SWISSMETAL The Restructuring of 2002-2009 Case study Reference no 310-260-1

This case was written by Michael Boppel and Professor Dr Christoph Lechner, University of St Gallen. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was written with the support of a Philip Law Scholarship awarded by ecch. The case was made possible by the co-operation of Martin Hellweg and Swissmetal Holding Ltd.

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SWISSMETAL THE RESTRUCTURING OF 2002-2009

Case Study

Authors

Dipl.-Wirt.-Inf. Michael Boppel Institute of Management University of St.Gallen & Prof. Dr. Christoph Lechner Institute of Management University of St.Gallen

This case was made possible through the generous co-operation of Martin Hellweg and Swissmetal Holding Ltd. The case is intended as a basis for class discussion rather than to illustrate either effective or ineffective handling of management situations. © 2010 Michael Boppel and Christoph Lechner, Institute of Management, University of St.Gallen. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying, recording, or otherwise – without the permission of the copyright owner.

2 310-260-1 Swissmetal: The Restructuring of 2002‐2009

INTRODUCTION “Stay the course! People shouldn't be treated this way! If the Boillat is gone, this valley will die!”, shouts the mayor of Reconvilier. The crowd responds “La Boillat Vivra! La Boillat Vivra!” It is January 25, 2006, and the workers have assembled in front of Swissmetal’s Jura-based Reconvilier plant. They fear that the concentration of all Swissmetal’s foundry activities in Dornach will ultimately lead to the closure of the whole plant. The entire region becomes involved. Local businesses donate 10% of their revenues to support the strikers, musicians give concerts, actors perform plays, authors read from their books, and even the local minister relocates Sunday’s church service to the Reconvilier plant to demonstrate solidarity. This is not Swissmetal’s first experience with strikes in Reconvilier. Two years earlier, in 2004, workers staged a 10-day strike to protest the dismissal of the plant manager, André Willemin, who had opposed the centralization of administrative functions in Dornach and was believed to fear the transparency resulting from the introduction of SAP as the site-wide enterprise resource software. His threatening of Swissmetal’s supervisory board’s chairman to mobilize the whole Reconvilier workforce to oppose Swissmetal’s management led to his dismissal. It was the start of a bitter fight for a single site’s independence from its parent company. This time, matters are more complicated. Swissmetal was hit hard in 2002, with the copper market at an all-time low due to the economic crisis and its European customer base eroding as clients move to Asia. This second strike, which is expected to last several weeks, if not months, might bring Swissmetal to the brink of bankruptcy. Workers oppose the “new industrial concept,” the basis of Swissmetal’s restructuring, which was developed by Martin Hellweg, Swissmetal’s CEO, and his management team and is thought to be the only way for Swissmetal to stay in business. Having two foundries operating only one shift per day appears to Martin to be lethal. He feels that either the new industrial concept is implemented and the plants work closer together or Swissmetal is doomed. But Swissmetal has strong opponents: Not only do the workers of the Reconvilier plant strike, an action supported by the whole region, but the newly formed Swiss trade union, UNIA, launches a major media campaign to increase the pressure on Swissmetal (Appendix 9).

SWISSMETAL GROUP The Swissmetal Group (www.swissmetal.com), headquartered in Dornach (in the vicinity of Basel, Switzerland), is one of the leading suppliers of high-end, “semi-finished” products made from copper and copper alloys (see Appendix 4 for Swissmetal's history). Swissmetal’s products find their way into a wide range of technical applications where superior performance is crucial to the value of the client’s end product, ranging from ball-points for pens, to gear wheels for watches, to slot-wedges for power generators. Manufacturers and users of Swissmetal's products require materials that have specific physical, mechanical, or chemical properties, such as electrical conductivity, freedom from corrosion and high static, and dynamic strength. A significant proportion of their products are used in electronics and electrical engineering, such as contact pins, contact rails, and other components of connectors and can be found in computers, aircraft, automobiles, and telecommunications devices. In 2008, Swissmetal operated plants in Dornach and Reconvilier (Switzerland) and in Lüdenscheid (Germany), while also pursuing other operations (see Figure 1). With the long-term goal to establish its own production site in Asia, Swissmetal formed an alliance with a long-standing distribution partner in India to start cold-forming activities as a first step. Furthermore, Swissmetal acquired the U.S.-based Avins Industrial Products Corporation, starting its activities in the trading business, with a view to offer its customers an even more complete product range and to accelerate the process of focusing its plants on technically sophisticated products with a correspondingly high added value.

3 310-260-1 Swissmetal: The Restructuring of 2002‐2009

In April, 2008, Swissmetal published solid 2007 figures. The company generated net sales of about CHF 394 million. With an operating income (EBIT) of approximately CHF 15 million and a return on invested capital of 6%, it was reasonably healthy again. However, four years earlier, in 2003, Swissmetal faced bankruptcy. Only an intense restructuring made the 2007 results possible.

UMS Swiss Metalworks Holding Ltd. CH-Dornach

Swissmetal – UMS Swiss Metalworks Ltd. Avins International AG. CH-Dornach CH-Dornach

Swissmetal – Deutschland Handelsgesellschaft mbH D-Deisslingen-La uffen

Swissmetal – Lüdenscheid GmbH D-Lüdenscheid

Figure 1: Organizational Structure 2006

THE CRISIS OF 2002 Being profitable most of the 1990s and experiencing its most successful business year in 2000 (see Appendix 1), Swissmetal failed to recognize various major developments. As did many other companies in the same industry, Swissmetal faced increasing competition from low-cost Asian and East European producers and saw its clients moving to Asia (Appendix 3), leading, in particular, to eroding margins. Hit hard by the economic downturn, Swissmetal experienced a 20% drop in revenues in 2002. Losing confidence in Swissmetal’s ability to service its debt obligations, banks began refusing credit in the fall of 2002, taking Swissmetal to the brink of insolvency. As one bank after another called in their loans, the financing banks formed a consortium, led by BW Bank, a subsidiary of the German Landesbank Baden-Württemberg (LBBW). The aim was to pool all collateral and speak with one voice and, thus, to better represent the creditors’ interests. These banks mandated Helbling, a small consulting boutique, to analyze Swissmetal's current situation and develop a turnaround plan. Time passed, but negotiations did not advance. The banks called in their loans, but no bank enforced its rights. Without a formal standstill agreement with the banks in place, each day could have been the end of Swissmetal. Reaching an agreement that would give Swissmetal a chance to refinance its debt was crucial. Late on a rainy day in Zurich in May, 2003, Francois Carrard, the president of Swissmetal's supervisory board, called his board colleagues to inform them that he and CEO Nadine Minerath reached a standstill agreement with the major financing banks until the end of June, 2004. “Rescued in the last minute! This agreement gives us some time. But, we need to start from scratch,” Francois says. He is convinced that focusing on premium products in niche markets, defined together with Swissmetal’s management, is the correct strategy. The banks have made it clear that the standstill agreement depends on significant changes being made. Nadine had already laid off around 20 employees in February and stopped financing Swissmetal's German subsidiary, Busch-Jaeger, which eventually declared bankruptcy in May, 2003. As a member of Swissmetal's board of directors for over 10 years, Francois has seen a couple of CEOs come and go. No one was strong enough to overcome the tensions between the Dornach and Reconvilier plants. The board considered several internal and external candidates to replace Nadine. “A fresh start can only be done by someone external, and by someone who is experienced with such turnaround situations,” Francois says to a colleague. “We need someone who is able to implement his

4 310-260-1 Swissmetal: The Restructuring of 2002‐2009 ideas, despite resistance.” One board member suggests Martin Hellweg, with whom he had successfully managed a major crisis at Keramik Laufen, a global sanitary ware manufacturer. A management consultant for several years, Martin, a German citizen, specializes as an interim manager for turnaround situations. As Swissmetal seems to be a short-term assignment with a clear end, Martin does not hesitate. Two weeks after their first contact, in June, 2003, the supervisory board appoints Martin as CEO of Swissmetal. The board makes it clear that this will be Swissmetal’s last chance. Martin should enforce and implement all necessary steps to refinance Swissmetal, regardless of the interests of particular groups or local biases. “In a restructuring situation, being dependent on banks’ decisions, it is essential to be able to think and communicate both in financial and in operational dimensions.” Martin Hellweg

"STOP THE BLEEDING" Martin knows from previous assignments that he needs to turn Swissmetal on its head. He has one year, until June, 2004, to accomplish the refinancing of Swissmetal. At that time the standstill agreement with the banks will expire. Will a strategic or financial investor emerge; will other banks be willing to grant loans? He is aware that obtaining new funds is the most challenging task ahead. At the same time, however, Swissmetal needs to show short-term gains and develop a strategy that will appeal to existing and potential investors as well as the banks. The former management team’s planned initiatives are too timid, as they were designed to avoid an open conflict with the individual plants, especially Reconvilier.

Operational Restructuring Based on Helbling’s restructuring plan, Swissmetal’s new management developed 14 initiatives encompassing more than 200 measures (see Figure 2) targeted at improving cash flow and return on capital by increasing sales (3 initiatives), reducing costs (6 initiatives), and reducing employed capital (5 initiatives).

Maximisation of the return of capital employed

Cash Flow Capital Employed

Sales Costs Assets Liabilities

Reduction of Capital Employed: 1 Sales Initiative Dornach 4 Metals Margin 10 Acc. receivables/payables

Manufacturing Costs 2 Sales Initiative Reconvilier Reduction of Capital Employed: 5 Dornach 11 Stock reduction Dornach

Manufacturing Costs 3 Sales Initiative Group 6 12 Reduction of Capital Employed: Reconvilier Stock reduction Reconvilier

Further Personnel Costs Reduction of Capital Employed: 7 Reduction Group 13 Stock reduction Reconvilier

Reduction of Operating Reduction of Capital Employed: 8 Costs 14 Divest non-operative assets

Cost Reduction Holding / 9 Subsidiaries 15 Further selected projects and measures

Figure 2: Overview of Restructuring Program Improving the Bottom Line Swissmetal introduced lean management techniques, improved the shop and production layout, and improved the output of the foundry and the press by 10-15%. While these measures reduced Swissmetal’s production costs, one cornerstone was to centralize as many operational and administrative functions as possible. Although requiring some upfront investment and by enforcing transparent and group-wide consistent processes and procedures, the use of SAP as the only enterprise

5 310-260-1 Swissmetal: The Restructuring of 2002‐2009 resource-planning system across all plants offered the greatest efficiencies. Previously, Swissmetal’s sites were traditionally run as almost separate companies with high autonomy, leading to many redundant functions (e.g., HR, Finance, IT, etc.), different management cultures, and limited potential for creating synergies between the plants. Martin discussed this issue often with Sam V. Furrer, an Arthur D. Little consultant, who eventually became Swissmetal’s Chief Development Officer of Swissmetal. They are sure that Swissmetal will benefit tremendously from standardization and centralization; however, they also know that implementing such measures will be an uphill battle, especially with regard to the plant in Reconvilier, which inevitably has to relinquish some independence. Martin believes that positive effects will be distant in time, probably no earlier than two years. “How can we finance these upfront investments,” he asks Yvonne Simonis, his newly appointed Chief Financial Officer.

Reducing employed capital Yvonne provides a status report about ongoing projects and major key performance indicators. “Why do most projects have a yellow or red status, why are they behind schedule,” Martin asks. For instance, accounts receivables increased by almost 24% from January to April, 2003. He continues, “This increased our employed capital by CHF 6.2 million. That is money that we do not have. We are not the bank of our customers! Why is this happening?” He checks the project status and searches for ways to reduce the days of sales outstanding (DSO). Because the majority of overdue trade receivables are no more than one month overdue, chances of receiving payment are good. However, the increase concerns him. Yvonne and he discuss further immediate steps. For instance, they will call the debtors and ask for the overdue payments, check granted payment terms, reduce the number of offered payment terms, and, in particular, shorten the due date. They will try to negotiate with the banks to buy Swissmetal`s trade receivables. This “factoring” allows a company to turn revenues into cash immediately, at the expense of a provision to the bank. Other measures include the reduction of inventory by 30% and the sale of non-operating assets.

Improving the top - line Implementing these measures led Swissmetal to break even. In order to make a profit, Swissmetal launched several sales initiatives designed to reach set targets for the fiscal year 2003 and to achieve a 15% increase in the following year. The first step was to define responsibilities and sales targets clearly and to reorganize the whole sales organization. Sales staff checked more often outstanding offers and had to reconcile advertised products with the planned productions. Swissmetal began offering discounts for certain products, training their sales personnel, and introducing a new system of monitoring the success of sales activities. The result was additional sales of 5,000 tons (or CHF 15.8 million) of gross added value sales (sales excluding material costs). Over the course of the year, Swissmetal reduced its bank exposure by approximately 10%, a helpful sign for later refinancing negotiations. In addition to operational measures, the banks demanded frequent reporting on the financial status and the success of the restructuring measures as one of their conditions for the standstill agreement. Yvonne knows she has no time to wait for a proper IT-backed solution. She has to figure out how to increase the timeliness, accuracy, and transparency of both external and, especially, internal reporting. As each plant has its own finance and controlling department, figures (e.g., on productivity) are incomparable and misleading.

6 310-260-1 Swissmetal: The Restructuring of 2002‐2009

Financial Restructuring Over the course of the first year, Martin and Yvonne evaluated different financing alternatives. The easiest and best solution for the existing shareholders was to find other banks willing to grant new loans, thus financing the operative business and providing needed investments. Another option was to find a strategic or financial investor willing to acquire Swissmetal from the existing shareholders, bear initial losses, and pay for investments. However, as time passed, it became clear that neither option was viable. Despite the need for consolidation within the copper-producing industry, negotiations with a strategic investor will not lead to a successful transaction, as most competitors are also suffering from the economic downturn after the bursting of the internet bubble. In 2003, the market for copper products is at an all-time low. Thus, potential strategic investors were reluctant to invest due to their limited financial resources and demanding a significant contribution from the banks. In addition, Swissmetal is relatively small compared to other, bigger players in the mass market (see Figure 3). Therefore, buying Swissmetal does not really solve their problems. If the leading financing banks accepted the demanded contribution, this "haircut" would lower the barrier to investment in Swissmetal. Because of the high potential liquidation value of Swissmetal if the company closed due to significant levels of metal stock that could be sold, a meaningful haircut was not acceptable. “A default is one of the banks’ biggest fears. Management and owners of an endangered company often underrate their bargaining power." Martin Hellweg 10%

5% Wieland Diehl (EBIT) Fuchs Prym SM KME 2001

Outokumpu Profit Gnutti 0% 5% ‐ Boliden

Specialities Standard/Mass products

Figure 3: Copper-semi Producers in Europe It soon became evident that a new strategic investor was not in sight and that new banks were not willing to replace the existing banks. Granting new loans to Swissmetal were a risk most banks were unwilling to take in such troubled times, nor did they wish to pay off other banks. Therefore, Martin and Yvonne needed to pursue other options. New money for investments and replacing the existing banks are required, which may dilute the ownership of existing shareholders. Three smaller investment banks are interested in placing new shares at the capital market. But their demands are high, in particular from existing shareholders; for example, offering new shares at about one third of the current stock market price. The existing banks would have to agree to a small haircut as well. Time

7 310-260-1 Swissmetal: The Restructuring of 2002‐2009 passes without any agreement; June 30, 2004 – marking the end of the standstill agreement with the banks – is getting closer and closer. Without an agreement, Swissmetal would have to file for insolvency, as it would not be able to pay back its loans. Only days before the expiration of the standstill agreement, a group presented itself to Martin, comprised of managers from Reconvilier, a customer from the Bernese Jura, and someone who claimed to represent an external investor. They proposed a buy-out of the Reconvilier plant. The managers assumed that the refinancing of Swissmetal could not be completed before the deadline and prepared a plan to operate Reconvilier alone after the predicted insolvency of the parent company. However, a solution for the refinancing of Swissmetal has just been found. On June 9, 2004, the financing banks, the lead investment bank Lombard Odier Darier Hentsch (LODH), and the supervisory board of Swissmetal signed an agreement encompassing a total equity capital increase of over CHF 50 million. The par value of the Swissmetal share was reduced in two steps from 100 CHF to CHF 9 per share. LODH bought all existing loans for a maximum of CHF 27.3 million, representing a total write-off of CHF 6.3 million to the existing banks (a haircut of 19%). Under this contractual agreement, LODH possessed the right to swap this debt into equity and sell shares for CHF 9 per share. In addition, new shares were offered to existing shareholders, at the same price. All shares not subscribed by existing shareholders were underwritten by the three specialized investment banks: LODH, OZ Bankers, and Jefferies. As most existing shareholders did not use their subscription rights in full, this capital increase represented a dilution of approximately 87%. Although a significant loss for existing shareholders, an insolvency would have meant a total loss. Martin and his team are thankful that they were able to secure the financing of Swissmetal. “Successful refinancing of the company, including a capital increase resulting in 87% new shares (quasi “re-IPO”) led to a new start following the near collapse in 2002-2003." Martin Hellweg

THE TURNAROUND Upon Martin’s successful completion of his initial assignment, the banks demanded that he lead the subsequent repositioning. Swissmetal’s financial needs are secured for the next couple of years; now, a set of initiatives that will eventually help reduce operating costs needs to be implemented. Major adjustments must be considered, that, to Martin, are inevitable to guarantee Swissmetal’s long- term survival. Swissmetal needs to find growth areas for the future and to significantly reduce costs of its current business (which, over time, is eroding and, eventually, disappearing in Europe) in order to stay competitive.

Operational Restructuring: Project "Sputnik" In addition to streamlining administrative functions, which have been maintained separately in Dornach and in Reconvilier, Swissmetal has to change its plant and production footprint. This is particularly true for foundry production, where costs are almost independent of production volume. A foundry needs energy and personnel, regardless of its utilization. As a result of long-standing tensions between the plants, the organizational structure leads to problems and inefficiencies. Although a closer integration had been planned, many workers and managers favored benefits for one particular plant over Swissmetal’s overall success. Because local forces blocked changes, integration was never fully achieved. In order to find a solution that all plants will support, Martin set up the "Sputnik" project in February, 2005. This project team, consisting of representatives from all plants, evaluated possible options for reducing costs by integrating production sites more closely and developing a comprehensive industrial concept.

8 310-260-1 Swissmetal: The Restructuring of 2002‐2009

Status Quo Producing only copper-alloy-based, semi-finished products, Reconvilier focuses predominately on small rods and wires, while Dornach focuses on rods, tubes, and profiles in significantly bigger dimensions. As both plants were, and are still, operated with great independence, both conduct all activities of the value chain (see Figure 4). Each runs their own foundry activities, their own presses (Dornach, four and Reconvilier, two), and their own finishing lines. In February, 2005, the supervisory board decided to install a new central press and foundry center in Dornach, mainly because product dimensions make it more difficult to transport work in progress and because Dornach has better transportation logistics. Furthermore, Swissmetal could afford only one new press, as this represents a major investment made only every decade or two. It is clear from the start that the new extrusion press must be versatile and suitable for all products produced at both plants. Those produced in Reconvilier are smaller; thus, the intermediate products can be easily transported from an extrusion press in Dornach to the finishing lines in Reconvilier, and vice versa. Products produced in Dornach are much larger; in addition, the Dornach location is close to a harbor, an airport, and highways. Although keeping the current structure is considered, it leaves too many potential synergies unrealized. Swissmetal needs specialized staff to run both plants and to operate the foundries and presses. Inventories for metal and waste, separate laboratories, energy and water supply, exhaust gas filters, and tool shops also have to be maintained and run on both sites. Foundry Extrusion Presses Finishing

Drawing Machine Plant 3 Facilities 4 Presses Dornach (SMD) Rolling Mills

2 Drawing Plant 5 Facilities 2 Presses Reconvilier (SMB) machines

Figure 4: Operational Footprint before the Restructuring "The Alternative Concept" The team assesses another option: concentrating Swissmetal's foundries in Reconvilier and presses in Dornach. Representatives from Reconvilier favor this concept (see Figure 5) and consider it fair. One location receives the new press, the other the foundry. While this option may be beneficial for Reconvilier, it has several disadvantages for Swissmetal as a whole and the individual sites in the long run. Calculations show that transportation costs would increase approximately 40%, from CHF 1.3 million to CHF 2.1 million. Operating the foundry in Reconvilier, then sending products over to Dornach for their extrusion on a new press, and then sending part of the extruded interim product back to Reconvilier, while finishing another part in Dornach, appears complex and costly. Plus, the metal waste (scrap) generated in the extrusion production step would have to be shipped back to Reconvilier to be utilized again by the foundry (Appendix 5). The option was quickly abandoned, as Swissmetal needs to exploit synergies between the press and foundry (e.g., the easy recycling of internal scrap). There is one last argument to build the new foundry and conduct press activities in Dornach: being aware of the Reconvilier strike in November, 2004, investors oppose the idea that Swissmetal becomes completely dependent on a Reconvilier central foundry and press center.

9 310-260-1 Swissmetal: The Restructuring of 2002‐2009

Foundry Extrusion Presses Finishing

Plant New Press Cold Forming Dornach (SMD) W&B* P&T** P&T

Cold Forming Plant Foundries Reconvilier (SMB) W&B

* Wires & Bars ** Profiles & Tubes

Figure 5: Industrial Footprint of the Alternative Concept The "New Industrial Concept" Key to this concept are the centralization of all foundry and extrusion press work in Dornach, the further development of the Reconvilier plant into a leading worldwide finishing center for wires and bars, and the development of the finishing process in Dornach to produce ultra-high-quality profiles and tubes (see Figure 6). Cost savings from running only one foundry far outweigh the costs of transporting the intermediate products from Dornach to Reconvilier. A further integration of other European plants that seems inevitable in the long run (such as the integration of Busch-Jaeger) will be easier when all foundry and press activities are concentrated in Dornach. To implement this idea, the concept proposes an investment of CHF 75 million for the 2006-2010 period. A sum of CHF 40 million shall be invested in the new foundry and extrusion press work in Dornach, CHF 10 million in the Dornach finishing plant, and CHF 25 million in the Reconvilier finishing plant. These investments should result in marked modernization, as well as increased efficiency, which should reduce industrial jobs by 150 (from 750) between 2006 and 2010. Foundry Extrusion Presses Finishing

New Press Cold Forming Plant Foundries Dornach (SMD) W&B* P&T** P&T

Plant Cold Forming Reconvilier (SMB) W&B

* Wires & Bars ** Profiles & Tubes

Figure 6: Industrial Footprint of the New Industrial Concept The decision process The "Sputnik" team conducted four off-site workshops to evaluate these alternatives and discussed preliminary findings after each workshop with the supervisory board (see Figure 7). In September, 2005, after receiving advice from several external production experts, the supervisory board favors the concentration of all foundry and rolling activities in Dornach. This option offers the greatest cost saving potential, is less risky, and has the support of all investors.

10 310-260-1 Swissmetal: The Restructuring of 2002‐2009

Decision in Discussion with Supervisory Supervisory Board Board

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Retreat Retreat Retreat „Bad “Meister- Retreat „Rigi“ „Dorint“ Schauenburg“ schwananden“

Retreat „Widder“

Figure 7: Decision Process of the "New Industrial Concept" To finalize the decision and prepare for implementation, senior management discussed the new concept with all 20 plant managers at a two-day workshop held on Rigi Mountain, in the heart of Switzerland. The concept is agreed to by all participants. After in-depth and emotional discussions, the representatives from Reconvilier accept the proposed way forward and become involved in deciding how to implement the planned strategy. All managers, including those from Dornach and Reconvilier, commit themselves to support Fritz and Martin on implementing the agreed-upon strategy. This commitment quickly became known within Swissmetal as the “Rigi oath.” “We knew that a decision in favor of one plant will cause a lot of resistance in the other one. Thus, we put a lot of effort into the business cases that we used as a basis for our decision. We wanted to be sure and base our decision on facts. Without focusing our extrusion press in Dornach, it would have been impossible for us to offer competitive prices.” Sam V. Furrer

The strike in 2006 Major changes are in store for the organizational structure, such as reducing the overlap of functions between sites and, in particular, that of executives responsible for both plants. Despite their involvement in the whole process and their stated commitment, shortly before the concept’s actual implementation and influenced by local politicians, Reconvilier's management starts to oppose the strategy by filtering indiscretions into the public domain, which generated rumors. Before Swissmetal is able to explain the concept to all involved social partners (i.e., the governments of the two cantons involved and the employees), at agreed-upon dates, the workers’ union UNIA begins an unprecedented media campaign by publishing media releases, including "No to the dismantling of Swissmetal “Boillat”! " and "Doubtful strategy and obscure information policy at Swissmetal." UNIA tries to convey the idea that the closure of the foundry in Reconvilier means the closure of the whole plant. Opinion leaders from the valley and the ranks of UNIA repeat the technically and economically unjustified assertion that the plant could not survive without a foundry. As workers in Reconvilier feel that agreements are not kept and their interests are ignored, they indicate unwillingness to accept a solution that involves major changes. By opposing Swissmetal's new strategy, local politicians especially try to benefit from this issue. “We have to deal with people who do not respect anything and anyone: no promises, no rights, and no public authorities. We don't believe anything anymore!” Nicolas Wuillemin, president of the Reconvilier employee committee

11 310-260-1 Swissmetal: The Restructuring of 2002‐2009

To end the 2004 strike, Swissmetal and the striking workers signed an agreement, the “Protocole d’Accord.” Among other concessions, Swissmetal guaranteed to operate the Reconvilier plant, to invest, and to appoint a plant manager. As Reconvilier's plant manager stepped down in November, Swissmetal was forced to introduce the new organizational structure, with cross-plant responsibilities, earlier than planned. While this new structure still included a plant manager for Reconvilier, the position has less power. Swissmetal invited talks on adapting the existing “Protocole d’Accord,” but the workers' committee from Reconvilier turned the offer down. Martin contacted all 20 managers who had decided upon the new industrial concept at the Rigi meeting in October, 2005 and asked for their impressions about the situation. Although the situation was generally portrayed as being tense, the managers from Reconvilier denied the risk of a new strike. The next day, January 25, 2006, those same managers led the Reconvilier workforce to strike. “A strike is the consequence if promises are not kept, if you don't take your employees seriously, if you ignore the rights of the workforce, if you override a whole region and political institutions.” Fabienne Blanc-Kühn, UNIA representative

Shift of power It is January 26, 2006, one day after the beginning of the strike. Martin is on his way to a meeting with executives of the German company Busch-Jaeger. The previous evening, he and Fritz Sauerländer, chairman of the supervisory board, contemplated whether or not to cancel this trip. But this visit, Martin thinks, might be the solution to the whole problem. He says, “Fritz, we need to go there! We need to ask whether they are willing to sell their company!” As remote as the chances may be, Busch-Jaeger would be an ideal second source for Swissmetal's customers usually served by the striking Reconvilier plant. This meeting was originally planned as a pure courtesy visit after Martin met one of Busch-Jaeger’s new owners at a social function. The current owners acquired Busch-Jaeger in 2002 from an insolvency administrator. Busch-Jaeger is similar to the Reconvilier plant and, before its insolvency, had already been part of Swissmetal Group. The meeting evolves as Martin had hoped, with the owners indicating their willingness to sell the whole business for a reasonable price. Martin calls Yvonne to discuss this opportunity. “Prices for copper are skyrocketing! We could try to sell the copper stock that is still piled in the Reconvilier plant. This might give us a chance to finance the deal without asking banks for additional funds.” Meanwhile, Martin and Fritz agree to a mediation process overseen by Rolf Bloch, owner of a Swiss chocolate company, after the personal intervention of Joseph Deiss, President of the Swiss Government. However, they seriously doubt whether a mediation process is the right answer to a strike that they regard as illegal. On the other side, the UNIA trade union representatives Renzo Ambrosetti and Andre Daguet represent the striking workers. At the same time, Martin focuses on the acquisition of Busch-Jaeger, as he thinks that this will bring the current strike to an end and distance Swissmetal from the upheavals in Reconvilier. On February 9, only 15 days after the initial meeting with Busch-Jaeger, Swissmetal signs the deal and makes the acquisition public. Swissmetal lays off all executives of the Reconvilier plant and later replaces them with executives from both Busch-Jaeger and the Dornach plant. While at an impasse before, the situation fundamentally changes in favor of Swissmetal’s management after the announcement of the Busch-Jaeger acquisition. A few days after the announcement, as part of the mediation process, the strike is officially put on “stand-by” by the workers. Although they return to their jobs at Reconvilier, there is no turning back. The strike has seriously harmed the Reconvilier plant. Some customers do not want to return to such an unstable situation, at least not immediately. Swissmetal’s loss of customers represents one third of Reconvilier’s revenues. Swissmetal lays off 112 workers, more than a third of the workforce.

12 310-260-1 Swissmetal: The Restructuring of 2002‐2009

In June, 2006, after several rounds of negotiations without any substantial progress, Swissmetal concluded the mediations unilaterally. While UNIA originally tried to use this strike as a marketing platform, it signals a willingness to end this conflict as silently as possible. Furthermore, a significant part of the Reconvilier workforce has already been working again for weeks and wishes only for a return to normal conditions. The strike is at a definitive end.

STRATEGIC REPOSITIONING Swissmetal has a long-standing global reputation for manufacturing the most advanced precision copper semi-finished products. Swissmetal sets itself apart from its competition by its ability to produce over 100 different copper alloys as well as its mastery of complex combinations of mechanical, physical, and chemical properties and of complex extruded shapes, including thin-wall hollow profiles and double-hollow profiles. In addition, Swissmetal offers very tight dimensional tolerances and products that are co-developed with customers. It maintains a technological edge by its close ties to leading technical universities, such as the ETH in Zurich (the Paul Scherrer Institute) and the University of Lausanne.

Consolidation Swissmetal’s strategy of producing high-quality and high-tech products requires technical superiority and, therefore, offers much higher margins. Only in this market segment is Swissmetal able to capitalize on its technological advantage and overcome its relative cost disadvantage on the commodity level. Even with its focus on high-end products, part of Swissmetal’s strategy is to fill the plants up with lower margin products (Appendix 6). However, as these segments are small-volume niche markets, they require a consolidation of capacities. Martin and his team know that the market of copper products in Europe will remain under significant pressure and suffer from overcapacities (Appendix 3). Many customers in need of copper products have moved or are about to move east, especially toward Asia, resulting in an overall shrinking market. While the situation is the same for the high-end producers, there may be more time for them to adjust to this trend. The specialty copper product market is characterized by many small companies (Appendix 8). Like Swissmetal, many face problems, since the industry is capital-intensive and increasingly requires a global sales and distribution network. Only a few of these small niche players are able to produce high-quality copper alloys and distribute internationally. In order to focus more on specialty products, industrial consolidation with other high-end product producers should help create a company with enough critical mass to survive the big changes ahead. Martin is convinced, therefore, that Swissmetal needs to consolidate with other specialty manufacturers if the opportunity arises. For example, with the acquisition of the former Avins Industrial Products Corporation in the U.S., Swissmetal is able to offer not only its own products, but also a wide range of trade products. More important, it strengthens Swissmetal’s sales organization in the U.S. and in other international markets. “Given our technological strength, by acquiring other players there is an excellent opportunity for us to become one of the leading international groups within the copper alloy industry. We need to have a strong presence in Europe in order to be able to follow our customers to Asia!” Martin Hellweg

Becoming Supplier of Choice and Geographic Repositioning Even with a focus on high-end products and despite further consolidation, however, it is Martin’s deep conviction that this strategy is only buying time for Swissmetal. The company needs to find new ways to compete and grow over time.

13 310-260-1 Swissmetal: The Restructuring of 2002‐2009

Since its consolidation of operational activities, Swissmetal not only increases its technological capabilities for improving existing processes and products, but also actively targets industries where the use of superior materials has a tremendous benefit for their products and their customers. Swissmetal’s engineers, in close cooperation with clients, develop tailor-made products for the airline, semiconductor, and power generation industries (e.g., the patented copper alloys NP6 and CN8). The alloy CN8, used by the airline industry, offers lower friction, high mechanical strength, and excellent corrosion resistance. “Today, no commercial aircraft flies without at least some high-tech copper alloy from Swissmetal.” Martin Hellweg In a similar vein, Swissmetal has become a leading supplier of copper semis for power generators, a market demanding about 3,000 tons of copper products per year. Swissmetal offers wedges for generator rotors, hollow conductors for transport of electrical current, and bus bars for distribution of electrical current. It works closely together with manufacturers, such as ABB and Alstrom, in order to improve the efficiency of their products. A small increase in the efficiency of a turbine, for example, has a tremendous impact on profitability over its lifetime. This benefit far outweighs the higher price for Swissmetal’s components. These tailor-made products offer even higher margins and, as the only supplier, Swissmetal avoids price competition. These small niche markets make the short- to medium- term survival of companies such as Swissmetal possible. To combat the further declining copper market in Europe, plans for expanding to Asia are prepared. First, Swissmetal intends to set up inventories for finished products in India and China. Later, it will invest in finishing capabilities and extrusion presses. At first, Swissmetal and its partner will perform only cold-forming activities (i.e., squeezing, bending, drawing, and shearing) by installing relatively small and mobiles items. A foundry, the biggest investment, will follow if the other steps are successfully completed. Due to the development of the market for copper alloys and the financial crisis, plans have thus far not been realized. Investments in hot-forming capabilities will be made in more favorable economic times. A much unexpected innovation comes Swissmetal’s way. In December, 2007, Swissmetal’s head of IT developed a bronze roof tile that collects energy from the environment. The major advantage of this roof tile, which could be produced by Swissmetal, is that it absorbs energy from the wind, rain, and sun. This energy is carried through the supply-line system by heat-carrying fluid to the heat pump, which extracts thermal energy from this fluid. The heat extraction process cools the tiles to below ambient air temperature. As the tiles become colder than their surroundings, they are ready to absorb fresh heat again. Extracted heat is stored in a hot water storage tank and energy for water and space heating is drawn from this tank as required. The instrumentation and control system ensures that the heat pump is used as efficiently and effectively as possible at all times and that the room temperature remains comfortable. Another advantage is that this system is almost invisible: high-quality roofing and façade cladding are either attractive decorative highlights or integrate perfectly into existing or new roofs and façades, offering the possibility of installing renewable energy solutions where building restrictions apply (e.g., historic houses).

THE CRISIS OF 2008: CHALLENGES AHEAD While showing promising results in 2007 and in early 2008, Swissmetal finds itself in rough waters again. Shortly after the collapse of Lehman Brothers in September, 2008 and the corresponding impact on the global economy, Swissmetal’s incoming orders declined about 40% (compared to previous years). For more than a year, the economy suffered as many of Swissmetal's customers had difficulty financing their business activities. In particular, Swissmetal's credit insurers excluded an increasing

14 310-260-1 Swissmetal: The Restructuring of 2002‐2009 number of customers from their coverage, which led to a significantly reduced cash flow, as factoring banks did not buy these uninsured claims. Already efficient in many ways, Martin and his management team decided to react quickly. They halted all investments and hiring of new personnel. The only exceptions were the new extrusion press that was commissioned earlier in 2008, which requires further investments, and the renewable energy sector, as Swissmetal must maintain growth prospects after the crisis. Because of different backlog volumes, Lüdenscheid has worked short-time since December, 2008, Reconvilier since January, 2009, and Dornach since March, 2009, thus reducing personnel costs. A further restructuring of central services and sales entailing a layoff of 35 people was implemented in January, 2009, representing a 25% reduction in non-production overhead personnel. In addition, Swissmetal intensified its cash management by further optimizing its inventories and monitoring and managing its accounts receivables more closely. In April, 2009, after six years, Martin leaves Swissmetal. The company may be significantly restructured, but it is still witnessing an unprecedented global economic downturn with no real end in sight. In the short term, Swissmetal has to master this major external challenge; over time, the company must address a fundamental strategic issue. Although it may have bought time by restructuring over the past years, the central question remains: Is there a future for semi-finished copper producers in Europe? And if not, what should Swissmetal do? "My first contract lasted 18 months. My initial task was the financial restructuring. It turned out to be six years. My job is certainly done now. Swissmetal is fundamentally restructured. There is nothing a turnaround specialist can do anymore. The key challenge for the next management generation now is to find new markets for Swissmetal to profitably grow long-term.” Martin Hellweg

15 310-260-1 Swissmetal: The Restructuring of 2002‐2009

APPENDIX

Consolidated group (CHF million) 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Gross sales 191,7 324,9 407,0 357,6 198,3 204,8 170,6 229,2 300,7 327,6 317,6 thereof 3rd party sales 17,6 22,8 26.4 Net sales 183,2 312,7 394,3 343,7 190,4 195,1 162,5 216,5 286,3 311,7 303,7

Gross added value sales (plants)* 76,7 113,8 126,1 118,0 103,5 117,7 103,5 134,7 170,0 184,4 162,5

Gross margin** 77,9 126,4 148,5 141,1 109,2 118,4 100,8 124,6 160,2 175,8 164,5 Operating income before depreciation (EBITDA) -18,2 11,2 28,6 27,6 16,0 20,2 12,4 2,5 25,2 41,5 31,1 Operating income (EBIT) -30,9 -2,4 14,5 10,2 3,4 8,4 1,0 -27,6 9,4 25,5 Result for the year (EAT) -28,5 -6,5 11,4 4,6 3,3 17,7 -6,9 -55,5 1,5 13,7 3,5

Total assets 183,7 200,8 236,9 219,1 162,8 162,1 144,9 145,8 226,4 244,2 244,9 Current assets 99,5 113,8 147,8 129,3 94,8 99,1 80,7 73,8 110,6 125,6 123,4 Fixed assets 84,3 87,0 89,1 89,8 68,0 63,0 64,2 72,0 115,8 118,6 121,5 Short-term liabilities 57,6 53,1 52,0 57,9 22,9 27,7 73,7 66,0 58,3 71,2 59,3 Long-term liabilities 26,9 32,6 46,8 34,9 16,5 15,9 18,5 20,3 52,9 54,8 76,1 Shareholders' equity 90,9 124,1 138,1 126,3 123,4 118,5 52,6 59,4 115,0 118,2 109,5

Cash flow from operating activities 2,1 1,5 8,1 33,1 21,1 -4,6 11,2 18,1 21,9 12,9 22,1 Capital expenditures 5,6 12,3 19,3 28,4 15,5 11,2 9,4 9,0 17,2 18,8 12,4

Capital Employed 126,1 147,7 184,9 161,2 139,9 134,4 71,2 79,8 ROCE -25%-2%8%6%2%6%1%-35%

Headcount (annual average in full- time equivalents) 640 693 801 879 768 807 755 1.118 1.224 1.194 1.110

Net debts 37,6 46,6 40,1 34,9 -2,7 3,2

* Gross added value sales: Gross sales less metal at standard metal costs (production plants) ** Gross margin (for years according to Swiss GAAP FER): Net sales less cost of materials and changes in inventory

Appendix 1: Key Financials

Consolidated group (CHF million) 2009 2008 2007 2006 2005 2004 2003 2002 Inventories 53,9 69,1 84,5 68,9 43,1 44,9 27,5 32,8 Accounts receivables 34,7 34,1 41,0 39,3 36,4 42,6 36,3 31,4 Accounts payables 19,7 18,4 26,0 33,1 14,3 16,2 11,8 7,5 Prepayments 0,0 0,0 1,0 0,6 0,2 0,1 1,9 1,6 Net Working Capital 69,0 84,8 100,6 75,8 65,3 71,4 53,8 58,2

Material Costs 55,2 107,5 245,7 202,5 81,2 76,7 62,0 91,9 Other Operating Expenses 22,9 27,4 35,6 12,6 8,8 8,2 7,8 11,4

Days Payable Outstanding (DPO) 91,8 49,9 33,7 56,1 58,1 69,5 61,8 26,5 Days Sales Outstanding (DSO) 69,2 39,8 38,0 41,8 69,7 79,6 81,5 52,9 Days Inventory Held (DIH) 356,7 234,7 125,5 124,2 193,7 213,6 161,7 130,2 Days Working Capital (DWC) 334,0 224,6 129,8 109,9 205,3 223,7 181,4 156,5

Appendix 2: Working Capital

Demand Copper Alloys Demand vs. Production in Europe 2,5 2,5

2 2

1,5 1,5

Europe ('000)

t

('000) China 1

t

in

in 1 0,5

0,5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 Production Demand 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: International Wrought Copper Council (IWCC) Source: International Wrought Copper Council (IWCC)

Appendix 3: Development of Demand and Production of Copper Alloys

16 310-260-1 Swissmetal: The Restructuring of 2002‐2009

History of Swissmetal Group

The origins of Swissmetal date back to 1855. At that time, Bueche, Boillat & Cie., a rolling mill and foundry, was founded in Reconvilier (in the Bernese Jura) in response to the Swiss watch industry's growing demand for brass to make watch movement plates. Around 600 kilometers north, in the town of Lüdenscheid, Germany, Heinrich Jaeger founded a similar company in 1879 and started the manufacturing of small metal parts. In 1896, with the establishment of a rolling mill, the firm became a semi-finished metal products factory. In that same year, the plant in Dornach began operations with a foundry and rolling mill, operating under the name Schweizerische Metallwerke AG Dornach. The overlapping of product ranges led to the formation of a company comprised of the aforementioned plants in Reconvilier, Dornach, and the Selve plant in Thun (in the Bernese Oberland). This plant, also founded at the end of the 19th century, had a similar product range, with an emphasis on rolling. In 1989, the effective reorganization under the Swissmetal brand was completed, with Boillat specializing in small and medium-sized pressed and drawn parts, Dornach focusing on medium and large pressed and drawn parts, and Selve concentrating on rolled products. In 1989, UMS Swiss Metal Works Holding Ltd. was formed. The plants were merged and lost their legal autonomy. The Group’s main shareholders were now SACT Cossonay Holding SA, ACMV Vevey Holding SA, and Swiss Bank Corporation. In 1990, the German company Busch-Jaeger Metallwerke GmbH (originally founded by Heinrich Jaeger) was acquired. This company now specialized in smaller pressed and drawn products. Around the same time, in 1991, the decision was taken to close the Selve plant and transfer the capacities to the other two Swiss plants, Dornach and Reconvilier. Appendix 4: History of Swissmetal

Foundries Extrusion Press Finishing Offcut andWaste Waste* 5.450 to/35 CHF 3.000 to/35 CHF

Raw Material* from Rhine Port Basel 5.960 to/35 CHF Finished Plant Cold forming Presses Products Dornach Profiles & Tubes 12.000 to Chippings of customers 20.100 to/30 CHF Bolts* 36.300 to/20 CHF Intermediate products 18.600 to/60 CHF

Finished Plant Cold forming Foundries Wire Casts Products Wires & Bars Reconvilier 1000 to 16.000 to Waste of Wire Casts 500 to

Appendix 5: Transportation Costs of Alternative Concept

17 310-260-1 Swissmetal: The Restructuring of 2002‐2009

Swissmetal identifies and claims lucrative niches with customer-specific products, high value for customer and service level

Drawing on its superior capabilities, Swissmetal focuses on premium specialty products in selected market segments • Consumer Goods • Automotive & Machine Building • Electronics & Electrical Engineering • Industry & Construction

Swissmetal reaches a high utilization with low-end mass products

Market volume

Appendix 6: Swissmetal’s strategy

Appendix 7: Organizational Chart after Restructuring

18 310-260-1 Swissmetal: The Restructuring of 2002‐2009

Competitors Profiles Competitors Bars Wettbewerber Tubes

ALMAG - AZIENDA LAVORAZIONI METALLUItaly BOLIDEN GUSUM AB Sweden MESSINGWERK PLETTENBERG HERFELD Germany ALSAFIL France CARLO COLOMBO S.P.A. Hungary METALLROHRZIEHEREI KARL IMHAEUSERGermany BOLIDEN LDM NEDERLAND B.V. Netherland CSEPEL METALWORKS CORP. Hungary METALLWERK EMIL MUELLER GMBH Germany BOLIDEN MKM LTD. UK SPECIAL METALS WIGGIN LIMITED UK METALLZIEHTECHNIK GUSTAV IMHAEUSEGermany BUNTMETALL AMSTETTEN GMBH Austria MUELLER EUROPE LTD. UK CERRO EXTRUDED METALS LTD. UK 4 European + approx. 20 Asian MUELLER EUROPE S.A. France CERRO MANGANESE BRONZE LTD. UK Competitors OUTOKUMPU COPPER PRODUCTS AB COSweden CLAL-MSX France OUTOKUMPU COPPER TUBES, S.A. Spain DEUTSCHE NICKEL AG Germany PETERSEIM GMBH & CO. KG METALLWERGermany DIEHL METALL STIFTUNG & CO. KG Germany STANDARD METALLWERKE GMBH Germany EIP METALS LIMITED UK THE LAWTON TUBE CO. LTD. UK ENZESFELD-CARO METALLWERKE AG Austria TUBO TECNICO EUROPEO S.L. (TERTUB) Spain ETS MAURICE LEGO France YORKSHIRE COPPER TUBE LTD. UK EUROPA METALLI S.P.A. Italy FITCO METAL WORKS S.A. Greece 13 European + approx. 10 Asian FRIEDRICH KEMPER GMBH & CO. KG KUPGermany Competitors FUNDICION Y ACABADOS DEL COBRE, S.ASpain GEBR. KEMPER GMBH & CO. KG Germany GINDRE DUCHAVANY S.A. France HALCOR METAL WORKS S.A. Greece Competitors Strips Competitors Wires HIJOS DE JUAN DE GARAY S.A. Spain AB ELEKTROKOPPAR Sweden ATLANTIC COPPER S.A. Spain KM EUROPA METAL AG Germany B. MASON & SONS LTD. UK BERKENHOFF GMBH Germany KRUPP VDM GMBH Germany CARL SCHREIBER GMBH Germany CUPROFIL France LE BRONZE INDUSTRIEL France DRAKA WIRE (PART OF DRAKA UK LTD.) UK ELBAK ELEKTROLITIK BAKIR SAN VE TICATurkey METALLI ESTRUSI S.P.A. Italy GEBAUER & GRILLER METALLWERK Austria ER-BAKIR ELEKTROLITIK BAKIR MAMULLETurkey METALLURGICA S. MARCO S.P.A. Italy LAMINADOS DE ARETXABALETA, S.A. Spain FULGOR GREEK ELECTRIC CABLES S.A. Greece MKM MANSFELDER KUPFER UND MESSINGermany LAMINADOS OVIEDO CORDOBA, S.A. Spain GENERAL CABLES S.A. Greece NEUMAYER-GES.M.B.H. Austria OUTOKUMPU COPPER STRIP AB Sweden HELLENIC CABLES S.A. Greece NORDIC BRASS AB Sweden OUTOKUMPU COPPER STRIP B.V. Netherland NEXANS HELLAS S.A. Greece OTTO FUCHS METALLWERKE Germany PIRELLI CAVI & SISTEMI S.p.A. Italy NEXANS WIRES France OUTOKUMPU COPPER PRODUCTS OY Finland S.A. GRISET France PIRELLI CABLES (2000) LTD UK OUTOKUMPU PORICOPPER OY Finland SCHLENK METALLFOLIEN GMBH & CO. KGGermany PIRELLI CABLES ET SYSTEMS SA France PENINSULAR DEL LATON S.A. Spain SCHWERMETALL HALBZEUGWERK GMBHGermany PIRELLI CABLES LTD - ROD ROLLERS UNI UK PRYMETALL GMBH & CO. KG Germany STOLBERGER METALLWERKE GMBH & COGermany RBG ELCOND SA Romania S.A. EREDI GNUTTI METALLI S.P.A. Italy SUNDWIGER MESSINGWERK GMBH & CO Germany SOCIETE DE COULEE CONTINUE DE CUIVFrance SARKUYSAN ELEKTROLITIK BAKIR SANAYTurkey WIELAND-WERKE AG WERK VELBERT Germany SOCIETE LENSOISE DU CUIVRE France SIA COPPER, S.A.U. Spain WIELAND-WERKE AG WERK VILLINGEN Germany SUMERBAKIR SANAYII VE TICARET A.S. Turkey SITINDUSTRIE INTERNATIONAL S.R.L. Italy TELECABLES S.A. Greece TRAFILERIE CARLO GNUTTI SPA Italy 17 European + approx. 8 Asian TREFILERIES ET LAMINOIRS DE LA MEDITFrance TRAFILERIE DI LAINATE S.P.A. Italy Competitors UMICORE Belgium TREFIMETAUX France UMICORE ITALIA S.R.L. Italy WIELAND-WERKE AG METALLWERKE Germany 21 European + approx. 10 Asian 42 European competitors + approx. 4 Asian Competitors

Appendix 8: Companies active in the Copper-Alloy Market in Europe

19 Swissmetal media communication UNIA media communication Canton of Berne media communication Change of management at Swissmetal leads to stoppage Plant Manager (Industry) dismissed at Swissmetal Boillat 16.11.2004 plant in Reconvilier 18.11.2004 Swissmetal media communication: Stoppage at Swissmetal – Reconvilier plant 19.11.2004 Negotiations will start tomorrow 21.11.2004 Supervisory Board is checking every possibility of guaranteeing Negotiations break down without a result the interests of Swissmetal 24.11.2004 Swissmetal in Reconvilier: Agreement between Supervisory Board and employee representatives 25.11.2004 Swissmetal stands by the Reconvilier plant Success for the striking Swissmetal employees 8.7.2005 Swissmetal appoints the internal candidate Patrick Rebstein as Plant Manager for the Swissmetal Boillat plant in Reconvilier 6.9.2005 Swissmetal celebrates the 150th anniversary of its oldest plant, “La Boillat,” in Reconvilier, with a celebratory ceremony in the presence of Government Adviser Elisabeth Zölch-Balme 25.10.2005 Resolution by the National Industrial Conference of the UNIA Trade Union: No to the dismantling of Swissmetal “Boillat 8.11.2005 A strategy is needed for the growth of two production Swissmetal: Strategy and Restructuring plants measures8.11.2005 9.11.2005 Swissmetal: Committed to both its Swiss plants 11.11.2005 Doubtful strategy and obscure information policy at

20 Swissmetal 14.11.2005 Swissmetal plans annual savings of around CHF 14 million with Swissmetal bosses are playing poker with concessions to new industrial concept retract their plans 15.11.2005 Campaign of solidarity by the Swissmetal Boillat employees 18.11.2005 Swissmetal meets Pierre Kohler and Maxime Zuber 6.12.2005 Swissmetal starts a dialogue with the cantonal governments and s politicians 12.12.2005 Important step toward integration of the Swiss plants – Discussions between Swissmetal and a representative formation of industrial competence centers from the cantonal government (Regierungsrat) 13.12.2005 UNIA demands clear guarantees from Swissmetal regarding investment and cancellation of the proposed job losses 14.12.2005 Boillat workforce refuses to amend agreement concluded a year ago 23.1.2005 Swissmetal breaches the terms of the GAV 25.1.2006 Sudden stoppage in Reconvilier Swissmetal’s workforce in Reconvilier goes on strike 27.1.2006 Swissmetal calls for settlement of the stoppage and does not Swissmetal provokes escalation of the conflict and negotiate with the striking workers – conclusion of the GAV engages the whole region consultation process with the Dornach Employee’s Committee 8.2.2006 Swissmetal: UNIA condemns the dismissal of Nicolas 310-260-1 Wuillemin 31.1.2006 Swissmetal: Call to talks 31.1.2006 Swissmetal proposes a roundtable discussion 1.2.2006 Swissmetal regrets UNIA’s attitude toward round table Manifestation of solidarity for the striking workers in Reconvilier Swissmetal: The Restructuring of 2002‐2009

Swissmetal media communication UNIA media communication Canton of Berne media communication

UNIA welcomes Swissmetal’s willingness to hold talks 2.2.2006 Acceptance of talks 3.2.2006 The Dornach Employee’s Committee takes a stand (by Acceptance of talks Employment Committee)

9.2.2006 • Swissmetal offers open talks about the prospects of Unbelievable irresponsibility by the Swissmetal senior Bundesrat Joseph Deiss appoints Rolf Bloch as integration in Reconvilier management mediator in the Swissmetal Reconvilier conflict • False assessment by UNIA – correction 10.2.2006 • Open talks with Bundesrat Joseph Deiss about a solution to the Swissmetal conflict • Swissmetal sabotages Bundesrat mediation • Demonstration in front of Swissmetal gates in Dornach 14.2.2006 Employees agree to mediator Bloch’s proposals 15.2.2006 UNIA meets Swissmetal customers 16.2.2006 • Customers are seriously disappointed by Swissmetal • Why does Hellweg want to asset-strip Reconvilier • Swissmetal drove Boillat to strike 21.2.2006 Swissmetal’s supervisory board approves common draft for Bloch’s proposal is currently being revised by Swissmetal 21 mediation senior management 23.2.2006 Hopeful result Strikers in Reconvilier agree to mediator Bloch’s proposal 24.2.2006 Preparatory work started today 8.3.2006 Musical solidarity with the Swissmetal workforce in Reconvilier 15.3.2006 Artists support the Swissmetal Boillat employees in Reconvilier 24.3.2006 30% of customers lost by the strike at the Reconvilier plant – UNIA criticizes layoffs as irresponsible and demands the The Canton of Berne regrets the layoffs but hopes to 112 layoffs unavoidable – Swissmetal wants to retain plant and speedy break-up of Reconvilier save the plant remaining jobs. 25.3.2006 The UNIA delegates set an important course for the next few years. 30.3.2006 UNIA is attempting to interfere with corporate decisions and is Swissmetal: Artists’ support brings in around 60,00 francs endangering the Reconvilier plant with its recommendations to sell it 4.4.2006 • Stop these industrial cutbacks. “La Boillat vivra!” • Movement in the mediation process with the Swissmetal conflict

25.4.2006 Swissmetal reduces the number of layoffs at Reconvilier by 30 First step toward normalization of the Reconvilier plant 310-260-1 jobs 28.4.2006 Satisfactory 2005 results in a low in the sector – economy has been growing again since the beginning of 2006 – progress in the strategic growth of Swissmetal – Critical situation in Reconvilier continues

Swissmetal: The Restructuring of 2002‐2009

Swissmetal media communication UNIA media communication Canton of Berne media communication UNIA fuels the conflict in Reconvilier with indefensible 17.5.2006 polemics 13.6.2006 The final furlong at Boillat: 15.6.2006 Swissmetal puts in place the technical expert’s Industrial expert confirms UNIA’s criticism – his recommendations despite resistance proposals will be immediately put in place 16.6.2006 Swissmetal: The economic director supports the mediation process 27.6. Mediation process ends: Swissmetal puts in place the findings of the mediation process in Reconvilier and offers to cooperate with the social partners Appendix 9: Overview over Media Communication 22 310-260-1