Borusan Group has ended its partnership with Salzgitter Mannesmann GmbH, with which it has been in partnership since 1998. Thus, the new name of Borusan Mannesmann, which Borusan Group established as its first industrial venture and has long held majority shares, became Borusan Boru. On the global stage, the company adopted the name Borusan Pipe. The company, which started its operations in Türkiye in 1958 and today has become the global giant of the steel pipe industry with more than 2,800 employees, more than 4,000 product types, and 11 facilities on three continents, will continue its investments and bring its critically important products, which are used in different sectors and facilitate every aspect of life, to the whole world in this brand-new period.
Borusan, one of Türkiye’s leading groups, increased its 77 percent shareholding in Borusan Mannesmann Boru Yatırım Holding A.Ş. to 100 percent and parted ways with Salzgitter Mannesmann GmbH, with which it had been in partnership for 25 years. With the completion of the share transfer transaction, which will not lead to any change in the company structure and management, the company, which witnessed the development of the Turkish industry and transformed into a global manufacturer starting from Türkiye, has a new name. From now on, the Company will carry out production in 11 facilities on three continents and deliver its products all over the world under the name Borusan Boru in Turkey and Borusan Pipe in the international arena and will continue to grow in the international arena with its strategy of becoming a local player in global markets as well as its investments in Türkiye. The company will increase its claim in automotive pipes, the leader in the European market, with its Romanian facility, which will start production in 2024. The new pipe production line, which will serve the construction, general industry, and energy sectors in the US market, will be operational in the upcoming months.
We returned with two awards from the Human Capital Excellence Awards organized by the Brandon Hall Group. We won the Gold award in the Best Training and Development Team category with our "Talent Management" team and the Bronze award in the Best Sales Team Development Program category with our "Sales Faculty" project.
Established in 1958 by Borusan Group as its first industrial venture, Borusan Mannesmann has recently finalized an acquisition in the United States, further scaling up its presence in the global market. Through a transaction of 162 million U.S. Dollars, the company has acquired 100% of Berg Pipe, one of the leading manufacturers of large-diameter line pipe in the United States. With this acquisition, Borusan Mannesmann now strengthens its presence as a leading North American energy pipe industry player.
Established 65 years ago by Borusan Group – one of Türkiye's leading conglomerates – as its first industrial venture, Borusan Mannesmann has recently finalized an acquisition in the United States, further scaling up its presence in the global market. In line with its global growth strategy of expanding its manufacturing capacity in target markets, Borusan Mannesmann has acquired Berg Pipe, a corporation operating in the U.S. for the past 44 years with its two facilities in Florida and Alabama.
Borusan Mannesmann has been operating steadily in the United States since 2014, with a facility located in Baytown, Texas. With this acquisition and a second facility being constructed in Baytown, where production will start in 2023, the company will own four manufacturing plants in the United States. The company's total manufacturing capacity in the U.S. will reach 1 million tons and around 1 billion U.S. Dollars in turnover. With this latest acquisition of Berg Pipe for 162 million U.S. Dollars, Borusan Mannesmann will have a total of 11 facilities located in Türkiye, Italy, Romania, and the United States, as well as a production capacity of nearly 2 million tons and 2,800 staff members by the end of 2023.
"Our focus is sustainable growth."
Noting that Borusan Mannesmann has added sustainable value to Türkiye since its inception, Borusan Group CEO Erkan Kafadar commented on the acquisition that was carried out in line with Borusan Mannesmann's strategy of localization across global markets:
“Pipe manufacturing, the first industrial sector in which we operate as Borusan Holding, and its first industrial venture Borusan Mannesmann has been adding value to our country for the past 65 years. It contributes to the country's economy by way of its exports to global markets. As Türkiye's number one brand in its sector, our company has been focusing on expanding into global markets to promote sustainable growth. Having scaled up its growing presence since the early 2000s across different pipe segments with its facilities operating in Italy, the U.S., and most recently, in Romania, Borusan Mannesmann's recent acquisition of Berg Pipe strengthens the company’s presence as a key player in the North American energy pipes market, which we believe holds great potential. In addition, Borusan Mannesmann happens to be one of the largest Turkish industrial investors in the United States. As part of its sustainable growth strategy, our company will continue to evaluate opportunities to help increase its share in target markets."
A new era for Borusan Mannesmann
Borusan Mannesmann entered the European automotive market after it acquired the Vobarno precision pipe plant in Italy in 2001, its first international investment. As a result, today the company is the number one manufacturer in the automotive segment in Europe, thanks to additional investment in its facilities in Gemlik, Türkiye in 2018. Kafadar said, "In line with our sustainable growth and globalization strategy, we achieved remarkable success over the course of 9 years after commissioning a facility in 2014 with an investment of 150 million U.S. Dollars in the United States energy pipe market. With this facility in Baytown, Texas, where we manufacture oil country tubular goods and line pipe for the energy sector, we received the ''Pipe and Tube Manufacturer of the Year” award three times from American Metal Market, one of the most prestigious pipe industry publications in the United States. Thanks to the new investment we have now launched in Baytown, which will be finalized by the end of this year, we will be a local manufacturer also in the construction and general industry segments. This remarkable growth coupled with the latest acquisition of Berg Pipe marks the beginning of a new era for our company".
Borusan Mannesmann strengthens its presence in the U.S.
Considering Borusan Mannesmann’s past success and prestige in exporting large-diameter line pipes from Türkiye to the United States, following the acquisition of Berg Pipe, the company will now be considered a ''local player'' in the North American large-diameter pipe market. Kafadar explains, “Berg Pipe owns two facilities, one in Florida, where longitudinal seam-welded pipes are manufactured, and one in Alabama, where spiral seam-welded large-diameter pipes are manufactured. Having championed remarkable growth in the energy sector recently, the company stands out as a leading supplier of major pipeline projects in the United States, which is a country with great market potential, especially now that it has evolved from its role of an energy importer to that of an energy exporter. By acquiring Berg Pipe, a company with a total manufacturing capacity of 550 thousand tons, we have secured a strategic position in the large-diameter pipe sector.”
The second of the MechTalks series of events hosted by the Turkish Society of HVAC&Sanitary Engineers (TTMD), Mechanical Contractors' Association (MTMD), and Borusan Mannesmann, a Borusan Group Company, was held on November 24, 2022, at Istanbul Mandarin Oriental Hotel Kuruçeşme. The event, which focused on sustainability in the building industry, shared measures and technologies to reduce carbon emissions in buildings and suggestions on the steps the industry should take.
The second meeting of the MechTalks events, which focused on sustainability in the building industry, was held on November 24, 2022, at Istanbul Mandarin Oriental Hotel Kuruçeşme in cooperation with TTMD, MTMD, and Borusan Mannesmann. In four sessions where the sustainable transformation of the industry was discussed, industry professionals shared essential tips on the sustainability journey with their findings and suggestions for today and the future.
Commenting on the second meeting of MechTalks, which consisted of "Climate Crisis and Management Technologies," "Zero Energy Building Management," "Low Delta T Syndrome," and "Good Practices" sessions organized with the participation of the Platinum Sponsors of the event, Meriç Sapçı, Chairman of the Board of Directors of TTMD, said: "We prepare these events under the name of MechTalks both to strengthen our sectoral unity and to increase professional knowledge sharing. In the second of our MechTalks event series, we have brought up essential topics that we have learned about for us, engineers working in the building industry, to be more proactive in the use of 'Correct, Clean, Safe and Efficient Energy,' since the climate crisis is the biggest problem of humanity in the coming period. MechTalks, which I believe will be one of the most important information and idea-sharing platforms of our industry, will continue to open different doors to all participants with new meetings."
Borusan Mannesmann has kept on producing, and adding value in the domestic economy even throughout COVID-19 Period in order to turn the wheels of the industrial sector as constituting the backbone of Turkish economy. Our Company has resumed its productions healthily by way of taking a series of precautions within the frame of Borusan Group's basic principles of "I Protect My Employees, I Protect My Business, I Protect My Stakeholders" in this period.
- Having been composed of the Execution Board Members, HR, Occupational Health and Safety, Corporate Communications, Health Unit, and Factory Directors, "COVID-19 Crisis Management Groups" have been organized in all our Companies, and Emergency Plan, Case Action Plans, and Risk Assessments have been prepared in line with the directions of these groups.
- While those employees of ours, who are able to carry on their activities remotely, have been transferred to home-working model, among our employees serving at our production facilities, those who fall within sensitive risk group due to having chronic diseases have gone on leave, and the ratio of a group working at our work sites has thereby been reduced.
- Information and applications that are consistent with the data of the Ministry of Health attained regarding the COVID-19 pandemic have been submitted to the attention of our employees via SMS, digital screen, poster, etc. for raising their awareness in this respect even before any case was detected in our country. Besides, similar awareness-raising has been attempted among the families by way of preparing and sending hygiene kits to the homes of our employees for the use of them and their family members. While conducting a one-on-one follow-up of our employees via phone, preventive health practices have been raised to the highest level.
- Digital communication with our employees has been raised to the highest level. Alongside the periodic shares of the Company Leader, further shares have been and are being conducted by the mediation of the Company Doctors and Psychologists.
- The highest level of hygiene protocol has been put into operation throughout all the common areas of our Companies, including the offices, production sites, meeting rooms, etc., and the frequency of the disinfection and ventilation filter cleanings has been increased. Production sites and offices have begun to be ventilated by a natural method at certain intervals. While special ozone disinfection is applied at the general areas, shuttles, and company vehicles, disinfection works are conducted regularly at each change of shift.
- New arrangements have been made at the offices and resting areas throughout the workplaces in order to maintain social distance between the employees.
- Employees that come via the company vehicles/shuttles, or their personal vehicles, as well as the incoming guests, are undergone temperature-measuring via contact-less devices at the factory entrances.
- It has been made obligatory for all the employees to use surgical masks at the shuttles and the production sites. While a certain number of surgical masks have begun to be distributed daily to our employees, coordination has been organized for meeting the additional needs from the station points. Waste mask bins have been placed in all areas for the secure disposal of the surgical masks.
- Dry-cleaning services procured externally for maintaining the hygiene of the work uniforms kept at the lockers, as well as the provision of extra uniforms to the employees in cases of necessity that have been re-arranged.
- Frequency of cleaning the offices, production sites, and that of the spots with frequent hand contacts (doorknobs, handrails, meeting rooms, WCs, etc.) have been re-arranged.
- Single and cross-seating order has been implemented at the shuttles in consideration of maintaining social distance. While the shift hours have been re-arranged, the number of shuttle trips have been increased, and the number of persons being transported in each shuttle has thereby been reduced. It has been made obligatory for both the drivers and all the passengers to wear surgical masks inside the shuttles during their travels. While all the team is distributed with masks on a daily basis, it has also been made obligatory to use hand disinfectant in the shuttles.
Common Area Precautions
- Having put single-use items, such as packed drinking water, napkins, salt, etc. into use at the dining halls, infection risk has thereby been reduced to the minimum. Having changed the dining hours of the employees, the number of employees using the dining halls concurrently has thereby been reduced.
- Alongside the markings that determine the social distance for the rows at the dining halls, surface contacts have been reduced to the minimum by way of putting the card-pressing system into operation instead of the fingerprint-readers. The risk of violating the social distance rule at the entrances and exits has been lowered by way of putting additional gates to use.
- Different mobile applications and barcode-reading systems have been put to the use of our employees in our Companies in order to minimize the risk of infection and to isolate our contacted employees rapidly in the occurrence of a potential case.
- The new working orders we have implemented, as well as the precautions we have taken in our Companies as from the occurrence of the first case, have been submitted to the attention of all our stakeholders.
- Alongside the aforementioned notifications, we keep on informing all our stakeholders in this respect periodically.
- While all the visits to our offices and facilities from outside have been postponed, critical visits have begun to be performed within the frame of HSE protocols.
- All meetings with the customers, suppliers, and third parties have been conveyed to the digital environment until the next decision to be taken in this respect. All Company organizations and activities with large attendance have been postponed.
Fastmarkets: What would you highlight as the key challenges for the Turkish steel market?
Ali Okyay: I believe that Türkiye is suffering the most as a result of global protectionism measures. The US and EU are the biggest export markets for the Turkish steel sector, however during the last 1.5 years we have had very limited exports to these regions. On top of this Türkiye is also struggling with domestic demand. Construction and automotive are the biggest steel consuming sectors in Türkiye, however we have recently seen demand in construction decrease significantly as well as a decrease by 20% in automotive production. About 80% of automotive production in Türkiye is exported and the EU is the main market, however it is expected that EU automotive demand will continue to decrease in 2020, and as a result we may see further decline in Turkish automotive production.
US steel prices decreased sharply after they reached record high levels when Section 232 first announced. Therefore it is now not possible for Türkiye to export to the US with 25% tax. The EU is also struggling with domestic demand and as a countermeasure they are putting safeguards in place to try and protect the domestic market; for instance producers are cutting capacities to limit supply and stop price decreases. However prices are not high enough to support export to the EU, so Türkiye is struggling to balance domestic and export markets and it seems that this will continue at least until mid 2020.
For Turkish producers it is not easy to generate alternative export markets for tubes, pipes and flat steel, so these sectors will struggle unless EU and US markets become more open.
Fastmarkets: As a pipe manufacturer, does Borusan Mannesmann foresee continued demand for these products? Is this domestic demand?
Ali Okyay: There will always be global demand for tubes and pipes. We see the current problems in the market as temporary, and as soon as they are solved we can see a fast recovery in the steel sector. Türkiye is an emerging country and has the ability to accelarate the recovery very quickly, and as such Türkiye will continue to grow and therefore there will be demand for steel tubes and pipes.
As Türkiye’s leading steel pipe manufacturer, Borusan Mannesmann always keeps balance between export and domestic sales. We have been engaged in export activities since the 1960’s, and I can say that we have made very important moves in this field, especially in the last 20 years.
In this context, we are not only exporting, but we also took important steps towards becoming a global brand.
77% of our current total consolidated revenues comes from sales to clients outside Türkiye and we have reached this point by both exporting from our plants in Türkiye and conducting sales from our local production plants in US and Europe. Despite current negative conditions, Borusan Mannesmann continues to invest. Our investment for automotive tubes continue, in particular the development of a $75 million facility investment in Gemlik, which we started at the beginning of 2018. Currently part of it is completed and we have started work that we will ensure completion of the whole facility in 2020. We are increasing our capacity although the market is shrinking: our strategy is longterm and we are very hopefull for the future of Türkiye. We think that this investment will also increase our position among the top 5 producers in Europe.
Fastmarkets: What do you hope attendees of your panel on the Turkish steel market will learn from the discussion?
Ali Okyay: Türkiye is an important player in the steel sector both regarding the capacity and geographic location. Therefore the development of the Turkish domestic and export markets is important for global steel companies. I believe attendees will benefit from the panel and they may make their strategies accordingly.
Organized together with DekoGroup under Borusan Mannesmann’s project partnership, the “Four Effects Engineering Meetings” was held on Thursday, 10 May 2018 at Çırağan Palace Kempinski.
Held for the first time in Türkiye, the event is set to become an annual event, bringing together the four actors of the mechanical installation industry –investors, designers, contractors, and suppliers. The participants were highly satisfied with the first edition of the “Four Effects Engineering Meetings”, which allowed for communication and an exchange of views, contributing in an increase and dissemination of the know-how across the industry.
At the event, where we explained as Borusan Mannesmann the Space platform prepared exclusively for the mechanical installation industry professionals, our platform, which allows for the interactive information sharing needed by the industry, drew significant interest.
Borusan Mannesmann prepares to add a new one to the major line pipe supply projects it launched in the United States in recent years.
The company undertook a project that aimed to bring through new pipelines the gas extracted in the Permian natural gas fields in Texas to Corpus Christi on the Atlantic seaboard, and bring the US natural gas to international markets.
The section of the project to be undertaken by Borusan Mannesmann will be 368 kilometers long. The contract value of the project will be USD173 million. All of the 42” pipes required for the project will be manufactured at the Borusan Mannesmann Gemlik plant, which has one of the world’s foremost state-of-the-art spiral pipe production facilities. Shipment of the pipes is set to start in 2018.
In a statement he made on the issue, Borusan Mannesmann General Manager Zafer Atabey said:
“Borusan Mannesmann has become a world-renowned and sought-after brand across many fields of the steel pipe industry, particularly pipelines. Borusan Mannesmann is currently the only manufacturer in Türkiye qualified to sell spiral welded line pipes in the United States. Over the last three years, we showed performed spectacularly in prestigious and high tonnage line pipe projects, and became an appreciated brand. For the first time in the world, we smoothly concluded the exports and shipment of 24.5m line pipes from an overseas country to the United States and Mexico, with lengths 445km and 120km, respectively. Therefore, it came as no surprise to us to see that we were granted such a project that requires expertise and reliability for line security, and which matters significantly for the US economy. The new project is the biggest ever awarded to Borusan Mannesmann in terms of tonnage and contract value. And we are pleased and proud to have undertaken such a project. As an international Turkish brand in steel pipes, we will once again represent our country in the best way possible. Borusan resists to the increasing attempts of protectionism in the global trade, which have reached considerable dimensions, continuing to export added value energy pipes to the world’s most prestigious projects and to contribute in the Turkish economy. It will carry on with its efforts with resolve and determination.”