SMS Demag Ltd., North American leader in the metallurgy industry, keeps strong ties on the home front while taking business global. George Lauer profiles a Canadian company with Ontario roots and an international future.
One of the characteristics of quality steel is high tensile strength. The more stress the material can bear without tearing apart, the better the steel.
The same goes for companies.
SMS Demag Ltd., designer and builder of ferrous and non-ferrous strip metal processing systems, showed considerable tensile strength when the North American steel industry went into steep decline in the late 1990s and the first few years of this century.
“The North American market was disappearing,” says Joerg Hoffmann, vice-president of sales for SMS Demag Ltd., based in Ontario, Canada. “A lot of our competition was closing down or cutting back, but we stayed our ground and committed ourselves to maintaining a strong local presence.” It’s paying off.
A subsidiary of SMS Demag AG, a division of SMS AG in Germany, SMS Demag Ltd. is the clear industry leader in America, Canada and Mexico. And with the help of the considerable international clout of SMS AG, the Canadian company is gaining a worldwide reputation as an innovative designer and manufacturer of advanced machinery, melding the latest in technology with practical design.
“The thrust of the company, going back more than 40 years, has always been to help customers be more efficient,” says Ian Johnstone, president of SMS Demag, Ltd.
“That’s still our focus, whether we’re working with one of our North American customers or a new customer in China or India,” Johnstone says.
Canadian startup to global partnership
Founded in 1964 and known for most of the 20th century as PRO-ECO, the company joined forces with SMS Demag AG in September 2000. Many of the company’s products and systems still bear the PRO-ECO brand, known throughout the industry for several innovations that have now become standard.
Industry “firsts’ developed by SMS Demag Ltd. include “Kor-Flex” slitting tensioning systems, special recoiler drums and turbulent pickling systems used in push-pull pickling lines. SMS Demag Ltd. supplied the first heavy-gauge hot-dip galvanizing line in North America. The company’s push-pull pickling lines were the first to feature shallow tanks made of solid granite, stain-free rinse systems, turret-type recoilers and plunging bridles.
Now, as part of the mammoth SMS AG of Germany, the Canadian company is maintaining its close ties and focus in North America while establishing new toeholds around the globe. SMS Demag Ltd. has designed and installed machinery in almost every industrialized country on earth. Winner of the Canada Export Award, SMS Demag Ltd. is certified under the international ISO: 9001 program as well as the Canadian CSA Z299.3 program.
SMS Demag Ltd.’s annual revenues, which range from $40 million to U.S. $50 million, are a small, but vital part of the big SMS picture. SMS AG, with annual revenue of 1.4 billion Euros, offers the Canadian company new advantages while SMS Demag Ltd. in turn gives the giant German conglomerate technical expertise as well as inroads to the North American market.
“There are definitely advantages to being part of the huge SMS organization,” Johnstone says. “It opens up a lot of doors for marketing and gives us access to more technology. “But although we’re part of this very large organization, we’re still in a relatively independent division which allows us to maintain close relationships and a tight focus on our core markets,” Johnstone adds.
The bigger picture
SMS Demag AG, the corporate division that includes the Canadian company, has about 4,000 employees worldwide. The parent company, with plants in Dusseldorf, Hilchenbach, and Hilden, Germany, also has subsidiaries in Italy, the United States, China, India, and South Africa.
SMS Demag AG has been designing and building plants and machinery for producers of steel and aluminum throughout the world for more than 200 years. Today, the company’s products are found across the entire production chain and include everything from plants for pig-iron production to steel mills, continuous-casting lines, rolling mills, and rolling mills for hot- and cold-rolled steel.
China and India are growing markets for SMS AG. The company generated almost 50 percent of last year’s revenues in China.
India, China and Russia are also growing markets for SMS Demag Ltd. as well, says Hoffmann, who spends about half his working days in other parts of the world.
Innovations and new technology
SMS Demag has mastered a couple of new wrinkles in the metallurgy industry that offer new opportunities to customers.
The company’s continuous vertical galvanizing line (CVGL) is a revolutionary hot-dip coating process that provides better quality, higher levels of control and lower levels of maintenance. With the zinc pot in a free-moving vertical pattern across the strip metal, the system allows for shorter dipping times, quick product changes and more control over the process.
SMS Demag Ltd.s’ powder coating line technology offers high-speed applications using an emission-free and solvent-free operation that meets stringent environmental restrictions, unlike many liquid coil-coating lines. Powder coating lines are more compact, often less expensive and more versatile than conventional liquid technology. Powders also offer higher scratch resistance and better gloss and color stability.
The company’s core line of products include a wide range of machinery and processes for mills, service centers, metal processors and fabricators involved in all kinds of metallurgy applications from automobile parts manufacturing to architectural and manufacturing applications. Industrial needs and demands are constantly changing.
“The automotive industry is pushing very hard right now for new material that will provide higher strength and be lighter in weight,” Hoffmann says. “We’re working with new aluminum products and other alloys.”
Understanding and responding to customers’ needs is critically important to the success of systems in the field, SMS Demag managers say. “Good communication is still a basic need for a strong business relationship,” Johnstone says.
Strong, but flexible
While it stays strong using new technology and practical designs, SMS Demag Ltd. also stays nimble with a flexible work force centered on a stable of contract engineers, ready to react when the market calls.
“This is a very volatile industry,” Johnstone says. “The markets fluctuate so much that you can go for long periods of time at your base level of business, which is what we are essentially geared to. But then, all of a sudden, a segment of the industry will take off in a new direction and you have to be able to react quickly.”
SMS Demag’s workforce fluctuates between 100 and 300 employees, depending on the market.
As more parts of the world come into SMS Demag Ltd.’s sphere, flexibility and the ability to react quickly may become more important.
With an extensive product portfolio, several decades worth of business relationships in North America and technological advantages and global contacts through the larger corporation, SMS Demag Ltd. appears ready to maintain – maybe improve – its tensile strength in the 21st century.