the world's first steel mill with oxygen converters, a revolutionary innovation that later became the industry standard.
  • 1972: Voest becomes part of the holding company ÖIAG, Austria's largest industrial group.
  • 1973: As part of a broader reorganization, Voest merges with the other leading Austrian steel producer, Alpine, which operates the Donawitz steelworks.
  • 1975: The Austrian special steels industry is concentrated at the company VEW.
  • 1976: Voest-Alpine Stahlhandel is formed by a merger of the separate nationalized units of the Austrian steel stockholding trade.
  • 1988: ÖIAG is reorganized into seven separate companies, one of which is Voest-Alpine Stahl AG (VA Stahl).
  • 1995: VA Stahl makes its initial public offering on the Vienna Stock Exchange.
  • 2001: VA Stahl returns to its previous name, Voest-Alpine, in order to distance itself from its old image as a steelmaker; the company eventually becomes voestalpine AG.
Vosper Thornycroft Holding Plc Business Information, Profile, and History [next] [back] Victorinox Ag Business Information, Profile, and History

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or


This web site and associated pages are not associated with, endorsed by, or sponsored by Voestalpine Ag and has no official or unofficial affiliation with Voestalpine Ag.