Arcelor Gent - Company Profile, Information, Business Description, History, Background Information on Arcelor Gent

John Kennedylaan 51

Company Perspectives

Arcelor Gent is striving for leadership in the production of high quality flat steel products in a sustainable entrepreneurial way. Sidmar is fully aware that this leads to great responsibility towards its shareholders, customers, employees, local surroundings and the environment. Sidmar is fully responsible for making the best use of all its available resources, such as investments and research and development, in order to be able to deliver top technological performances. Continuous customer contact and research into new applications with customers are crucial to develop new products and processes.

History of Arcelor Gent

Arcelor Gent, formerly known as Sidmar N. V., remains one of the largest companies within the Arcelor group, which was formed through the merger of Sidmar's parent company, Arbed, with Arceralia and Usinor in 2002. The Gent works operate within Arcelor's flat carbon steel division, alongside StahlWerke Bremen and EKO Stahl. The Gent plant, located along the Ghent-Terneuzen Canal produces nearly 4.5 million tons of crude steel, more than 4 million tons of hot rolling mill, and nearly 3 million tons of cold rolling mill each year. The largest part--nearly 40 percent--of the group's production goes to the automotive industry. The company is also a major supplier of high grade steel to the home appliance, mechanical engineering, and packaging industries. The original European Union countries comprise Arcelor Gent's primary market, representing nearly 85 percent of the group's output. In addition, Norway, Switzerland and Turkey add an additional 4 percent to the group's sales, while the markets represented by the EU member countries admitted since 2004 add nearly 3 percent to sales. The company also ships to the North American and Chinese markets, although these remain minimal in the group's overall sales. In 2005, Arcelor Gent posted revenues of EUR 2.34 billion. The company took on its new name in 2006, as Arcelor fought off a takeover offer from India's Mittal Steel with plans to merge with Russia's Severstal.

Evolution of a Belgian Steel Producer

The development of the Benelux market's leading steel producer, Arbed, which as Arcleor later became one of the world's largest steel concerns, began in Luxembourg in the early 19th century. The earliest part of Arbed came through the establishment of Auguste Metz et Cie by brothers Norbert, Auguste, and Charles Metz in 1838, while another major component of the future steel giant was founded by the Victor Tesch in 1856, called the Société Anonyme des Hauts Fourneaux et Forges de Sarrebruck. Linked through marriage, the Metz and Tesch families joined together in 1871 to create a new company, Forges d'Eich--Le Gallais. Metz et Cie later joined with Mines de Luxembourg in establishing another steel producter, the Société Anonyme des Hauts Fourneaux et Forges de Dudelange in 1886.

By 1911, the two companies, together with their two joint ventures, were merged together into a single company, called Acieries Reunies de Burbach-Eich-Dudelange, or Arbed, for short. Leading the merger was Emile Mayrisch--whose mother was a grand-niece of Norbert Metz, and who had served as director of the Dudelange works since 1897. Joining Mayrisch, who took the position of managing director of the new Luxembourg-based company, was co-founder Gaston Barbanson, a member of the Tesch family with links to Belgium. Arbed became the single-largest corporation in the duchy of Luxembourg, responsible for a large percentage of its gross national product.

Luxembourg remained under control of Germany until the end of World War I. Following the war, the company found its operations split among the new borders between Luxembourg, France, and Germany as defined in the Treaty of Versailles. In the context of the new geographic and economic situation, Mayrisch initially steered Arbed toward a union with its French steel counterparts, in anticipation of a possible economic treaty between France and Luxembourg, despite the objects of Gaston Barbanson, who preferred to seek partnerships in Belgium. The refusal of an economic treaty by France forced Luxembourg to turn to Belgium for an economic partner, however, and in 1922, the two countries signed a treaty of economic union, ending Mayrisch's hopes to create a Luxembourg-French steel giant.

Instead, Arbed turned to Belgium, establishing its first company there, Clouterie et Tréfilerie des Flandres, a producer of nails and similar products. In the late 1920s, the Arbed subsidiary was given instructions to begin buying up land along the Ghent-Terneuzen canal. Originally constructed in the 1820s, the canal had been deepened in 1911 to accept the passage of larger ships to the city of Ghent (also known as Gent). With access to a major Belgian industrial market, and the strong transport facilities provided by the waterway, the canal was a promising location for the creation of a steel plant.

Through the 1920s, Arbed acquired property along the canal, and by the early 1930s owned some 210 hectares. Plans for construction of the steel plant were suspended, however, amid the economic turmoil of the 1930s. The outbreak of World War II and the German occupation of Belgium provided a new obstacle to the development of the Belgian steel operations. By 1951, however, Arbed's own production had surpassed its prewar levels for the first time, and demand for steel and steel products was rising steadily amid a general European economic boom. In the mid-1950s, Arbed, together with the Belgian authorities, began talks for developing the company's canal property and establishing a steel mill. Arbed launched preparatory studies for the construction of the mill in the late 1950s.

Strong Demand for Steel Fuels Growth of Industry in Belgium

By the beginning of the next decade, the project took on fresh impetus when the Flemish authorities agreed to dredge the canal in order to enable the passage of the new generation of 65,000-ton Panamax vessels to Ghent. At the same time, Arbed increased the size of its landholding, to 624 hectares. The following year, Arbed further defined the scope of the project, deciding that the Ghent site would focus on the flat product market. The company also set out plans to construct state-of-the-art blast furnaces, and add both cold and hot rolling mills. Arbed received approval for the project from the European coal and steel industry oversight authority in early 1962. By July that year, a new company had been established, called Sidérurgie Maritime, headquarted in Ghent. Arbed was joined in the new company's shareholding by a number of French and Flemish steel groups. Construction of the steelworks began in 1964, and by March 1966, its cold rolling mill began operation. The commissioning of the company's hot rolling mill came at the end of the same year, while the company's blast furnaces and steel mill were commissioned at the beginning of 1967, marking the full-fledged launch of Sidmar, as the company came to be known. Sidmar commissioned its second furnace in 1968.

Into the early 1970s, the company continued to expand, launching the second phase of its construction. This led to the construction of a coke factory in 1972, and two more production units through the 1970s, including a second cold rolling mill opened in 1971.

Crisis and Restructuring Lead to Growth

Yet Sidmar's growth was soon threatened by the international economic crisis and the near-collapse of the global steel industry during the 1970s. In Belgium, the troubles in the industry led to the nationalization of much of the country's steel interests. With their own operations in danger, Sidmar's Flemish and French shareholders pulled out of the company during this period, as part of the overall restructuring of the Belgian steel industry. The Belgian government, through the Nationale Maatschappij voor de herstructrering van de Nationale Sectoren (or NMNS) then took over the minority stake in Sidmar, while Arbed remained the company's majority shareholder. In 1980, the NMNS transferred its shareholding to Gimvindus, the holding company of the Vlaamse Regering. The Luxembourg government also acquired a stake in Sidmar. Throughout this period, investments in Sidmar had slowed; by 1981, however, the company had once again begun to expand, notably with the commissioning of the first continuous rolling mill. The company had also launched a diversification effort in order to reduce its exposure to the cyclical steel industry, establishing its own investment operation, Sidinvest. The company also acquired stakes in ALZ, a stainless steel producer in Belgium, a share of Arbed's Brazilian subsidiary Belgo-Mineira. In 1988, Sidmar's diversification effort led it to acquire automation systems producer Egemin, based in Schoten. By the beginning of the 1990s, however, Sidmar had abandoned its diversification effort and instead refocused itself around its flat steel products operations. This was accompanied by a streamlining of its shareholder, as Arbed bought out the Luxembourg government's 17 percent in the company in 1990.

By then, Sidmar had become the single-largest unit in the international Arbed empire. Sidmar launched a restructuring in 1992, in an effort to drive down its costs amid the turbulent economic climate. The company then launched an expansion drive, targeting acquisitions in the steel sector. This led the company to acquire a 25 percent stake in Germany's Klöckner Stahl. By 1994, Sidmar had acquired majority control of the Germany steelmaker, which was subsequently renamed Stahlwerke Bremen. Sidmar followed this purchase with the establishment of its own sales operation, Sidstahl. In 1997, the company also acquired Ferrometalli Safem, a steel service center in Italy, from the Falck Group. Arcelor Group Flat Steel Producer in the New CenturySidmar launched a new expansion effort at the end of the 1990s, announcing a production capacity expansion backed by a EUR 450 million investment in 1999. As part of that program, the company inaugurated four new hot-dip galvanizing lines at its Ghent works.

In the meantime, Arbed had launched its own expansion drive, buying up a 35 percent stake in Spain's Aceralia in 1997. In 1999, Arbed moved to take fulll control of Sidmar, buying out the stake held by Gimvindus. Now one of Arbed's main subsidiaries, Sidmar relaunched its production capacity expansion. In 2001, for example, the company invested more than $215 million on a new continuous slab caster, as well as the expansion of its blast furnaces. In 2002, Sidmar found itself part of a much larger group after Arbed, Aceralia, and France's Usinor agreed to a three-way merger that created Arcelor, the world's third-largest steel group. Following the integration of the three companies, Arcelor announced the launch of a restructuring of its divisional structure, abandoning its geography-based structure in favor of a operational focus. As part of that restructuring, Sidmar received a new name, Arcelor Gent, in 2006. By then, Arcelor itself had come under pressure, after Indian steel leader Mittal launched a hostile takeover offer. Arcelor fought back, agreeing to a merger with Russia's Severstal in June 2006. The resulting company promised to become the world's largest steel group. Arcelor Gent was expected to remain one of the new group's major subsidiaries.

Principal Subsidiaries

Agifep S.A. (Luxembourg); Arcelor S.A.(Luxembourg); Arcelor Finances & Services Belgium N.V.; Bourgeois S.A. (France); Decosteel N.V.; EBT GmbH (Germany); Paul Wurth S.A. (Luxembourg); Shangai Bourgeois Leicong (China); Sidarfin N.V.; Sidlease N.V.; Sidstahl N.V.; Sikel N.V.; Tailor Blank Genk N.V.; Zeeland Participatie B.V. (Netherlands).

Principal Competitors

Cargill Inc; Chongqing Special Steel (Group) Company Ltd.; Aceros Chile S.A.; Mittal Steel Temirtau; Indian Iron and Steel Company Ltd.; Nippon Steel Corp; Hitachi Metals Ltd.; Corus Nederland B.V.; ThyssenKrupp Steel AG; MAN AG; Mittal Steel Company N.V.; ACINOX S.A.


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