Rautaruukki Steel = Quality and Profit

Wednesday, February 13, 2002
Rautaruukki Group of Finland is the largest steel company in Scandinavia with 13,000 employees and an approximate annual turnover of $2.7 billion. While this is, essentially, a small company among the consolidated behemoths of the steel industry, Rautaruukki comes up big in the important areas: quality and profit.

Shipbuilding, stripped to its bare essence, starts and ends with steel. From the ceremonial “first cut” through its eventual evolution at the hands of breakers to razor blades, steel – as much as any other factor – directly determines if the multi-million, multi-year investment in a vessel is a profitable one. Ensuring the original quality and long-term care and integrity of the ship’s steel is central to every quality owner’s repair and maintenance plan. Rautaruukki Group of Finland – a group of companies that includes Rautaruukki Steel, Metform, Steel Structure Division, Fundia and Steel Service – has steadfastly grown its business despite an overall business stupor. Rautaruukki prospers where others have and currently failed based an its unwavering demand for quality, it continuous investment in the latest production technologies, as well as its diversity of products it can deliver, from raw steel to coated products. State-owned Rautaruukki was established in 1960, with iron production starting in 1964 and the production of steel and hot-rolled plates commencing three years later. Hot-rolled plate – it should be noted – is the main construction material of steel ships, giving the vessel up to 80 percent of its total weight. From the beginning, shipbuilding played a crucial role in development and success of the company, accounting for approximately half of its business by the early 1970s. In the early years, the company’s business was built by supplying steel for Soviet ships, supplying an estimated three million tons producing about 600 seaworthy ships. By comparison, today, only eight percent of the company’s three billion Euro turnover comes from shipbuilding. Despite the drop, shipbuilding is still viewed as a crucial piece of the Rautaruukki pie, as evidenced by the comapany’s investment through acquisition in Mo I Rana’s profile rolling business and the purchase of Fundia, the bulb profile supplier. Today, Rautarukkii Profiler AS is the European market leader with its products. The company also produces cold-rolled sheets, a product that plays a minor role in the hull construction of ships but plays a much larger role as decoration background, and as the base material for prefabricated cabins and bathrooms. Finnish shipyards, that are renowned for the construction of high value, high technical specification tonnage such as cruise ships, icebreakers and gas carriers, are practically buying all of their flat steel from Rautaruukki. This is due because of the physical proximity, short delivery times, price/quality ratio, but also because of the aforementioned cooperation among the Finnish maritime cluster. This close cooperation has, in turn, integrated Rautaruukki so closely into the needs of an efficient, high-volume shipbuilding operation that it has the add-on benefit of making the company and its products more attractive to shipbuilders around the world.

Cruise Shipping Still King Despite the steady transfer of traditional shipbuilding operations from Europe to Japan, Korea and China over the last 30 years, Europe in general, and Finland in particular, has maintained a stronghold on high value, high tech specification ships such as cruise shipping. Finland has prospered on the cruise shipping front, as evidenced by the number of quality deliveries detailed on these pages, in large part because of its highly advanced, integrated structure of material, product and system suppliers specialized to this niche. While the immediate future of the nearly $8 billion cruise industry is shaky at best given the reluctance of the public to travel, it can be assured that business-as-usual will return, the cruise industry will continue its steady course of growth, and Finnish shipyards and suppliers will receive their fair share of business.

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