A Designer Steel Wins Out, Despite Tariffs

by Jack Ewing

Егемен Қазақстан
30.10.2018 59

An estimated 100 million tons of chromium, used in making high-grade steel, are beneath Tornio, Finland. (Juho Kuva for The New York Times)

TORNIO, Finland

You must have a very good reason to toil in iron-melting heat an hour’s drive south of the Arctic Circle. But there is an economic logic behind the Finnish steel maker Outokumpu’s huge complex in this small city. Its centralized production line of high-grade stainless helps to explain how global supply chains work — and why President Donald J. Trump’s trade war could be disruptive.

Outokumpu’s story begins hundreds of meters beneath a Lapland forest inside a man-made warren of industry. On a recent day, a miner, Kalle Kilpelanaho, was perched in the cab of a boring machine inside a tunnel, twisting a joystick that could maneuver a drill 20 meters into the rock floor.

“We want the dark brown,” Mr. Kilpelanaho shouted over the roar, referring to the pulverized rock churned up by the drill. Brown indicates chromium ore, the element that turns ordinary steel into rust-resistant stainless steel. It shines the drums that spin inside American washing machines or beats back rust in cars.

Outokumpu has a bounty of it. The discovery of copper in eastern Finland a century ago and then chromium here in the 1950s — an estimated 100 million tons underground as of 2012 — made Outokumpu an economic engine for Finland.

Generations of families have worked in its factories and lived off its chromium deposits as the demand for high-grade stainless has increased globally. The government owns a 26 percent stake. Today, there are 2,300 workers, involved in mining or smelting or trucking kilometers-long rolls of finished steel to a company-owned seaport in the Gulf of Bothnia.

The steel is shipped across the Atlantic to American manufacturers, who have been among the Finnish company’s eager customers.

But the economic rationale behind global supply chains has been scrambled by Mr. Trump’s tariffs. By imposing a 25 percent tax on steel imports from the European Union and other allies, Mr. Trump has forced customers of companies like Outokumpu to obey a logic defined by his policies rather than market forces.

Modern steel is a designer product. Depending on what a customer wants, steel makers mix in ingredients like nickel or titanium to create differing degrees of hardness, pliability or resistance to corrosion.

Many kinds of steel, including varieties made in Tornio, are simply not available from suppliers in the United States. And no one is much interested in making them in America because the demand is too small to justify the investment. Outokumpu has mills in small cities in Alabama and South Carolina as well as Mexico, but no site produces stainless as efficiently as the Finnish plant can.

And there are no active chromium mines in North America.

The president’s tariffs on imported steel have created headaches for people like Chris Ulbrich, chief executive of Ulbrich Stainless Steels & Special Metals in Connecticut.

The family firm buys steel from Outokumpu and processes it further for use in products like aircraft engines and automobile airbags. One of the varieties of steel that Mr. Ulbrich buys from Outokumpu is called Type 305 Stainless and contains at least 12.4 percent nickel. The recipe is tailor-made for a customer whom Mr. Ulbrich, for proprietary and competitive reasons, declined to name.

Mr. Ulbrich said he had searched for the same product among the American companies that still make stainless steel. He found one willing to produce the steel. But the supplier insisted that Mr. Ulbrich buy many times more of it than he needed. Mr. Ulbrich said he had little choice but to pass the tariffs on to his customers.

The Outokumpu factory also provides a lesson on why some kinds of steel are impossible to buy in America, or in many other countries. Every batch of steel has its own recipe. There are some recipes for the steel sold to the German high-end appliance maker Miele for drums that rotate inside washing machines and others for the blades of Swiss Army knives made by Victorinox.

“It’s like baking cookies, but on a different scale,” said Niklas Wass, who oversees the Tornio work. “You need to specialize in certain things.”

© 2018 New York Times News Service

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