The European steel industry is being clobbered

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Steel mills around the world are enjoying rising profits—except in Europe

, cowbells ringing and a fairy-tale castle make the alpine foothills above Linz seem alive with “The Sound of Music”. Down in the valley, however, the Austrian city’s skyline is dotted with piles of coal, smoke-belching funnels and the blackened silhouettes of blast furnaces, the home of Voestalpine, an Austrian steelmaker. High-wage, prealpine Linz is not a cheap place to smelt steel.

Not at Voestalpine. “Politics ruined this group from the first,” says Wolfgang Eder, its chief executive. Mr Eder’s scepticism of state intervention is long-standing. He recalls how in the 1980s, shortly after he joined the firm as a junior lawyer, politicians who dominated the company’s board refused to lay off workers made redundant by labour-saving technologies. Idle hands were kept busy with ill-considered forays into shipbuilding , making weapons and trading oil .

That was an unorthodox move. In 2005 Aditya Mittal, now president of ArcelorMittal, the world’s biggest steelmaker, mused that companies would need to smelt at least 100m tonnes a year to survive. Voestalpine was too puny to compete with the Mittals of this world when it came to exporting cheap, bog-standard steel to feed China’s construction boom, Mr Eder reasoned.

 

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