Field visit: SSAB’s steelwork in Montpelier, Iowa

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10-02-15 16:48 | Field visits

SSAB is a leading producer of high-strength steel sheet and steel plate and belongs to the medium-sized steel companies in Western Europe. The Group’s steel operations consist of three divisions – Strip Products Division (main centers are Borlänge and Luleå), Plate Division (Oxelösund) and the North American Division (Mobile and Montpelier).

At previous meetings with executive directors of SSAB, the U.S. operations in Montpelier, Iowa, and Mobile, Alabama, formerly IPSCO Inc., which were acquired a number of years ago, were held up as role models in terms of health and safety. Therefore the RI team (Responsible Investments) at Nordea Asset Management visited the factory in Iowa to get a deeper insight into safety issues. A significant difference between the SSAB steel mill in Sweden and the U.S. is that in Sweden the steel production is based on iron ore, while the American steel mills exclusively use scrap as raw material, giving a more environmentally friendly process.

In order to continuously improve the level of safety in the steel mills, SSAB has set up so-called CI groups (CI = Continuous Improvements). The improvements are made through various channels, including so-called “housekeeping tours”, which means that members of the management walk a tour of inspection in the steel mill every month to see the opportunities for improvement. The people carrying out the inspections are replaced every six months according to a schedule. Thus the tours regularly have “new eyes “. The tours are also linked to compensation and bonuses to employees if certain safety criteria are met. At Nordea we think this is a good way to maintain sharp focus on safety issues.

SSAB train their staff in health and safety within three months of employment and then there is a follow-up training once a year. One precaution is that the new employees in the factory wear a white helmet to get help and guidance from the more experienced people who are wearing a yellow helmet. For particularly vulnerable operations, special helmets with built-in air conditioning make sure that the employees do not breathe in dust and ashes. In addition the air in the factories is monitored, controlled and measured continuously. Furthermore, blood samples are taken of certain employees in the riskier positions in the factories to monitor that they are not exposed to hazardous substances. To reduce the risk of inhalation of hazardous substances and disseminating such as lead, the employees in the steel mill have clear procedures regarding change of clothes before and after their shift at the factory. It has until now been able to fully prevent damage caused by the inhalation and the factory have not had any cases where employees have become ill, because of lead or silicone.

SSAB has also initiated a global safety meeting (Steel Manufacturing Association) and the two plants in the U.S. have a common security chief and share “best practice” with each other. This has meant that factories continuously evaluate and apply new enhanced security procedures. SSAB’s two plants in the U.S. both have OHSAS 18001 (Occupational Health & Safety Advisory Services), i.e. a certification and thus a management system for health & safety. All these initiatives have resulted that LTI – Lost Time Injuries, i.e. the loss ratio – is down from 9% in 2002 to 2% now in 2014. The average for industrial companies is 3.2% and for the steel industry specifically, it is 7%. In addition to the health benefits for employees and the positive effects on production, the continuous improvements have resulted in lower insurance costs for the factories.

The Steel mills also have ISO 9001 (Quality Certification) and ISO 14001 (Environmental Certification) and SSAB’s office building in Montpelier is LEED certified (Leadership in Energy & Environmental Design). The company mentions that environmental regulation such as carbon dioxide emissions in the U.S. is significantly different from the one in Sweden in that it is far stricter. The company follows the regulations that the Environmental Protection Agency (EPA) in the United States set up, but unfortunately it can be very costly for SSAB to act proactively. Despite a reactive approach, SSAB is having clear criteria to ensure good environment, energy efficiency and cost savings. An example of this is the high quality demands on suppliers of scrap that must be cleansed of harmful particles such as mercury and lead, free from radiation and have as low a carbon footprint as possible.

In the environmental area, SSAB’s main focus area is to minimize waste, recycle and energy optimize. SSAB handle the water issue in a systematic manner. The company sees no major water problems in their factories today. The water is mainly used for cooling and purified in the so-called filter chamber where all armful products are separated and the treated water is discharged into water streams.

Our visit to Montpelier confirms the notion of the American factories being on the forefront of safety issues. When it comes to the environment, the production is significantly cleaner than the Swedish business thanks to only using scrap as raw material. From an American perspective, the factories are also far ahead on the environmental side, yet still by adapting to the prevailing regulations rather than being proactive, since this could prove to be too costly.