10/04/2012 - Greg Ludkovsky is head of ArcelorMittal’s global research and development team. He talks about the team’s contribution to success and sustainability, and the main challenges facing R&D in the steel industry.
What is the role of global R&D within ArcelorMittal?
R&D has a significant role in the technical and strategic objectives of our company. It is one of the cornerstones of the sustainability and success of ArcelorMittal. We’re focused on improving both the top line of the company, which is the revenues side of our business, and the bottom line, which is largely cost. So our activities are intimately connected to both of these objectives.
What are the main challenges you are facing in R&D?
They come from a variety of sources. The requirements for quality, functionality and differentiation are steadily growing. The competition is growing as well because of a significant number of Asian competitors entering the marketplace. So the challenge is to maintain our market share through R&D and product development, and hopefully increase it.
Another major challenge is the fact that the raw material base is deteriorating in terms of its quality. So a significant amount of work is dedicated to being able to produce the same or better quality of steel using raw materials inferior to those that were previously available.
We have also made a significant commitment to reducing the amount of energy we produce per tonne of steel. So we have programmes in all these fields.
S-in motion has become one of the flagship programmes for the automotive market. What is the next S-in motion?
A key executive of one of the largest global automotive companies said recently in one of our meetings that they no longer viewed ArcelorMittal as a steel supplier, but as an engineering solutions supplier to their industry. Part of our efforts continue to be in support of deployment, but another part is saying ‘OK, what else can we put in the marketplace that will further increase the gap between ourselves and the competition?’
S-in motion allowed a 20% reduction in the structural component of the vehicles and a 14% reduction in the ‘body in white’ weight [a vehicle’s welded steel weight before other parts are added]. Our new programmes in product development alone will allow a further 7% reduction.
Some of the solutions offered in S-in motion are already as good as or better than anything that can be offered by aluminium. We are now getting into the trial phase of unique new materials, bringing in concepts that have never been tried before. More and more of these products fall in the nano products category. So this is one of the major directions we will be moving in.
Another component of critical importance to automotive manufacturers is time. If they can take time out of their product development cycle, that is worth billions of dollars. Reducing the cycle time is one of the major breakthroughs that our organisation will be focusing on.
What about composite materials? Should ArcelorMittal feel threatened by them?
We need to watch them, we need to understand them, but long-term performance, ageing and crash performance remain important and to some extent unresolved issues. So I do consider them part of our competition base and we will not lose track of them, but I think our first line of attack will be to make sure we don’t see a proliferation of aluminium.
Automotive is considered one of the major steel growth areas. Do you agree?
We need to be careful in our definition of growth. The market worldwide is certainly growing rapidly, but this is largely due to expansion in Asian countries. China is the key engine of automotive growth. You do not see corresponding numbers for the developed economies. So, in terms of global growth – yes – but for growth in the developed world it is different, and this is where our challenge lies because that is where most of our facilities are located. We do have a joint venture in China and we are growing our presence in Brazil. However, competition in the developed world is getting tougher, so we must ensure our market share remains and grows. We are increasing our exports to Asia and other parts of the world, and we certainly intend to capitalise on this growth both through local production and exports.
What has allowed ArcelorMittal to keep its competitive edge so far?
The experience of our employees has been one of the main ingredients in maintaining competitive advantage. Another is the fact that we have been able to out-create, out-implement and out-deploy our competition. Our focus is to create differentiating solutions and then become significantly better in deploying them faster than anybody else in the world. For example, our new metallic coated steel, Magnelis®, shows superior resistance to corrosion in harsh environments. It has diverse applications in construction of buildings, civil engineering and public works, agricultural structures like greenhouses, and for safety equipment in railways.
Do hybrid and electric cars demand specific requirements for steel?
The weight reduction goals in vehicles of this nature are less than in traditional combustion-engine vehicles. This is because of energy recovery in braking, and also because electric vehicles change CO2 generation so dramatically that reduction targets will be met through engine technology, rather than weight. This does not mean that we will not be challenged in these areas. As a World Steel Association member we will be working on offering parallel solutions predominantly to electric vehicles, because the architecture of hybrid vehicles remains largely the same. So we are making sure that we have a full complement of material and design solutions to meet all the requirements of the evolution that vehicles are going through, both combustion-engine and electric vehicles.
When you look at the automotive sector today, do you think that requirements are more to do with cost, environment or steel strength?
If you look at the major driving forces affecting the direction of our research and our products, I would say that environmental issues are dominating the field. I would never disregard the cost issue, but certainly for automotive companies, compliance is paramount. Our Life Cycle Analysis tools for steel products make it possible for us to analyse and understand places in the life cycle where environmental impacts are most critical, enabling project teams to develop effective solutions or alternatives that help minimise negative effects. The World Steel Association awarded us the first prize for our innovative work in life-cycle assessment.
What about internal customers?
R&D is playing a big role in reducing manufacturing costs, such as energy, raw materials, and so on. For example, we have developed energy optimisation models that have already been deployed in three of our facilities, and now we have a plan to deploy them globally. In terms of energy reduction, we are working on technologies that will use significantly less energy to produce steel. We are supporting our business units in using energy-efficient technology; exploring the use of low-cost raw materials, such as iron ore that has some impurities but is cheaper; looking for a way to use a high proportion of non-coking coals to produce coke; and a series of other activities with a significant impact on cost.
Where do you see R&D in ArcelorMittal in five years’ time?
The vision of ArcelorMittal is to become a successful and sustainable company for generations to come, to provide a nurturing environment for its employees, an above-average return to its stakeholders and to be recognised as a reliable, responsible member of the community. R&D has a key role to play in accomplishing it.
If you could address one message to the teams within R&D, what would it be?
I believe in the importance of pride. I think every person working for our company wants to be proud of being part of this organisation. I would like people to be proud of being a part of R&D, and what makes people proud is accomplishments. We ensure success with a multi-disciplinary approach to research, giving equal emphasis to metallurgical, chemical, mechanical, thermal and construction engineering. We believe that true breakthroughs take place on the interface of different components of science.