A method of manufacturing a magnetically graded material, including depositing a steel filler material to a substrate, and applying a directed energy source to first and second regions of the filler material to thereby join the filler material to form a joined material. The energy source is directed to the first region while the first region is provided with an inert shield gas such that the material of the first regions includes a magnetic phase, and the energy source is directed to the second region while the second region is provided with a nitrogen containing shield gas to thereby impart an non-magnetic phase to the joined material.