SteelOrbis interviews European steel magnate Giuseppe Pasini

Monday, 10 August 2009 12:28:01 (GMT+2)

Turnover increased by 23.8 percent. Steel output increased by 7.3 percent to 2.589 million tons. Net profit of totaled 67.2 million Euro (US$95.36 million). These are the results achieved in 2008 by Feralpi Group, one of the largest European producers of steel for construction sector, led by Mr. Giuseppe Pasini. The company's headquarters are in the northern Italian city of Brescia, but Feralpi also has subsidiaries in Germany, Czech Republic, Hungary and Romania. Feralpi Siderurgica was founded in 1968 and is a leader in the production of rebar, wire rod, mesh quality wire rod and other products. We recently sat down with Mr. Pasini, who, in addition to serving as the president of Feralpi Group, is also the president of Federacciai, the Italian Steel Industries Federation.

Educated as an industrial engineer, Mr. Pasini entered the family steelmaking business in 1983 (Feralpi was founded by Mr. Pasini's father, Carlo Pasini), serving as the managing director of Feralpi Siderurgica and eventually becoming president of the Feralpi Group. Mr. Pasini also became the president of Federacciai in 2002and in 2003 won Ernst and Young's prestigious Entrepreneur of the Year award in the Global category.

Unlike most other Italian producers, Feralpi is an international group. How has this affected Feralpi in terms of the current crisis?

Feralpi was founded in 1968 by my father, Carlo Pasini. Over the last 20 years, we have progressed our international development and this has been our major support in this downturn period. Turnover increased by 5.3 percent in 2008 from 2007 in respect to sales to foreign countries, especially to Algeria, a country which imported about 70 percent of our materials. We've also profited from the strategic locations of our subsidiaries in Eastern Germany and Eastern Europe, areas in which activity has never undergone a severe slowdown, at least not as one as severe as in Western Europe. Our figures of the first half of this year registered a drop of -31 percent in finished products output, which is the average between a drop of -37 percent in Italy and -18 percent in Germany. In order to face the crisis we have arranged for our workers to work less hours while maintaining their skills. This is a tool strongly supported by the Labor Minister Maurizio Sacconi and is very good in such a downturn period.

Which are the consequences of the crisis, from your perspective, on the national and international rebar markets?

The crisis in the construction materials market, and in the rebar market in particular, is being addressed by the stimulus plans approved by several national governments, but these plans need a clause to provide that the projects are put into motion immediately. In my opinion, this is the one way to make the situation recover in a short time. We will benefit somewhat from the “home plan” approved in Italy, too, but the national economy needs big plans in order to recover. The figures published by Eurofer show a drop in apparent consumption of steel in Europe by -33 percent this year, with a recovery next year of 14 percent. Right now, capacities are running at less than 40 percent. This indicates that the current year is completely compromised, but at least we think we have reached the bottom.

 Many Italian steel producers are smaller mills and are more flexible than the big ones. In the current crisis do you think this could represent an advantage?

There is no one rule to survive a downturn period. I think that the companies which have not made big investments, nor mergers or acquisitions, will be the ones which better survive the crisis. The current situation has demonstrated that the Italian steel industry has a strong foundation, but stability is the major factor we have to consider: we can not think of developing right now, as our imperative is surviving.

What do you think about the threat of overcapacity in the steel industry?

I’m sure there's some threat of overcapacity, and we have already seen some of the effects. I am sure we will survive the crisis, but we cannot think that we will still achieve the results of the last four or five years. We will have to reorganize and optimize our human resources and production capacities. In some countries, the demand for steel is still strong, especially in developing countries, such as North Africa, particularly Tunisia, Libya and Algeria. North Africa could be considered a promising area for future investments. In Egypt and the Middle East, we are not as competitive because of the activity of Turkey. But it is good that we are able to take part in the markets among several countries.

Giuseppe Pasini is also the president of Federacciai, the Italian Steel Industries Federation. Federacciai is part of Confindustria, the Italian employers federation, and accounts for 150 members which are equivalent to 95 percent of the production and processing of Italian steel. Federacciai works in order to safeguard and support the operators of the steel industry, also promoting industrial policies to support the sector through initiatives in the economic, political and scientific fields. The group aims to achieve high visibility in Italy, Europe and worldwide for the steel industry by illustrating its economic impact, production and trading development. Under this scope, Federacciai supports all the strategies which strengthen the national and international competitiveness of the steel industry and promote economic policies to solve sector issues. Recently in the news, Mr. Pasini, speaking for Federacciai, reported in July that Italian steel production is likely to fall 45 percent in 2009 from last year.

Tell us your story as president of Federacciai, Mr Pasini. What has been your experience at Federacciai? Which objectives have you achieved and which have yet to be reached?

I have been the president of Federacciai since 2002. The Federation is doing a good job, offering to its members good visibility, and this has been possible also thanks to the president of Confindustria, Emma Marcegaglia, who also comes from the steel industry. I don’t like to talk about what I have done; I prefer talk about what there still is to do.

My imminent objectives concern the reduction of harmful emissions, in particular of carbon dioxide and other such emissions from the energy sector, though the current government in Italy, unlike the prior, has made taken some positive steps as regards energy: the average price we pay for energy has moved a little closer to the European average price, though in Italy is still higher than in Europe. Luckily, the current government has seen in the manufacturing sector a key resource for the national economy. In the middle-to-long term, I think we have to pay attention to protectionism strategies which have been carried out in several countries, such as China and India. We cannot forget that Europe is a net exporter of steel, and thus we have to fight against protectionism which damages the markets. I also aim to make safety in the workplace a priority by an agreement with Italian workplace safety group INAIL.

In terms of environmental sustainability, Italy has nothing to envy of rest of the world as we abide by EU directives. Unlike the EU or USA, China has more lax standards with respect to the environment. We are under the threat of environmental dumping: China accounts for one-third of the global steel production, and their environmental laws are different from the European or American ones. It is necessary that China play its role. It was expected that no agreement would be been reached at the G8 or G14, and in fact, no agreement was achieved. Good intentions are not enough; we need facts, and China and India will have to demonstrate their commitment to respect international standards. The review of the Kyoto Protocol is scheduled for 2010 in Copenhagen, and it is there where we will have to outline a single document to address international environmental standards.

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