Gianpietro Benedetti, President of Danieli

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ow was Danieli founded? Due to what did the company manage to comparatively rapidly gain one of the leading positions in the metallurgical equipment market?

– Danieli’s origin dates back to 1914 when two brothers, Mario and Timo Danieli, founded the family business based on a mechanical workshop in Brescia, close to Milano. After the war Danieli family moved to where we are located now, one hundred kilometers from Venice.
The company was one of the first in Italy to use EAFs for steelmaking, it was also among the pioneers of industrial application of the minimill concept widely utilized now all over the world. The first minimill was installed in Germany in 1964 and the first continuous casting machine was installed in Italy. In 1955 the company got down to the engineering and manufacture of equipment for small- and medium-size steel plants. It was the time when the concept of the today’s process version of the "EAF-conticaster-rolling mill" production route was reasoned. In 1977 the first large turnkey project was placed with Danieli for a steel mill in the former GDR. In 1981-1985 numerous plants were supplied on a turnkey basis to the USA, USSR, Africa and the Far East. The large-scale investments made in research enabled the company to achieve a leading position in plants for long products. For example, in the USA Danieli conquered about 80% of the long products plants market at that time.
Later on, the company was active in expanding the business covering new fields of metals production. Thus, in the second half of the 80s Morgardshammar (Sweden), world leader in the set-up of plants for long products in special steels, was acquired. Early in the 90s an expansion into such a sophisticated field as flat products equipment began. With this view in mind, United Engineering and Wean United, specialized companies in the USA, were acquired. Danieli rapidly and very successfully advanced in this direction. In particular, projects in thin slab casters and thin slab rolling and hot and cold strip mills were implemented. By the end of the 90s in the international market Danieli’s share was about 30% for flat products and 65% for long products. Furthermore, the company started to make integrated mill equipment – blast furnaces, converters, DRI plants, finishing lines, etc. In so doing, today Danieli makes the complete equipment range from ore to finished products.

– What are the main directions of developing the research and production potential of the company?

– Danieli is long known in the market as an innovative and reliable team. We consistently invest in research and development. Only in the last five years we invested around US$350m. Our research center has been operating for 30 years. We have now three thousand people, and out of them about 800 is workshop, very little administration – another 100 people, including finance and personnel departments. All the rest are engineers and commercial people. At present our structure includes 8 design centers and 3 production sites. Our research covers all metallurgical operations. We design and make blast furnaces, converters, electric arc furnaces, continuous casting machines, long and flat products mills. In downstream operations it is finishing equipment, drawing, peeling, pickling and galvanizing lines, etc. Now we also carry out research in gas-direct reduction process, we are planning to start construction of the first module.

– Danieli has gained an acknowledgement as a leader in the construction of minimills. Are you going on with the development of this line?

– We have 60% of the minimills market worldwide. Today the optimal size of a minimill is from 500,000 to 1,000,000 tons per year, depending on where it is located. We are now dealing with what we believe to be the minimill of the future based on endless rolling. We’ve built the first plant in Udine (Italy), and now we are dealing with several others where the material must go from the conticaster to the rolling mill directly. During this work we realized that this process suits commercial steels perfectly, being not so efficient for alloy steels. For example, commercial steels can be sequence cast, you can make 20 to 24 heats without stop. In our opinion, this exactly will be the minimill for commercial steels in future.
Another big development for minimills could be the strip caster. A minimill with an electric arc furnace and a long products mill is good but, suppose, in that area there is also a market for commercial flats. By installing a strip caster, one can produce an additional amount of flat products with minimum investments, diversify production, expand market capabilities of the mill. So, it is possible to have minimills for both long and flat products.
And one more trend is what I call the minimill for semi-finished products. The areas where these mills could be successful are very few in the world: Russia, Brazil, Venezuela, Iran. The matter is that semi-finished product – billet or slab – is a package of energy and ore. To make one ton of slabs in Italy, Germany or the USA we transport 2.2 – 2.3 tons of raw materials, we buy energy, coal… Maybe, in future certain countries could ensure competitive production of billets or slabs and sell them in the world market instead of ore, couldn’t they?
In my opinion, semi-finished products will be made at competitive cost wherever, above all, there is comparatively cheap energy. One of these countries is of course Russia. In fact you already have companies that are targeting this market, particularly, EvrazHolding. In my opinion, it is a good strategic area. Or to take the idea of Mr.Mordashov, General Director of Severstal Group: to buy a rolling mill in the US, close down the melt shop (don’t tell the unions!) and import slabs from Russia. On becoming a division of Severstal in the US, Rouge Steel can produce competitive products for automobile industry since it will be based on the competitive cost of slabs.
So, we will continue to develop minimills to make this production maximum effective.

– In what countries and regions is your business developing?

– Today the largest market is China, of course. In the past, before the recession, the United States – 80% of new long products mills in the US in the last 10 years are Danieli. The promising markets are Iran, Middle East in total, as well as South East Asia, namely, Taiwan, Korea, Malaysia, Thailand, Vietnam. We supply plants to Yemen, South Africa, Latin America, Ukraine and Russia. The last two countries, in my opinion, will be the next important market for us. Russia has already overcome the crisis, and today big changes are taking place in your steel industry. Russian entrepreneurs begin to understand what business is, how to connect money with technology, market, feasibility.

- How do you assess supply and demand for main equipment types in the world market? Who are your main competitors?

– Three largest metallurgical equipment makers (SMS, VAI and Danieli) have 60% of the world market. The rest 40% are Japanese and other medium-scale makers. In future, most probably, new competitors will appear, in China, Russia. You have excellent technical traditions, culture, good engineers. Sooner or later competition will be in Russia also. Very likely Danieli will have a joint venture here – a mechanical workshop to design and produce equipment. It is our market and if we are going to supply equipment we must be there to better understand and service customers, to speak their language.
When speaking of today’s market one must remember that the largest world areas – China, Russia, East Europe - are changing a social style of life. They realize that they will consume more if they begin to produce an added value more than before. In these countries the demand for houses, automobiles, fridges, washing machines and other consumer goods is growing, and it means there is a demand for steel, aluminum, concrete, etc.
Presently the world market is saturated at 1.0-1.1 billion tons of steel per year. Very likely, it will continue to fluctuate, plus minus 10%, just like in the other commodities sectors. In our opinion, the steel market will retain a positive trend, and the equipment market will be in proportion to it. So, we see a good outlook for metallurgical equipment makers in the near future

– Thanks to what does Danieli secure the competitiveness of products?

– Our competitiveness is connected with the fact that we being a small company achieve results due to as much as possible reduction of indirect labor, different technical solutions, innovations. Today our slogan is "innovaction" (innovation plus action). In fact, everything is important - advanced technical solutions, quality, price, fast delivery and erection, aftersales service, etc. To Russia we’ve supplied several turnkey plants. For the last five-six years, turnkey projects were not in demand in world market. Today again their is a tendency to order on a turnkey basis, that is, completely, with civil works and erection. Customers discovered that while they tried to save doing this work by themselves they failed to control schedule and cost. Now the customer prefers to give the whole package and obtain guarantees of schedule and cost.

– In your opinion, why does not Russia practise a set-up of mini mills now? Почему, на ваш взгляд, в России сегодня не практикуется создание мини-заводов?

– The fact is that minimills is a different mentality, if you like. You need a regional market for certain steel product types to be delivered fast. I can give you an example of Iran where our company once built several plants of the kind. Here the problem is not solved by one mill, most probably 3 to 5 mills are required to be set up. Besides, minimills mean new jobs in steel industry and associated plants. Therefore I am deeply convinced that Russia has all prerequisites (economic and social) for the set-up of minimills in the near future. With consideration for the Russian scale, I think there can be from five to ten of them.

– In your opinion, how is the situation with financing business projects changing in Russia lately?

– It is changing, and very substantially. Leading businessmen, for example, Alexandr Abramov, President of EvrazHolding, Viktor Rashnikov, General Director of the Magnitogorsk Iron & Steel Works, and others, are greatly interested in business projects to be implemented, they analyze different variants of most cost-efficient investments.

– Based on your experience of managing a big company, are you satisfied with the level of interaction with the young Russian business?

– Let’s first make a reservation – Danieli is a large company in its field but in terms of business scale it is rather a medium company. Our annual turnover is about one billion dollars, and it is less than that of your steel giants. From my viewpoint, Russian business is moving on the right track. To go from one system to another system is very difficult. A big revolution took place in the mentality of the people, and it is still going on. For the last two years the attitude of your young businessmen to competition issues, for instance, has changed greatly. Of course, you have problems, like China, in this regard, first, tax problem.

– To your mind, why did Russian metallurgical equipment makers fail to retain their positions and lose a big part of the home market?

– There is a whole number of reasons. Ideas and creative capabilities of Russian engineers are no doubt very high. But, in my opinion, they lacked competition, motivations typical of market economy. Heavy steel giants with redundant personnel were inefficient, very often in governmental distribution of funds the factor of project cost was not dominating. However, I believe that today the situation is changing, competition appears, and it creates prerequisites for the crisis to be overcome.

– What countries’ markets do you believe to be the most promising for you?

– China, Russia, Latin America. They are the regions where upgradation and modernization of steel production are most dynamic. The Middle East, due to low cost of energy. Further on, maybe, some part of metals industry from Europe and the USA will be relocated to these regions. China can in future come across the challenge of raw materials (ore and coke). Based on the main factor – provision of raw materials, the most promising seem to be Brazil and, of course, Russia.

– What determined you professional choice? One more question, of personal nature: what attracts you in Russia, apart from purely business interests?

– I am a diplomaed electrical engineer. When I started my activity in Danieli it was not a choice, it was simply the first reasonable job that I could take. Having accumulated professional and life experience I at 32 became responsible for technological department in long products rolling. Later on, because I liked to propose new ideas for the customers it was discovered that the largest number of plants was sold not by the commercial department but by the department I worked in. For this reason in 1976 I was promoted to sales manager of Danieli. In 1982 I was also promoted to technical director. So, two responsibilities – technology and sales – assisted in management optimization, from products to market and technical solutions.
The first time I came to Russia was in the 80s – I learned from the Germans that there was an excellent market. It was the rime of cold war. For me it was a surprise that the Russians have a good sense of humor. I appreciated their romanticism, sensitivity. Moreover, I discovered a lot of new for myself, I learned who Pushkin was, and so on. Certainly I have been to theatres, circus, saw things of extreme quality along with real professionalism in culture. Today I write some private letters, for instance, about salary increase, etc., on a paper with a nice photograph… Do you know which one? "Three Heroes" from the Tretyakov Gallery! I was so much impressed by the painting that took it as a logo on my personal paper.
That time I spent six months in Russia, the discussions lasted for 12 to 14 hours a day, we worked on Saturdays and Sundays. That was my first practice in Russia.
By the way, that time I made two extravagant things with very little money. First, I sponsored football teams. Once over the television I watched the play between Dinamo (Moscow) and Spartak, and there was written "Danieli"! And second, when you sent a rocket to Mars again over the TV "Danieli" was written on the track that moved the missile from the horizontal to vertical. It cost me only 80,000 dollars. All Europe was calling to Danieli’s headquarters in Italy asking if we changed business.
In conclusion, I’ll show you a photo of the motorbike. The motor is Harley Davidson, all the rest, except the wheels, is made to my order. This motorbike took the first place among seven in Padua and in London became the best custom bike in Europe. But my real hobby is gold-work design. I learned that Russia has excellent traditions of jewelry. Your modern art is remarkable.
Profile:
Gianpietro Benedetti is the Chairman & C.E.O. of Danieli & C. Officine Meccaniche S.p.A.
In 1961 he took his diploma as electrical engineer.
He began working in Danieli’s design technical offices in 1961, advanced to mechanical project engineer in 1963 and plant start-up engineer in 1966.
Manager of rolling mill process and roll pass design offices in 1968, Sales Director in 1976, Research & Development and Sales Director in 1982.
He was named Danieli Group Managing Director in 1985 and President & CEO in 1990.
In 1994 he was elected in the Board of Directors of ABS S.p.A. (Italy), a 900,000 tpy specialty steel mini-mill.
In 2000, he was given a "Honoris Causa" degree in mechanical engineering by the University of Trieste.
He was Member of the Board of Directors of Friuladria Bank (Intesa BCI Group) from 1999 to 2004.
In October 2003 he was elected Chairman of the Board of Directors of Danieli.