Businessmodel of United States Steel

Customer Segments

US Steel serves a range of customers across its three operating segments. The Company’s segments principally serve large enterprises in the industrial sector, as follows:

• Flat-Rolled Products, which serves North American customers in the service centre, conversion, transportation (including automotive), construction, container, and appliance and electrical markets;
• US Steel Europe, which primarily serves customers in the European construction, service centre, conversion, container, transportation (including automotive), appliance and electrical, and oil, gas and petrochemical markets; and
• Tubular Products, which primarily serves customers in the oil, gas and petrochemical markets. US Steel’s largest market is North America, principally serving customers in the US, as well as in Canada. The Company also serves customers across Europe through its European arm.

Value Propositions

US Steel provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as one of the largest and most well regarded steel companies in the world, with a track record for providing reliable and efficient products and services;
• Its technical expertise and experience, with the Company employing specialists technical staff across its operating segments, including on-site and in its offices, as well as an experienced executive team;
• Its extensive infrastructure and operations, with the Company engaged its extensive operations across the US, including various production and distribution facilities, as well as having operations in Europe;
• Its research-backed approach, with the Company operating its own in-house research organisation which support the development and operation of the Company’s processes and projects;
• Its technology and equipment, with the Company utilising state-of-the-art technology and equipment across its operations. ### Channels

US Steel operates a website at www.ussteel.com, through which it provides information on its various projects, products, and services. The Company, however, does not operate an online sales channel or customer portal. US Steel makes sales through its direct sales force, which is organised by segment and geographic region and operates out of the Company’s network of offices across the US and Canada, as well as in Europe.

US Steel’s products are manufactured through a network of production and processing facilities that it owns and operates itself, which has annual raw steel production capability of 22.0 million net tons – 17.0 million tons in the US and 5.0 million tons in Europe – as well as flat-rolled finishing operations. US Steel also operates its own distribution and logistics infrastructure. It also utilises the services of various third-party agents and distributors.

Customer Relationships

Despite its online presence, US Steel does not offer services or products to its customers on a self-service basis. The Company makes its sales through its direct sales teams, which consults closely with customers in order to fully ascertain the individual requirements of each client. The Company typically agrees fixed-price multi-year sales contracts with its customers, with a view to establishing longstanding recurring business.

US Steel has dedicated account management teams that work closely with its customers on an ongoing basis, providing technical support and sales assistance when necessary. The Company also provides more general support services, with customers able to contact the Company’s personnel over the phone or via email.

US Steel also offers its customers a range of information resources through its website, including press release, news articles, and reports. The Company also operates social media accounts – including with Facebook, Twitter, and LinkedIn – through which it is able to interact directly with customers.

Key Activities

US Steel is an integrated steel producer engaged in the production of flat-rolled and tubular steel products. While the majority of the Company’s production operations are in North America, the Company also has operations in Europe.

US Steel’s operations are organised into three business segments: Flat-Rolled Products, which comprises the Company’s operation of integrated steel plants across the US – specifically those involved in the production of slabs, rounds, strip mill plates, sheets and tin mill products – as well as all of the Company’s US-based iron ore and coke production facilities; US Steel Europe, which comprises the operations of subsidiary company US Steel Kosice, the Company’s integrated steel plant and coke production unit in Slovakia; and Tubular Products, which comprises the operation of the Company’s tubular production facilities, primarily in the United States.

Key Partners

US Steel collaborates with a range of companies across its three operating segments. These partners include:

• Supplier Partners, comprising suppliers of resources and tools, notably suppliers of iron ore and coke, the principal raw materials in steel production;
• Service and Vendor Partners, comprising various service providers and vendors that support and facilitate the Company’s production and distribution operations, including companies to which certain non-technical functions can be outsourced;
• Joint Venture Partners, comprising various companies, principally other steel businesses, with which the Company collaborates on joint projects through mutually-owned entities;
• Channel and Distribution Partners, comprising a range of sales agents and third-party distribution companies that assist in the sale and distribution of US Steel products; and
• Community and Environmental Partners, comprising various companies and organisations with which the Company collaborates on joint projects, particularly projects that seek to protect and preserve natural resources. US Steel operates a number of joint ventures, including a production facility operated in partnership with Kobe Steel. The Company is also a partner of coke company SunCoke.

Key Resources

US Steel’s key resources are its supply chain and raw materials – notably its supply of coke and iron ore, its network of production and processing facilities and its equipment, its logistics and distribution infrastructure, its sales channels, its partnerships, and its personnel.

US Steel owns and leases a portfolio of properties across the US, Canada, Slovakia, and Brazil. This includes various corporate and sales offices, production and processing facilities, distribution centres, and warehouses.

Cost Structure

US Steel incurs costs in relation to the procurement of raw materials and the management of its supply chain, the operation of its production and processing facilities, the operation and maintenance of its logistics and distribution infrastructure, the management of its partnership, and the retention of its personnel.

In 2015 US Steel recorded cost of sales in the amount of $11.14 billion, including expenses related to the acquisition of raw materials. The Company’s selling, general and administrative expenses – including the payment of salaries and benefits to its workforce of 21,000 employees worldwide – amounted to $415 million for the year.

Revenue Streams

US Steel generates revenue through the sale of various steel products to industrial and commercial customers across North America and Europe. This includes sales contracts for the distribution of slabs, rounds, strip mill plates, sheets, tin mill products tubing, and mechanical tubing.

In 2015 US Steel generated annual sales of $11.57 billion, down considerably on the $17.51 billion recorded by the Company in 2014. The Company attributed this decrease in sales to decreased shipment volumes and lower average realised prices as a result of challenging market conditions.

The majority of US Steel’s 2015 revenue was generated by the Company’s Flat-Rolled Products segment, which accounted for 8.29 billion in net sales. The bulk of the remaining sales were generated by the US Steel Europe segment, which recorded sales for the year of $2.32 billion.