2015 operating environment
Like all our operations, our NAFTA segment is facing a tough world steel market, with global overcapacity, a strong dollar and a flood of imports weakening prices to unsustainable levels. Sales were $17.3 billion, down from $21.2 billion in 2014, and Ebitda was $891 million, against $1.2 billion in 2014. In the USA, a significant inventory build-up towards the end of 2014 led to negative apparent steel consumption in 2015, despite positive real steel consumption. Meanwhile, a downturn in iron ore prices resulted in a lower contribution from captive iron ore mining assets.
A strong contribution from automotive
Our automotive franchise business was a bright spot for us, with the USA, Canada and Mexico all achieving retail sales records for new vehicles. The fall in fuel prices helped persuade consumers in the USA back to trucks and SUVs, with trucks capturing almost 58% of the market in 2015. Auto inventories continued to be well managed, with 63-day supply at the close of the fourth quarter, very near the ideal level for the industry.
Promoting fair trade
We have fought hard to combat the threat of unfairly traded steel imports which are causing serious problems for our sector, working closely with industry associations in the USA and Mexico to bring cases to the attention of the relevant trade authorities. So far, we have had some success, but we expect better results from this work in 2016.
Increasing our competitiveness
The tough market has highlighted the need to make our business as viable as possible in the short- to medium-term, and has led to some challenging circumstances. We were forced to close our long carbon business at ArcelorMittal Indiana Harbor and ArcelorMittal Georgetown, while many of our sites were asked to cut production and supplier costs. The business has responded well, however, with cost-saving programmes delivering results in the third quarter, although not enough to turn around the overall results for the year. Energy efficiency is a significant factor in cutting costs, as you can read about in the energy and carbon section below.
We’re also in the process of renegotiating the collective labour agreement with the United Steelworkers union in the United States, and with their help, we hope to improve our cost base to ensure we remain a competitive business and a major employer. Our goal is to close the competitive gap and level the playing field relative to labour costs at other producers. In the interests of securing safe, healthy, quality working lives for our people, we are working hard to achieve an agreement that works for both parties, and is sustainable in the long run for all our stakeholders, including our employees.
New leadership team
At the end of 2015, we announced the retirement of Americas CEO Lou Schorsch. We also unveiled a streamlined management structure in the Americas that promotes more direct accountability and drives optimum performance across the company. Jim Baske will lead all of North America, including AM/NS Calvert, but excluding the USA flat carbon operations which will be led by John Brett. Both CEOs will report directly to the group Chairman and CEO, Lakshmi Mittal.