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VAMA continues to grow in China despite market decline thanks to “strength” in high quality steel

– Exclusive interview with Jurgen Cobbaut, CMO of VAMA

CHANGSHA, Hunan – China’s auto market may be in the midst of its worst downturn ever, but Valin ArcelorMittal Automotive Steel Co., Ltd. (VAMA) is still growing despite the decline.

“It’s a paradox,” said Jurgen Cobbaut, CMO of VAMA. “We are actually getting nominations on several new car models. Every month there are some new cars coming to the market for which VAMA has been nominated, so we are starting up new business with carmakers and our volume is growing. The impact is if the car industry would pick up more, our volume could be higher.”

Cobbaut made the comments in an exclusive interview with CBU/CAR on August 27 at VAMA’s sales office in Changsha, Hunan Province.

The fact that competition is also getting much fiercer among carmakers also bodes well for VAMA because they are paying more attention on stable product quality, which VAMA can certainly provide with all the knowledge that it gets from parent company ArcelorMittal, the world’s leading integrated steel and mining company.

“Somehow the competitive environment also allows steelmakers like VAMA which deliver high quality to stand out from the rest of the steel maker competitors as well. This is very well appreciated (by the carmakers),” said Cobbaut.

Carmakers’ focus on safety as well as for cost savings is driving up demand for higher advanced high strength steel (AHSS) grades, even though they are more expensive per ton, according to Cobbaut.

“This is strange because if you sell one ton of our Usibor® 1500, it’s more expensive than one ton of mild steel. But if you need to produce the car’s B-pillar with mild steel, you need to produce it with 3-mm thickness. With our Usibor® 1500, only 1.5 mm is enough, so you can produce much more parts out of the same tonnage, and the cost will be cheaper per part,” explained Cobbaut, emphasizing cost savings as an important advantage in a very competitive market.

Jurgen Cobbaut, CMO of VAMA

VAMA, based in nearby Loudi, was established in June 2012 as a 50:50 joint venture between ArcelorMittal, the world’s leading integrated steel and mining company, and Valin Steel, central China’s leading steel supplier. With a total investment of ¥5.2 billion and registered capital of ¥4 billion, VAMA has been producing state-of-the-art cold rolled coils, hot-dip galvanized and galvannealed coils and aluminized coils for just a little over five years since June 2014. The company has an annual production capacity of 1.5 million tons of high-grade steel for safe and cost efficient lightweight design, superior surface quality and coating technology, fulfilling increasing demand of lightweight automotive steel production in China.

Cobbaut joined ArcelorMittal in 2003 and has been with VAMA since 2011, serving as CTO until July 2017, when he became CMO.

While as CTO, he was responsible for specifying VAMA’s factory in China as well as technology transfer from ArcelorMittal to VAMA and bringing steel grades from Europe or North America to China for trial production and production approval. His experience as a resident engineer working at a design and development center of a major European OEM from 2005 to 2011 gave him a better understanding of how to use different steel grades in different cars, and that helped VAMA better adapt and customize production and quality control as well as interaction with customers.

“It was very satisfying for me to be able to build up VAMA and as CMO it feels good when I go see customers I can talk about VAMA’s technical capabilities because I know very well what VAMA is able to do,” said Cobbaut.

Over the past five years, VAMA has produced all kinds of steel grades for customers and has finished development of new steel grades such as the Usibor® 2000 and Ultragal®. Customer development has also progressed very well: it is now approved by almost all the major OEMs in China, be it the joint ventures or local domestic carmakers. It also serves tier-1 suppliers who are mainly using AHSS. For press hardening steel Usibor® 1500, VANA is a market leader in China.

One of the key success factors for VAMA’s big progression over the last five years, according to Cobbaut, is that it’s not an off-the-shelf steel supplier like a supermarket, but rather as a solutions supplier working with most OEMs in tandem to think about the future.

VAMA’s S-in motion® automotive steel solution

“We are now also thinking together with the carmakers for cars that will come out in five years,” said Cobbaut. “The issues of carmakers are our issues. We take them over and think about how we can help on them.”

One of the driving forces of that future and pushing steel grade forward is simply the environment, according to Cobbaut.

“Customers don’t want to buy a car that is very polluting, and carmakers do not want to sell cars that are very polluting,” said Cobbaut. “This is something all of us are contributing. The contribution is mainly coming from AHSS grades that are stronger. By making parts stronger you can make them lighter at the same time. This is the strength of VAMA where with the Usibor® 1500P when we came to China and produced this material, we saw a huge increase in the use of this material among all the players. Domestic carmakers today are very much interested in the second generation of this hot stamping steel grade – Usibor® 2000, which is 30 percent stronger. That’s the driving force.”

Cobbaut declined to reveal the share of VAMA’s business among the traditional Chinese carmakers, traditional foreign automakers and Chinese smart EV startups, the so-called “three forces,” but said that it is playing a big role for the EV startups because they are very open in studying new solutions together such as battery housings, door rings and new steel grades.

The traditional domestic carmakers are also working with VAMA on new solutions that shorten the quality gap with their foreign counterparts, according to Cobbaut. One example is an integrated door ring solution that combines the A-pillar, B-pillar, lower side and rocker side into one part for cost savings as well as the use of Usibor® 2000 steel grade, which we are developing with our downstream operations GONVAMA (Joint Venture between VAMA and Gonvvarri).

VAMA’s S-in motion® automotive steel solution

“In terms of R&D and innovation, eight years ago there was a gap but today I don’t see this gap anymore,” said Cobbaut.

VAMA is also working on battery housings made of steel instead of aluminum driven by competition on safety, pressure of cost and weight savings. “The cost is much lower for a steel solution than aluminum solution. We see a lot of potential here and co-engineering projects we are having with the domestic carmakers are for this subject,” said Cobbaut.

Looking out into the future, Cobbaut believes steel will still play a major role for the auto industry and doesn’t see it phased out in at least 10 years.

“Steel plays a huge role in the mobility of the road. Even going to electrification, a lot of EVs are concerned about weight savings on the one hand, on the other hand high costs involved bringing aluminum whereas with the new development of second and third generation AHSS grades reaching levels of over 2,000 MPa we offer a competitive edge,” said Cobbaut. “I see with our Usibor® 2000 which comes out a huge potential for steel in the next coming 20 years at least.”

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