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ARCELOR unites key players to form UGINE & ALZ

18 Stainless World March 2002 www.stainless-steel-world.net ❿ cover story ➛

There is a new player in the steel business that one cannot easily overlook. With the merger of Aceralia, and , has become a fact. But what about the activities of this steel giant, one of the largest in the world? Stainless Steel World decided to talk to the Commercial Director of UGINE & ALZ, Mr Pascal Payet-Gaspard. He discussed with us the reasons for the merger, the plans for the future, and how the stainless steel activities of the founding companies brought them together.

t the start of the 20th century new company. In fact, the first Europe’s steel industry was exchange of ideas about a possible Astrictly organised along na- co-operation between Arbed and tional lines. A lack of a national steel Usinor concerned their stainless steel industry was considered a direct activities.These talks, which took threat to the national security of a place in the autumn of 2000, were so nation and even a small country such fruitful that they were extended to as the Netherlands, which had to im- include all activities of Arbed, Usinor port both ore and coal, had its and also Aceralia, which at the time own steel mills. Much has changed was in a strategic alliance with since then. After the World War II the Arbed. From there on things gathered consolidation of the steel industry speed, and a year ago the announce- took off. Strongly influenced by the ment of a possible merger between foundation of the European Coal and Arbed, Aceralia and Usinor became Steel Community the markets for world news within the industry. steel were liberalised at once heavily In order to report on the emergence subsidised companies had to become of Arcelor and its stainless steel activi- efficiency-driven, competitive, self- ties Stainless Steel World visited Paris’s supporting entities. No wonder more business district La Défense. Right and more major players had to next to the Grand Arche we met Mr merge, so that today the number of Pascal Payet-Gaspard, who is the Vice steel-producing companies is only a President, Sales & Marketing of the fraction of what it was a century ago. new company UGINE & ALZ.He An important next step in the con- talked to us about the reasons for the solidation process was taken only re- merger, the capabilities of the new cently.Through the merger of company and its potential. Aceralia, Arbed and Usinor a new “There are two main driving forces company came into being, Arcelor. in our industry today that favour an With 110,000 employees world-wide increase in scale: the need to increase and an annual production of roughly competitiveness and the return on in- 45 million metric tonnes of steel the vested capital.To start with the latter, new company is the largest steel pro- the stainless steel industry is heavily ducer in the world. It sees itself as the capitalised and faces quite violent cy- first truly global steelmaker and cles. I don’t think I have to remind expects to increase its efficiency and anyone in the industry how extreme service to the customer to unprece- price differences for stainless dented standards.The name Arcelor can be. As a result it is quite a chal- symbolises first of all the union and lenge to guarantee a proper return on integration of the experience and ex- investments.The different companies Mr Payet-Gaspard: "Increasing pertise of the three constituent com- that form Arcelor recognised that get- competitiveness and service to the panies: Arbed, Aceralia and Usinor. ting together would help to optimise customer are important driving force behind the merger" Stainless steels form an important investment plans and reduce costs part of the product portfolio of the which would contribute to a more

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efficient organisation”, Mr Payet-Gaspard explains. The second main dri- ving force behind the foundation of Arcelor and the merger of UG- INE & ALZ is the need to improve competi- tiveness.The stainless steel industry is an in- dustry where economies of scale play an important role and the merger created a promising point of de- parture to realise these. Even though when it comes to economies of scale things are not as

Bright annealed stainless steel are just one product of UGINE & ALZ's wide product range

balanced and able to compete with each other in a healthy way.”

UGINE AND ALZ Mr Payet-Gaspard expects that the parts of Arcelor’s stainless branch that will benefit most of the spin-off of the merger are UGINE and ALZ. In fact it is these companies that are respon- sible for the first contacts between Aceralia, Arbed and Usinor because easy as they might look at a first comments whatsoever regarding the of the excellent opportunities a far- glance. In order to prevent monopoli- stainless steel companies involved in reaching co-operation would offer. As sation of a market the European the merger.We feel this is a great such UGINE and ALZ were present at Commission will not allow compa- support for our new company.We the birth of the new company. Mr nies that produce the same type of have created an organisation that is a Payet-Gaspard feels that the excellent product to merge in a market with a more competitive player and a more co-operation between the two and limited number of players such as the efficient producer without interfering the positive spirit during the talks stainless steel market.Therefore the with the number of suppliers in the significantly contributed to the suc- companies that make up UGINE & ALZ separate markets we serve. In fact I cess of the merger.This positive spirit today had to look for partners that feel that the creation of Arcelor’s of co-operation is more alive today were strictly complementary when it stainless steel branch has restored the than ever now they are merged to came to products and services but balance in the market.Today there one company. could provide support to each other are four major players, of which Even though UGINE and ALZ have when it comes to realising economies Arcelor is the biggest, that are well completely different backgrounds. UG- of scale. Mr Payet-Gaspard:“If you look at the FACTS & FIGURES product portfolio, the markets we serve and the services we offer the Name: Arcelor companies that make up UGINE & ALZ are clearly complementary.This Founding companies: Acelaria, Arbed, Usinor was clearly recognised by the Production (carbon and European Commission. Even though stainless steel): 46 million tons of crude steel the standards they use in order to Turnover: EUR 30 billion guarantee a proper functioning of the market are extremely high and often Number of empolyees: 110,000 quite hard to meet, they had no

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INE has been a prominent player on built there which the market for very long. In fact UG- will start up produc- INE’s predecessors were true pioneers tion end of 2002. in the stainless steel business.Through The requirements of the years the company developed itself the new company into a top supplier specialising in thin have clearly been material and special bright annealed incorporated in the ferritic grades. ALZ on the contrary design of the new was founded in the early 1960s and plant. All in all, much started as a greenfield plant.The com- emphasis has been pany is an important producer of wide given to making the hot-rolled material, up to two metres route of production width. shorter and more All in all, Arcelor is not only world efficient in order to leader in terms of tonnage, but also be even more com- for the range of products and services petitive. on offer. Mr Payet-Gaspard says: Being responsible for “Today we can offer a complete and sales, Mr Payet- wider range of products to the mar- Gaspard is particular- ket : grades, formats, dimensions and ly interested in the surface finishes. Our cold-rolled ma- third strategic point, terial runs from 0.3 mm to 35mm in innovating the sales thickness and our hot-rolled material network and devel- from 1.5 to 13mm. As important as oping new applica- our products are our service centres. tions. Mr Payet- In Europe we have service centres Gaspard:“It is truly strategically located close to our cus- fascinating to be in- tomers and specialised for particular volved with UGINE & products or services.” ALZ ’s commercial ac- tivities.We are geared NEW COMPANY to service our cus- Stainless steels have definitely not reached its full So what are the key points for the fu- tomers with an opti- potential and will be used in an increasing number of ture for the new company? “Basically mal product and a applications according to Mr Payet-Gaspard. our strategic plans for the near future top service. In order to do so we have extensively used, the material has def- run along three lines: tap the syner- established a company-broad sales or- initely not reached its full potential. gies within the new company, further ganisation, as we want our customer And need I say what chances there co-ordinate the investment plans and to do business with only one sales or- are for instance in Asia? Thanks to innovate the sales network and devel- ganisation regardless of which of the further cost reductions, time and time op new applications”, Mr Payet- products he needs. All in all I feel that again stainless steels are recognised as Gaspard adds:“As I mentioned our sales organisation, together with the most efficient material. I feel the before, relations between the different our extensive and expanding service future looks bright for Arcelor.We companies that make up UGINE & ALZ network, is in an optimal position to have the facilities to be one of the today have been excellent, but there is serve the customer. Furthermore most efficient producers, the sales and still a lot of work ahead of us. It takes there is a lot of potential for stainless service organisation to back it up and time to switch over to a unified com- steels in the world today. Even in are in a business that belongs to the pany culture and to identify and re- Europe, where stainless steels are fairly future ➛ alise the synergies that are potentially there. But I am confident that, even in the short run, we will make signifi- cant progress, and I am sure we will Pascal PAYET-GASPARD, Vice President Sales & Marketing of UGINE S.A finalise the transformation process re- and General Manager of Ugine Europe Sales Network. markably soon.” Pascal Payet-Gaspard, 54, graduated from Ecole Polytechnique in PARIS in 1971 and Mr Payet-Gaspard continues to from Massachussetts Institute of Technology, Sloan School of Management in 1973. explain that, already during the early stages of the talks that resulted in the He worked with the Aluminium branch of Pechiney from 1973 until 1979. He then merger, synergies were identified. As joined Ugine Stainless Steel Long Product Division as Commercial Manager. From a consequence the stainless steel 1985 until 1995, he worked with Ascometal as Manager of Hagondange branch of the company has already and then CEO of Ascoforge, Ascometal’s Forgings Division. From 1996 until 1999, begun to co-ordinate its investment he worked for Usinor Holding as Vice President for Automotive Development. In the plans. As an example he mentions the beginning of 1999, he was named Vice President Sales & Marketing of Ugine SA new investment programme that the and General Manager of Ugine Europe Sales Network. former ALZ initiated in Genk. At the moment a new steel plant is being

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