U.S. Steel acquires Michigan-based steel coatings company
2 June 2015
United States Steel Corp. acquired the remaining shares in a steel coating company it owned as a joint venture with AK Steel, a further step in the Pittsburgh manufacturer’s efforts to win over more of the automotive industry.
AK Steel will receive $25.2 million for its half of the joint venture in the Double Eagle Steel Coating Co. and its 700,000-ton electrolytic-galvanizing line. U.S. Steel (NYSE: X) had owned 50 percent of Desco with the other half owned by AK Steel (NYSE: AKS), which acquired its shares in July 2014 along with other facilities and joint ventures when it acquired Severstal North America’s operations in Dearborn, Mich.
Desco’s processes add zinc and iron/zinc alloy to steel substrate that U.S. Steel said boosts its lightweight automotive products. Lightweighting is, in the era of fuel-economy standards, an increasingly important part of the auto industry. Desco’s products fit with Pro-Tec Coating Co., a joint venture of U.S. Steel and Kobe Steel, and the Great Lakes Works.
The Desco employees will remain AK Steel employees for 90 days after closing until U.S. Steel decides how many employees it will keep. U.S. Steel said the galvanizing line will become part of Great Lakes Works.
“Continuing investment into our operations to provide the highest-quality product critical to our customers’ success directly supports U.S. Steel’s ongoing transformation journey,” said U.S. Steel CEO Mario Longhi. “We seek to create innovative solutions for our customers now and well into the future. By increasing our operational footprint at Great Lakes Works, we are creating special synergies with our automotive customers as they seek to reach critical safety and fuel economy standards.”
Double Eagle Steel Coating Co. is based in Dearborn, Mich. It had been a joint venture of U.S. Steel and Severstal North America but dissolved in 2013. The plant announced earlier in 2013 it was closing its Dearborn plant and moving its operations to U.S. Steel Great Lakes Works and elsewhere.