Belgium’s Bekaert Group and China’s Angang Steel Company are reported to have formerly established a joint venture company on October 30. Called Angang Bekaert Tire Cord Co, the new venture is situated in Chongqing’s Shuangqiao Industrial Park and will engage in wire rod processing and the production of tyre cord for the domestic market.
Steel cord and wire manufacturer Bekaert has stated that anticipated increased raw material costs would lead to price increases for its products, including those employed in the tyre production process. These increases are expected to be implemented before the end of 2008.
Chief executive Bert de Graeve told a news conference on August 1 that “Price increases will have to be passed on to customers,”
Demand in Russia for the steel cord used to reinforce tyres is rising, and to meet this growing market Bekaert has taken the decision to invest in a new production facility in the country’s Lipetsk Special Economic Zone. More than 97 million euros will be invested in this project in a series of stages over the period 2008 to 2013, with the first stage scheduled to enter production in 2010.
The Lipetsk region, about 400 kilometres south of Moscow, is strategically located close to the target markets, reports Bekaert, and features good logistics, ready access to energy supplies and a skilled labour force. Bekaert already has an established portfolio of customers in Russia, including tyre manufacturers. These Russian customers are currently being supplied by factories in Central Europe.
Steel and wire cord manufacturer Bekaert announced on January 8 that it will issue five-year notes for a total consideration of 100 million euros in the form of a public offering in Belgium, the Netherlands and Luxembourg. The notes will be available in 1,000 euro denominations, with the subscription period running from January 10 to February 11, 2008, subject to early closing. The issue price is set at 101.80 per cent of the nominal value of each note, with a coupon of 5.30 per cent annually. Application has been made to list the notes on Euronext Brussels.
The Fortis and KBC banking groups will act jointly as financial intermediaries and lead managers for this transaction. The purpose of the issue, reports Bekaert, is to refinance the company’s existing credit lines and short term commercial paper, and to finance future growth initiatives.
Bekaert’s board of directors have appointed Geert Roelens as Group Executive Vice President and member of the Bekaert Group Executive Committee, effective 1 March 2008. He will succeed Marc Vandecasteele, Group Executive Vice President AWP Steelcord, who will retire after more than 36 years of service. In his new position, Geert Roelens will be responsible for managing and developing Bekaert’s steel cord activities on a global level. Geert Roelens is currently General Manager steel cord products Asia, based in Shanghai (China). He joined Bekaert in 1988 and gained extensive international business experience in various management assignments in Belgium, the United States, Indonesia and China.
In the US Bekaert Steel has laid off 23 employees at its Rome, Georgia facility, a result of stronger competition from manufacturers in China. The factory, which produces steel cord used in tyre production, began laying off staff on October 1.
“We hope this is short lived,” plant manager Gary Downey told local newspaper the Rome News-Tribune. “The market is slow right now, but we fully anticipate that it is going to return.”
In late August the company also announced the closure of its joint venture steel cord facility in Geelong, Australia, quoting cheaper production costs in other regions as a factor in this decision.
Belgium’s Bekaert Group and its Australian joint venture partner OneSteel Pty Ltd have decided to close their steel cord plant located in Geelong, Australia. This decision follows an extensive review of business performance, including customer and market outlooks, financial performance, plant operations and sourcing alternatives.
Employees, customers and suppliers have been advised of the closure, which will occur by the end of the year after all customer supply contracts and commitments for 2007 have been completed. The company says it will work closely with the plant’s 74 employees and their union representatives to provide advice and job placement assistance.
The joint venture, known as Bekaert Australia Steel Cord Pty Ltd, was established in 1986 to supply steel cords and hose wires to tyre and hydraulic hose manufacturers in Australia, New Zealand and South East Asia. Bekaert says these markets will for the immediate future be supplied with products sourced from factories in North and South East Asia.
Bekaert has acquired Delta Wire Corporation for an enterprise value of US$10 million. With almost 100 employees, Delta Wire Corporation, located in Clarksdale (Mississippi), is a major supplier of bead wire for tyre reinforcement, as well as of a wide range of specialized wire products for the North American market.
Roll containers are proving the most efficient method of distributing goods in the supply chain, according to Bekaert Handling. In recent months the company reports that it has seen the use of roll containers rise sharply throughout a variety of different industries. The company claims that it is unique in offering a complete bespoke design capability, developing innovative solutions to storage and handling problems.
Last year Bekaert achieved a 21 per cent consolidated sales growth. The total now stands at 2.2 billion euros of which 1.5 billion euros were generated in the “Advanced Wire Products“ business segment. Above average growth mainly took place in developing markets such as Latin America and Asia where the Belgian steel cord supplier managed to achieve a turnover of plus 32 and plus 49 per cent, respectively. Bekaert explains that these positive developments were the result of “organic growth” in 2004, but also acquisitions like the one in Slovakia. The company’s 2004 results will be published in March.
NV Bekaert SA (Kortrijk/Belgium) has announced that it has made an agreement with Penta Investments Limited and Majetkovy Holding a.s. to acquire 100 % of the shares of Drotovna Droty a.s. and Drotovna Kordy a.s. in the Slovak Republic. Both Drotovna Droty a.s. and Drotovna Kordy a.s. were incorporated in 1999 as a result of a restructuring of Drotovna at Hlohovec, 75 km North East of Bratislava. The present owners have been going through a rationalisation process which will give Drotovna Droty a.s. a capacity of approx. 60,000 tonnes of various steel wires for the Central European market and Drotovna Kordy a.s. a capacity of approx. 9,000 tonnes of tire cord and approx. 8,000 tonnes of bead wire. The acquisition of both companies will increase Bekaert’s market share and strengthen its competitive position in the fast growing Central European market. The completion of the purchase is subject to the approval of the Antimonopoly Office of the Slovak Republic and the full implementation of the rationalisation programme.
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