Flexibility and efficiency: Arania’s two major goals for 2023
2023 will be a year shaped by flexibility: we need to keep pace with production rate changes in order to remain competitive in a very demanding precision steel market. Arania has achieved a number of projects focused on safety, quality and efficiency, while improving facilities and processes and implementing automated systems, in addition to its sustainability objectives based on the reduction of CO2 emissions. This year, a very volatile environment, uncertainty and poor economic forecasts are all coming together. As a result of a strong commitment to its long-term strategy, and despite the drop in car manufacturing and other key segments, Arania successfully weathered this difficult 2022 while maintaining its leading position in terms of quality and service. Our theme in 2023 will be flexibility and efficiency to adapt to the changing environment.
Every year, the Arania Management Team shares the Company Plan for 2023 with all employees, analysing the results obtained in the previous year, as well as proposals, strategies and forecasts for the year ahead.
As for 2023, Arania’s objective is to reaffirm its leadership in Southern Europe with a reliable and secure manufacturing plant, able to flexibly produce up to 120,000 tonnes per year of high quality steel products in an efficient manner, with the required adaptability to the changing demands of the market.
Working towards the goal of achieving carbon neutrality by 2050 will be another key focus: low emission steel becomes increasingly important for Arania, as well as the expansion of rail instead of road transport, along with the energy and environmental optimisation of operations throughout the value chain.
Arania is facing a year marked by major projects, opportunities and challenges, against a backdrop of uncertainty, with an ever-changing global environment that will require a great deal of flexibility and adaptation. However, given the slight improvement in the growth forecasts for the Eurozone in the first months of the year, Arania has set the company’s growth target at 6% compared to 2022.
Overall, 2022 has been a year of positive results for Arania, although with a significant drop in turnover, basically due to three reasons. First, vehicle manufacturing is still at very low levels. On the other hand, the stock position of many customers was comfortable during the year and, finally, the economic growth forecasts were not favourable. In addition, as usual in recent years, many supply chain incidents were recorded.
However, Arania has managed to sustain a healthy profitability in 2022 thanks to the so-called «windfall profits», stemming from the stock acquired prior to the price hikes, despite the increase in the costs not only of human resources but also raw materials, consumables, energy… Meanwhile, the expected «windfall losses» will have a boomerang effect: profitability is expected to fall in 2023, as lower activity will require a longer period of time to absorb in the short term these stocks bought at higher prices. Once again, flexibility and efficiency will be crucial to soften this impact.
Decarbonisation of the steel industry is a priority for Arania; 90% of emissions in our sector come from the steelmaking process during the steel production. The main opportunities in the subsequent cold-rolling process emerge from the optimisation of energy management and logistics, with a focus on consumption efficiency and compliance with environmental requirements. This strategy includes continuing to foster Arania’s development as a pioneer and leader in Southern Europe in the area of green steel.
Therefore, green steel and low-emission steel produced by European leading producers will gain priority within the strategy of reinforcing this type of partnership that Arania is establishing with its suppliers, as it enables to share the added value of the transformation of our industry towards a more sustainable production with our partners, collaborators and clients. Mention can be made of agreements such as Salzgitter, Arcelor, or the recent deal with Tata Steel for the supply of steel with an assigned carbon footprint reduction of up to 90%.
Furthermore, in 2023 the installation of photovoltaic panels in Arania’s premises will become a reality, thus helping to reduce the carbon footprint and the energy costs. In the medium term, alternatives to natural gas are being studied, such as green hydrogen, as well as measures to reduce the current hydraulic footprint.
A factory can approach industrial automation in different ways, depending on its industry, processes and structure. Arania’s commitment to Factory 4.0 continues at full speed: in 2023, the investment programme for automation and digitisation of key processes will continue to evolve, building the factory of the future on several fronts. For example, a key focus in 2022 has been the implementation of an innovative automated warehouse at the heart of the factory.
The automation of facilities such as the semi-finished product warehouse in the central hall, a core element in the factory, is essential for Arania as it provides an excellent position for implementing similar processes in other areas of the plant. Progress towards the factory of the future involves improving work conditions, optimising efficiency and flexibility, and finally, increasing quality through forward-looking investments.
The involvement of every single employee is crucial to build an automated factory able to respond to the needs of production in an efficient way, with a safe work environment meeting the requirements of the staff. Arania relies on the experience, the vocation for steel and the expertise of each individual as the best tools to improve efficiency and competitiveness throughout the value chain: productivity cannot decrease just because of a drop in volume, and therefore the objective is to continue upgrading the manufacturing plant to reduce the impact of fluctuations in production.
Additionally, the HAZITEK Programme provides support for the projects PILAR, LOWHC and AHSS, three of the main projects carried out by Arania, co-funded by the Basque Government and the European Union through this programme.
In 2023, customer satisfaction surveys have been once again outstanding. So as to be even closer to its clients and to continue improving the excellent figures achieved in terms of quality and service, Arania will be opening two new warehouses in Italy and Germany allowing for 24-hour deliveries to our clients. This projects are framed within the logistics model the company is committed to, involving the continued promotion of technology and intermodality in transport, prioritising ship and rail over road transport.
For instance, in 2022, 25% of shipments to Italy were made by train, and this rate will double by 2023 and triple by 2024. An efficient management of the supply chain means taking sustainability into account, and this entails many challenges that will be addressed transversally, supported by different departments and processes.
In terms of personnel, one of the year’s highlights has been the introduction of a flexible five-shift model, with a pool of 12 flexible 12-day shifts, in order to effectively cope with the changing rhythms that the market will dictate over the course of the year, thereby responding in an efficient manner to the peak and trough pattern of demand imposed by the market.
Another crucial step was the approval of Arania’s Equality Plan, through which the company ratifies its real commitment to effective equality between women and men, establishing a series of specific action measures in key areas such as work-life balance, prevention of harassment, pay equity, equality and professional promotion.
In an industrial company, there is always room for improvement in safety. However, for the second consecutive year we have fulfilled our commitment to «zero serious accidents», which is excellent news. Absenteeism, however, is still an area for improvement: in 2022, Arania’s average absenteeism rate exceeded 12%. Certainly this is a reality of modern society, with over 10% absenteeism rates in the industrial sector in the Basque Country, and it is a structural phenomenon that Arania cannot solve, but the company must offer solutions to improve health and safety in the workplace. The objective for the future is to continue working to reduce accidents by promoting projects involving the staff in the improvement of ergonomics, and by investing in the automation of operations that can cause accidents and injuries, improving the safety and health of employees and consequently increasing productivity.
Las claves para 2023: la receta de Arania para contrarrestar la incertidumbre y la volatilidad pasa por trabajar en un modelo flexible que permita replegarse cuando baje la actividad y utilizar esa capacidad almacenada para poder desplegarse y así aprovechar las oportunidades que ofrecen los ciclos de mercado. De esta manera, una gestión adecuada de los stocks, la eficiencia en planta y acertar a la hora de realizar inversiones serán aspectos fundamentales este año.