We sat down with Peter Whiting the CEO of Kloeckner Metals UK to discuss his thoughts on company’s culture, digitalisation, Brexit, sustainability focus and so much more. This week we focus on the decade ahead…
Q4. How is Kloeckner Metals UK preparing for Brexit?
We now have some certainty over the question of whether we will leave the EU but no more certainty over what Brexit will look like eg will we have a continuation of free trade with EU countries or will we operate under WTO rules? Will free movement of people continue? Will we continue to align with judgements from the European judicial system? What is certain is that we left the EU end of January and the future will be different to the past. To the extent we can, we are preparing for Brexit; we have ample inventories of product but much of it is imported. If supply is disrupted, we will be able to supply customers from existing inventories for some time; we have already started training for new import and export requirements. As an island with insufficient metal producing capacity to meet domestic demand for many products, we will have to continue to import. This may present an opportunity for us if the import processes become more difficult to navigate and we are well prepared to navigate them on behalf of our customers. We are currently reviewing our import duty arrangements to ensure they are sufficient in a post-Brexit world.
Whatever Brexit we end up with, it will present opportunities. Our job is to quickly identify them and find ways of benefiting from them.
Q5. What trends are likely to dominate the metals industry in the coming years?
Global over-capacity is currently causing a situation where producing mills find it very difficult to make a sustainable level of profit at current prices. The inevitable consequence if this continues is that some will exit the market. In the UK, British Steel have been in bankruptcy for almost a year and are effectively controlled by the UK Government. We have also recently seen redundancies at two of the UK Tata plants in South Wales and Sheffield following announcements that their South Wales plant is losing £1 million per day. In an absence of increased demand, the only way to achieve price increases is through capacity reduction, not just in the UK but across the globe eg China and North America where we have large concentrations of metal production.
Investing in high added value services such as tube lasers and water jet machines is a strategy that we must continue with, but it is not too hard to copy and others will catch us up and overtake us if we do not continually look for new opportunities and invest. Recently we bought a cut and drill line and a fittings machine, both of which are being installed in the Leeds Central Warehouse.
The strategic area where we are the strongest and the furthest ahead of our competitors is digitalisation and this will continue. To stay ahead, we have to be agile and quickly implement new ideas. This means that we will launch new tools before they are fully ready for use; if we don’t, they will be obsolete before we reap the benefit of developing them.
In the UK, the new Conservative Government is reviewing several large infrastructure projects such as HS2. Some may be cancelled but other new ones may be initiated. All of this will have a complex impact on demand for our products.
Ambitious carbon reduction goals will require significant investments in renewable energy technologies and may lead to greater reliance on lighter materials such as aluminium rather than carbon steel. Our multi-metals strategy puts us in a good place to benefit from these changes.
Q6. What steps is Kloeckner Metals UK taking to minimise its carbon footprint/ensure sustainability?
Kloeckner Metals UK was recently awarded BES 6001 which demonstrates our continued commitment to sustainability and our aim to reduce our carbon footprint.
BES 6001 is about responsible sourcing and sustainability which focuses on;
- reducing energy usage
- reducing waste and operational waste streams
- reducing transport impacts incorporating Safe and Efficient Driving (SAFED) and modernising of our fleet by replacing older vehicles with vehicles fitted with the most fuel efficient Cat 6 engines
- optimising route planning to reduce miles driven
We are continuing with the introduction of LED lighting throughout all our sites and also investigating alternative sources for electricity generation.
A very important point, that is often overlooked, is that most of the products we handle at Kloeckner are virtually 100% recyclable, for example, steel, aluminium and stainless steel.
Q&A Vol. 3 will be published in the next week.