Transcript Kein Folientitel - Bruno Ruettimann

5th World Congress ALUMINIUM 2000
Rome, 18-22 March 2003
Globalisation and the Effects
of the Opening of the East on the
Western European Aluminium
Semis Industry
Bruno G. Rüttimann, Alcan Singen GmbH
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
Mergers &
Acquisitions
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
Trade
Deregulation
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
Increasing
Competition
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
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Price
Pressure
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
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Flow of
Information
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
Interlinked
Markets
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
World-wide
Strategies
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
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Reduced
Growth Rates
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
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Overcapacity
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Rome, 18-22 March, 2003
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Unemployment
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
CONTENT
 The Drivers for Globalisation
 The Globalising Competitive System
 The Opening of the East
 The Resulting Effects
 Changes in Demand Characteristics
 Possible Strategies
 The Ten Postulates of Globalisation
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
The Drivers for Globalisation
Symptoms, causes, and effects
Saturation in
existing
end markets
Price/margin pressure
Change of
competitive system
Shake-out
+
Searching for
optimization potential
Searching for
geographical expansion
M&A
Opening of a
global market
with new
competitive
environment
and new
world market
price
Searching for
diversification opportunities
World-wide
communication
network
Concentration process
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
The Globalising Competitive System
The types of globalisation
 Type 1  Globalisation of business itself
 products with world price
 and world-wide sourcing
 or need to follow globally active customers
 Type 2  Globalisation of managing business
 mainly in fragmented market structures
 for „franchise-like“ business model
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
The Globalising Competitive System
Aluminium industry structure and type of globalisation
Type 1
globalisation
predominant
Bauxit mining,,
alumina production
Primary smelter,, casting
Rolling,, extruding,,
die casting,, forging ,...
Components,,
Scrap,
finished products
waste
Remelters,,
foundries
Usage
Type 2
globalisation
predominant,
if ever
Recycling
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
The Opening of the East
System dynamics and driving forces on Alu demand
Al- capacity
CIS-offer
TOTAL
Al-offer
+
Al- capacity
Western-offer
Aluminium
price
+
Eastern privat and
industry demand
-
TOTAL Aldemand
+
+
Al- demand eastern
countries
+
+
-
+
+
Al- consumption
eastern countries
+
+
Eastern economy
policy
+
Western govern.
+
-
Substitution or
cooling down
+
Al- demand western
countries
+
Export possibilities
to western countries
Al- consumption
Western countries
+
Loans
+
help
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
The Opening of the East
The EU/CIS intertrade in 2001 (ktons)
EUR (15)1
CIS
150 Consumption 5353
Production
2571
Primary:
Russia,Azerbaijan, 1338
2
Capacity
3745 Tadjikistan,Ucraine
680 Consumption 845 Russia,Ucraine
0
Russia,Tajikistan,
Production 37072 Ucraine
Rolling:
464
Capacity
Rolling4:
21
Capacity
Primary:
1960
Capacity
2586
3500
420 Consumption 3350
Production
3300
31 Consumption 250
Production
330
Extrusion:
181
Capacity
2600
166 Consumption 2440
Production
2400
Extrusion4:
7
Capacity
600
26 Consumption 80
Production
150
1
3 theoretical,
2
4
EU 15 includes EU 11 plus Denmark, Greece, Sweden and UK
Differences between Production and Consuption/Export are explainable with
stocked material or even higher (not registered) Exports
69
17003
2
Russia 330
64
13
not fully operational
estimated, figures not available
Source: EAA/Eurostat,various souces, own estimations
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
The Effect on Prices
Price evolution of rolled and extruded products
10
LME DM/Ton
10000
9
8000
8
7000
7
6000
6
5000
5
4000
4
3000
3
2000
2
rolling
1000
1
extrusion
0
0
1980
1984
5th World Congress ALUMINIUM 2000
1988
Rome, 18-22 March, 2003
1992
1996
DM/kg
9000
LME
2000
B. Ruettimann, Alcan Automotive
The Immediate Effects
Price discontinuity due to apparent supply increase
Price
Demand
curve D
Supply
curve S
S‘ after
opening
pº
p‘
cost
differential
overcapacity
Vº
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
V‘
Volume
B. Ruettimann, Alcan Automotive
The Persistance of Effect
Evolution of East-West salary differential
80,0
70,0
DEM/h
60,0
50,0
40,0
30,0
Western salary with
constant growth rate
20,0
10,0
Eastern salary with
shrinking growth rate
0,0
1
5
9
13
17
21
25
29
33
37
41
45
Year
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
Changes in Demand Characteristics
New possible equilibrium in the long term
Price
long-term
D‘‘
Demand
curve D
Supply
curve S
S‘
pº
p‘‘
p‘
Vº
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
V‘ V‘‘
Volume
B. Ruettimann, Alcan Automotive
Resulting Strategies
The response to the opportunities and challenges
Increased opportunity
Foreward
Foreward
Foreward
integration
integration
integration
Larger market
Focussing
Opening /
Globalization
Increased competition
Best - in - class
Margin squeeze
Innovation
Customer dedication
Cost reduction
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
The 10 Postulates of Globalisation
1. The price spiral has not yet reached its equilibrium.
2. The Eastern semis exports will increase.
3. The East‘s labour cost advantage will persist.
4. The semis margin will hardly improve.
5. Lower semis prices will create new applications.
6. Customers will increasingly take advantage from low-price
sources.
7. Economies of scale will play a decisive part.
8. Specialised plants will take advantage over multi-purpose
plants.
9. Technology-push allows differentiation.
10. Mergers and networking within an integrated value chain
will dominate the future.
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
ALCAN
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
immagination materialized
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive
5th World Congress ALUMINIUM 2000
Rome, 18-22 March, 2003
B. Ruettimann, Alcan Automotive