U.S. Steel's Smart Strategies Will Help It Improve

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Jan 20, 2015
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The Carnegie Way transformation process of U.S. Steel (X, Financial) is primarily focused on creating superior value by applying a structured and disciplined enhancement approach for earning economic profit during the economic cycle and provides excellent market returns to its stockholders.

Strategies being implemented

U.S. Steel is currently implementing an innovative management structure crafted to gain three major goals: first, work closely with customers for creating and delivering unique and highly innovative solutions in the markets; second, increasing focus towards Carnegie Way projects in the operating units that include ongoing commitment towards quality and safety, achieving excellence in the process technology and reliable maintenance and; third, develop key stockholder value and earn continuously by developing highly focused accountability for its business leaders.

The steel major is keenly focused on managing the maintenance spending for creating higher efficiency in its maintenance processes by shifting to a proactive approach from a reactive approach. Apart from just enhancing the maintenance spending efficiency, the RCM program which is a well structured program lowers the pressure and ambiguity linked with emergency fixing, lowers the risks to its employees and adds to the working environment safety.

The U.S. Steel has planned not to expand its iron ore pellet operations at its Keetac facility and decided to wrap-up the carbon alloy project at Gary Works. The U.S. Steel has significant raw materials stock in North America and is focused on eliminating the future spending, primarily required for these projects and thus allowing it to develop other key projects that include further growth of the superior high-strength steels for its automotive customers for continuously developing finest connections for its tubular customers and improve the investments in its facilities with the modernization of its operations that include the addition of electric arc furnace steelmaking into its operations.

Optimistic regarding future growth

U.S. Steel is quite optimistic about the healthy trends of steel consumption in North America, slightly offset by the huge increase of imports in this market. Moving ahead, the operators are expected to remain focused on drilling horizontal wells unconventionally having low-cost dry gas or crude oil in areas such as the Marcellus.

However, the flat-rolled shipments are estimated to be nearly 10% lower compared to 3.2 million tons being shipped during the third quarter, but still its results for flat-rolled segment are expected to be over $100 million and better results are expected in both its tubular and its European segments.

Still, the third quarter results of U.S. Steel are believed to be substantial and real and are well-established to deliver higher earnings for the company.

The third quarter results for the tubular segment enhanced over the second quarter although there were lower shipments. U.S. Steel took advantage from rising market prices and a healthy product mix with increased shipments and it supplied poor welded line pipe post indefinite idling of its McKeesport facility in the third quarter. Shipments also declined owing to the indefinite idling of its Bellville facility during the quarter.

The third quarter financial performance for the European segment of the U.S. Steel declined over the second quarter due to the completion of blast furnace and scheduled caster maintenance projects.

Conclusion

 U.S. Steel is moving in the right direction to improve its business, making it a good investment.