5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Globalisation and the Effects of the Opening of the East on the Western European Aluminium Semis Industry Globalisation and the Effects of the Opening of the East on the Western European Aluminium Semis Industry Bruno G. Rüttimann, Alcan Singen GmbH Bruno G. Rüttimann, Alcan Singen GmbH 5th World Congress ALUMINIUM 2000 Rome, March th World Congress ALUMINIUM 2000 Rome, March 2003

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Mergers & Acquisitions

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Trade Deregulation

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Increasing Competition

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Price Pressure

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Flow of Information

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Interlinked Markets

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive World-wide Strategies

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Reduced Growth Rates

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Overcapacity

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Un- employment

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive

 The Drivers for Globalisation  The Globalising Competitive System  The Opening of the East  The Resulting Effects  Changes in Demand Characteristics  Possible Strategies  The Ten Postulates of Globalisation  The Drivers for Globalisation  The Globalising Competitive System  The Opening of the East  The Resulting Effects  Changes in Demand Characteristics  Possible Strategies  The Ten Postulates of Globalisation CONTENT

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Saturationin existing endmarkets Saturationin existing endmarkets World-wide communication network World-wide communication network Searching for optimization potential Searching for optimization potential Searching for geographical expansion Searching for geographical expansion Searching for diversification opportunities Searching for diversification opportunities M&A Opening ofa globalmarket with new competitive environment and new world market price Opening ofa globalmarket with new competitive environment and new world market price + Price/ margin pressure Price/ Change of competitive system Change of competitive system Shake-outShake-out Concentration process The Drivers for Globalisation Symptoms, causes, and effects

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive  Type 1  Globalisation of business itself  products with world price  and world-wide sourcing  or need to follow globally active customers  Type 2  Globalisation of managing business  mainly in fragmented market structures  for „franchise-like“ business model  Type 1  Globalisation of business itself  products with world price  and world-wide sourcing  or need to follow globally active customers  Type 2  Globalisation of managing business  mainly in fragmented market structures  for „franchise-like“ business model The Globalising Competitive System The types of globalisation

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Bauxitmining, alumina production, Primary smelter,casting, Rolling,extruding, diecasting,forging,...,,, Components,, finished products Usage Recycling Usage Scrap, waste Remelters, foundries, Scrap, waste The Globalising Competitive System Aluminium industry structure and type of globalisation Type 1 globalisation predominant Type 2 globalisation predominant, if ever

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive + - Aluminium price Easternprivatand industry demand Easternprivatand industry demand + Eastern economy policy Westerngovern. help Loans Eastern economy policy Westerngovern. help Loans Substitutionor coolingdown Substitutionor coolingdown ++ Exportpossibilities towestern countries Exportpossibilities towestern countries + ++ Al-demand western countries Al-demand western countries Al-demand eastern countries Al-demand eastern countries Al-capacity CIS-offer Al-capacity Western-offer ++Al-capacity CIS-offer Al-capacity Western-offer ++TOTAL Al-offer TOTAL Al- demand + - TOTAL Al-offer TOTAL Al- demand + - Al-consumption Westerncountries Al-consumption Westerncountries The Opening of the East System dynamics and driving forces on Alu demand Al-consumption eastern countries Al-consumption eastern countries -

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive The Opening of the East The EU/CIS intertrade in 2001 (ktons)

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive The Effect on Prices Price evolution of rolled and extruded products

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive The Immediate Effects Price discontinuity due to apparent supply increase Demand curve D Supply curve S S‘ after opening Price Volume pº p‘ V‘Vº overcapacity cost differential

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive The Persistance of Effect Evolution of East-West salary differential

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Demand curve D Supply curve S S‘ Price Volume pº p‘ V‘Vº long-term D‘‘ V‘‘ p‘‘ Changes in Demand Characteristics New possible equilibrium in the long term

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive Larger market Increased competition Margin squeeze Increased opportunity Foreward integration Foreward integration Foreward integration Foreward integration Resulting Strategies The response to the opportunities and challenges Focussing Best-in-classBest-in-class Cost reduction Customer dedication Innovation Cost reduction Customer dedication Innovation Opening/Globalization/OpeningGlobalization

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive 1.The price spiral has not yet reached its equilibrium. 2.The Eastern semis exports will increase. 3.The East‘s labour cost advantage will persist. 4.The semis margin will hardly improve. 5.Lower semis prices will create new applications. 6.Customers will increasingly take advantage from low-price sources. 7.Economies of scale will play a decisive part. 8.Specialised plants will take advantage over multi-purpose plants. 9.Technology-push allows differentiation. 10.Mergers and networking within an integrated value chain will dominate the future. 1.The price spiral has not yet reached its equilibrium. 2.The Eastern semis exports will increase. 3.The East‘s labour cost advantage will persist. 4.The semis margin will hardly improve. 5.Lower semis prices will create new applications. 6.Customers will increasingly take advantage from low-price sources. 7.Economies of scale will play a decisive part. 8.Specialised plants will take advantage over multi-purpose plants. 9.Technology-push allows differentiation. 10.Mergers and networking within an integrated value chain will dominate the future. The 10 Postulates of Globalisation

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive

ALCAN

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive A immagination materialized A immagination materialized

5th World Congress ALUMINIUM 2000 Rome, March, 2003 B. Ruettimann, Alcan Automotive