“To find new business opportunities, our target market is now the whole world”
It could be said that Federico Piccardi is a born salesperson: where others see threats, he looks for opportunities, without losing sight of the future challenges facing Arania. Piccardi knows that the global economic landscape has shifted, that new commercial opportunities must now be sought beyond Europe, and that the main “threat” to the sector lies in Asia. He also knows that the best way to respond to this challenge is through a value proposition based on service quality and high added-value products. In addition, he adds another ingredient to the formula: closeness and direct contact with customers, something that was lost during the Coronavirus pandemic. “We need to be with people, listen to them, understand their needs and ensure the customer feels close to their supplier.”
Question. Have you ever experienced such a complex international climate as the one we are currently facing with the war involving Iran?
Answer. It is particularly complex at the moment, but since Coronavirus we have gone through several turbulent years: the war in Ukraine, Trump’s tariffs, the conflict involving Iran… We have almost become used to major events that change not only market dynamics, but the dynamics of life itself.
Q. Blocked strategic maritime routes, shortages in raw material supply, soaring energy costs… what would you say is currently the most critical issue affecting the steel sector?
A. The steel industry depends heavily on energy, so it is directly affected. In the last few days we have seen gas prices double, oil rise from 50 or 60 dollars to 110… this has a direct impact on the steel sector, which had already been under considerable pressure for some time. If we look at Europe over the last 20 years, steel production has remained virtually flat or even declined, while in other regions it has grown significantly, almost tenfold. This will particularly affect the steel industry now, especially in Europe, which was already uncompetitive and will now become even less so. Another risk is a disruption to the supply chain.
Q. This conflict comes after the US administration tightened its tariff policy towards European countries…
A. Yes, tariff policy has become tougher. Other countries have followed suit, and it seems each continent is protecting itself. The United States is protecting itself from Europe and China, Europe is doing the same with China… We are seeing major changes at an economic level. In our case, we were selling to one country and suddenly found ourselves facing 50% tariffs, effectively shutting us out and causing us to lose sales. But on the other hand, new opportunities have opened up. We need to monitor all of this very closely because opportunities may emerge.
“We must look beyond Europe and seek new markets”
Q. Arania, like the rest of the Group, has always had a strong growth mindset and a clear commitment to internationalisation. Do these remain two of the company’s core principles?
A. Yes, internationalisation has always been a clear vocation for us. We have consistently focused on it and invested in it. We used to talk about the European market, but now, to find new opportunities, our target market is the whole world. We also have a growth mindset, but above all we want to focus on service and quality. For many years we have based our business on three key values: service, people and quality. Internationalisation is essential, which is why we must now look beyond Europe and seek new markets.
“75% of steel production is now in Asia, and that is very dangerous because it reaches Europe at very low prices”
Q. And we have not yet mentioned Chinese and Asian competition, which accounts for around 50% and 70% of global steel production.
A. It is a major problem, a major threat. When I joined Arania in 2000, China produced 120 million tonnes and Europe 160 million. Twenty-five years later, Europe remains much the same, while China has multiplied that figure by ten. Today, 75% of steel production is in Asia, and that is very dangerous because it reaches Europe at relatively low prices, making it extremely difficult to compete. What is Europe doing? Imposing tariffs in an attempt to stem this wave of steel that is damaging the market. On top of that, we have the impact of Chinese electric vehicles, which are flooding the continent. Unfortunately, the components and parts in these vehicles are Chinese, so our steel is excluded from their production, and that is one of the problems we face today.
Q. Some Chinese automotive companies have already begun setting up plants in Spain…
A. Indeed, and that is important because if they want to sell here, they need to establish themselves and manufacture locally, just as European companies did years ago when they began relocating production abroad. This could be an opportunity for us.
“We need to be agile, deliver material on time and supply high value-added products”
Q. How can Arania respond strategically to all these challenges?
A. For us, it is essential to focus on service quality and offer a high added-value product. At present, the steel coming from China is low-value, so we must continue to differentiate ourselves through quality and service, which are increasingly important. Over the last four or five years, programmes have changed constantly and our customers are unable to predict what will happen in the next four or five months. You need to be agile and deliver material on time. But we also need to develop and supply high added-value products, which is what enables us to protect ourselves from Asian materials.
“Closeness to the customer is one of our value propositions, and it was lost during Coronavirus”
Q. Are these your main value propositions?
A. Yes, and one more: our closeness to the customer. During Coronavirus, we lost the habit of visiting customers and maintained contact through videoconferencing. Now we have reintroduced visits. We need to be with people, listen, understand their needs… because human contact had been lost. It is about returning to what we used to do and ensuring that customers feel close to their supplier.
“Arania exports 65% of its production, so to remain competitive we must optimise our supply chain and control costs”
Q. Given all this uncertainty and the complex international context, what would you say are Arania’s future challenges?
A. It is difficult because every year brings something new. Arania is an export-focused company, with around 65% of our sales going abroad, so we need to remain competitive. That means our product has to travel, and we need to optimise both our supply chain and our production in order to compete in the countries where we sell. Our product has high added value and can travel, but we must control costs, which have risen significantly. Another challenge is that we cannot look only at Spain or Europe, but at the whole world. Two years ago, we began looking at the Canadian market, and it so happened that Trump imposed tariffs on Canada, which responded in kind against the United States. This created a sales opportunity for us in Canada, and today a share of our turnover comes from that country.
“We need to strike a balance between decarbonisation and competitiveness”
Q. With all these developments, has decarbonisation moved into the background, or does it remain a core part of your strategy?
A. It remains fundamental. Arania has set itself a very ambitious target for 2035. It is true that the market is not yet 100% receptive. The problem we face is the cost. The market is very interested in low-emission steel, but price is still taking precedence over other considerations. Both objectives can coexist. Decarbonisation is very important, but it cannot become an absolute requirement, because we could lose competitiveness compared with other countries, especially those outside Europe. It is about finding the right balance with competitiveness because otherwise we run the risk of becoming a victim of our own success, and we cannot allow that.
“Stakeholders see us as a young, dynamic and highly professional company that delivers on its promises”
Q. How do Arania’s various stakeholders such as customers, suppliers, institutions or financial entities perceive the company?
A. From the outside, we are seen as a young, dynamic company, full of optimism, transmitting positive energy and extremely professional. When I meet suppliers who come to visit us, or when we take part in trade fairs, they always tell us they sense a level of enthusiasm and professionalism that is difficult to find elsewhere. Financial institutions also see Arania as a very dynamic company that is active and, above all, delivers on what it promises.
“People are the heart of the company”
Q. And what about the people who make up the company? How important are they?
A. People are the heart of the company. It is vitally important to invest in them, be close to them, support them and transmit our optimism to them. At the same time, they need to understand the importance of professionalism, listening to the customer and, above all, delivering excellent service. It is important that people feel protected and that they are working in a safe, positive environment. We live in a world full of negative inputs, and work takes up almost 70% of our lives, so it is important that our environment is positive. That is what we try to convey to our people. That positive atmosphere is felt externally, and I believe it is an important factor in our success.
