The shadow of Vekselberg still hangs over a steelmaker dismissed by the US Air Force
Swiss Schmolz + Bickenbach sees nearly half a billion contract canceled. Official reason? It is a “foreign” group.
A Swiss industrial flagship formerly linked to the conglomerate of Viktor Vekselberg is once again in contact with the American administration. Everything was supposed to be settled, however, since the Russian oligarch – the target of a sanctions shot from Washington on April 6 – had given up most of his stake in pump maker Sulzer. But also in the steelmaker Schmolz + Bickenbach. In order to prevent them from becoming, in turn, targets of the United States.
This art of dodging, however, did not prevent the Lucerne steelmaker from losing, at the beginning of the month, an order of nearly half a billion dollars placed by the US Air Force. The contract provided for one of the American forges of Schmolz + Bickenbach to melt, for five years, the metal carcasses of hundreds of dreaded “bunker buster” bombs.
“The cancellation of this contract has nothing to do with the shares (editor’s note: again) held by Mr. Vekselberg”, we are assured within the group. And for good reason: the Russian billionaire reduced his direct stake in the German steelmaker from 42% to 12.6% last May, avoiding American sanctions. What happened then?
Bombers «bunker buster»
Return to the United States. In Chicago more precisely, headquarters of Finkl Steel, a specialist in ultra-resistant forged steels bought by the Swiss steelmaker in 2015. With factories in Chicago, Detroit and Quebec, this subsidiary won, last spring, part of the supply of tubes steel from a new generation of penetrating bombs used by US forces. Weighing a ton and designed to penetrate more than thirty meters of ground before exploding, this type of ammunition was used in particular during the airstrikes targeting the underground networks dug by the forces of the Islamic State in Syria or Iraq. . The total order of the US Air Force reached 900 million dollars. The Finkl Steel subsidiary won $ 420 million, with the rest going to a competing forge in Ohio.
But the situation becomes more complicated as soon as the contract is signed on June 27. According to the Bloomberg news agency, it all started with a letter to the United States Air Force command sent from Pennsylvania by angry Republican lawmakers: employing 2,000 workers in their jurisdiction, the Ellwood national forge – a supplier history of the US military – was kept out of order. The reaction does not take long. At the end of August, in a letter sent to the Government Accountability Office – the audit body of Congress – quoted by “Bloomberg”, the US Air Force indicates that Finkl Steel is finally considered “ineligible” for the supply. of these parts. Reason given? Its “foreign control”, by Schmolz + Bickenbach. No reference is made to Viktor Vekselberg.
The American subsidiary of the German steelmaker was confirmed to cancel the contract at the beginning of September. The justification of the US Air Force “was that the supplier was controlled by foreign interests”, confirms within Schmolz + Bickenbach.
An unstoppable argument given the provisions available to the US Department of Defense to exclude a subcontractor having links – or even a simple “influence” – with the foreigner. In order to “protect access to secret-defense information,” explains the Cornell Law School site.
S + B does not let go
The Swiss steelmaker, who employs 9,000 people around the world, “appealed” against this eviction. In an attempt to maintain a five-year contract representing the equivalent of 15% of its 2.7 billion annual turnover. “This will have little impact on our activity, deliveries should really start to take off from 2020,” says one at the headquarters of Schmolz + Bickenbach. A spokesperson recalls that the expected revenues “had not been included in any forecast and should in any case be spread over five years”. According to him, this setback in no way excludes participation in other US military tenders. Far behind the automobile, “defense contributes only a small portion of our sales, it should be the same in the future”, estimates the company.
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