In the previous part of the series, we saw how US Steel (X) realized benefits of $575 million under its Carnegie Way program. Let’s now analyze some of the key projects that US Steel has implemented under this program.
ArcelorMittal (MT) also has a cost control program underway. Investors can also access the steel industry with Gerdau SA (GGB) and AK Steel (AKS). AK Steel currently forms 3.87% of the SPDR S&P Metals and Mining ETF (XME).
US Steel has installed new magnetic separators at its Minntac iron ore operations. These separators provide higher concentrate yield, more efficient yield, and increased pellet making capacity. This project has helped the company realize annual cost savings of $10 million.
In its flat-rolled operations, US Steel has increased the production of value-added products, which has helped the company increase annual profits by $10 million. The company’s flat-rolled segment accounted for 70% of total savings under Carnegie Way in 2014.
Blast furnace improvements
US Steel realized benefits of $40 million related to blast furnace improvement at its Kosice plant. The company is also implementing a reliability centered maintenance (or RCM) program across all its facilities. RCM is a structured, disciplined, and proactive approach to maintenance. Currently, US Steel has a reactive approach to maintenance.
In the next section, we’ll analyze the financial performance of US Steel according to the company’s segments. We’ll begin by looking at the 4Q financial performance of the company’s flat-rolled segment. As we discussed previously, this segment is US Steel’s largest revenue segment.