VZCZCXYZ0000
RR RUEHWEB

DE RUEHRL #0218/01 0331712
ZNR UUUUU ZZH
R 021712Z FEB 07
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC 6897
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHBS/USEU BRUSSELS

UNCLAS BERLIN 000218 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD OTRA FR GR IT JA KSAC EUN
SUBJECT: GERMANY'S BEST PRACTICES FOR ENHANCING STEEL 
INDUSTRY 
 
REF: SECSTATE 202497 
 
SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. 
 
¶1. (SBU) Summary: Germany's steel industry benefits from both 
national and EU programs to enhance the competitiveness of 
its steel industry.  According to Dr. Dirk Grabowski, Office 
Director for the Steel and Defense Industries at the Ministry 
of Economics and Technology, the nation's steel industry 
receives funding from both European Union and national 
government initiatives designed to enhance its 
competitiveness through innovation and research support.  In 
2006, Germany's leading steel producer Thyssen-Krupp enjoyed 
its best annual performance since its merger five years ago. 
Grabowski emphasized Germany's desire to enlarge the industry 
but not through subsidies, pointing to reacquiring segments 
of the raw material supply chain. He noted that globalization 
had brought new entrants from Russia and Italy and spurred 
Thyssen-Krupp's plans to open a $3 billion steel mill in U.S. 
 End Summary. 
 
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Innovation Funds 
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¶2. (U) The Research Fund for Coal and Steel (RFCS), a vestige 
of the European Coal and Steel Community, continues to 
provide 60 million Euros in annual funding for training, 
research and restructuring. The European Commission's 
Directorate-General for Research Unit 5 administers these 
funds. The Council directs about three-quarters of the funds 
to the steel industry EU-wide. During the 1980s, when the 
steel sector faced overcapacity, the program provided Member 
States with assistance to downsize their steel industries. 
The program is now a source of funding for steel research 
programs, which lead to economic, clean and safe steel 
products through improved production and finishing, new steel 
grades for more rigorous applications, enhanced mechanical 
properties and greater resistance to heat and corrosion. The 
program also aims to reduce carbon dioxide and GHG emissions 
through carbon-lean technologies combined with carbon dioxide 
capture and sequestration, and the innovative use of natural 
gas and bydrogen, biomass or electricity in the production of 
steel. Among the benefits of this research are lower energy 
consumption, greater environmental protection and 
conservation, greater structural safety in case of 
earthquakes or fire and easier material recovery and 
recycling. The EU Commission credits the program with 
assisting the steel industry to better meet the challenges of 
international competition, accelerated innovation, stricter 
environmental protection and energy consumption standards. 
 
¶3. (U) On the national level, the GOG's multi-billion dollar 
High Tech Strategy will devote resources toward innovation in 
the steel and related industries between now and 2010. 
Coordinated by the federal ministries for Education and 
Research, and Economics and Technology, the strategy 
identifies 17 cutting-edge fields, including materials and 
production technologies as well as the automotive, aviation 
and transportation sectors. The strategy sets aside 6 billion 
Euros specifically for research, development and innovation. 
Within this larger program, the German goverment allocates 
300 million euros annually on initiatives to improve energy 
efficiency in the production of metals, including steel. 
Despite a decades-long decline in the per-unit electricity 
needed to produce steel, Germany's industry continues to seek 
cost reductions and faces pressure to reduce energy 
consumption. 
 
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Research Support 
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¶5. (U) As part of the High Tech Strategy, Germany plans to 
build on its existing solid infrastructure in university and 
non-university institutes in materials science, which supply 
qualified professionals to the steel industry. Beginning this 
year, the GOG will fund young teams of researchers working in 
the engineering sciences at universities of applied sciences. 
 The Ministry of Economics and Technology specifically 
identified teaching positions to be added as well as a new 
Innovative Steel research chair, Georg Frommeyer, at the Max 
Planck Institute for Iron Research in Dusseldorf. 
 
¶6. (U) Dating back to 1971, the Planck Institute has 
contributed significantly to advances in Germany's steel 
industry.  The institute, which receives roughly half of its 
funding from industry, is located near the traditional 
industrial belt.  Frommeyer's Department of Materials 
Technology develops high performance steels with superior 
 
physical and mechnical properties such as lower density, 
higher elastic stiffness, excellent formability and improved 
corrosion resistance.  More specifically, Frommeyer's 
department designs and evaluates high-strength steels with 
the capacity to endure -50 to 100 degree Celsius environments 
as required for modern railway transportation systems and 
power trains. 
 
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Investment in U.S. 
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¶7. (SBU) In discussing Germany's steel industry, Grabowski 
said Thyssen- Krupp expects to open a $3 billion USD steel 
mill in the southern United States, either in Arkansas or 
Louisiana.  Grabowski also thought the U.S. and Germany could 
find areas of cooperation, particularly on the 
energy/environment front.  One possible area would be in near 
zero-emissions steel plants. 
TIMKEN JR