analysts presentation steel noram oct 2006
TRANSCRIPT
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Foseco Steel NorAmBusiness Review
October 10, 2006
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Agenda
• Introductions Lee Plutshack• Foseco NorAm Steel – Overview Mike Fish• The North American Market Bill Jennings• Foseco NorAm’s Focus Bill Jennings• Products and Applications Albert Dainton• Summary Lee Plutshack
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NorAm OverviewM. Fish
October 10, 2006
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Who are we?
Foseco is a leading supplier of high technology products and value-added services to the steel industry.
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NorAm Manufacturing & Laboratory Facilities
• Conneaut - Ohio– Afax granular & powder mould flux production– Turbostop flow control system production– Secondary steel making (SSM) degasser snorkel production– Afax & Foscast quality control labs
• Saybrook - Ohio– Deltek – Carbon bonded ceramics production
• Cleveland – R&D– Afax recipe development laboratory– Foscast refractory development laboratory– Turbostop water model laboratory– Deltek mould model laboratory – mathematical and water modeling
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Mittal Steel
AK Steel
US Steel
Nucor Steel
NorAm Customer Base
Stelco Steel
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Steel Making Process
Years of experience focused on the casting deck.
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The Casting Deck
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A History of Innovation
• Profax/Kalorex Hot Tops - early 60s - Ingots• Garnex Tundish Liners – 1970’s• Afax Granules in North America – 1980’s• Turbostop -1990’s• Integrated Process Improvement - 2000’s
– Unique product portfolio linking the variables in the continuouscasting process.
Foseco has been introducing new technology to the steel industry for over 40 years
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Ingot Hot Tops
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Garnex Tundish Lining System
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Organized to Improve Customer Performance
Service Techs
Direct Sales
VP Sales
R&D/Eng Support
Direct Mktg.
VP Marketing
Cell Mgrs.
Operations Dir.
Finance & Cust. Service
Finance/Commercial
Chief Executive
Application Engineers
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Solid Customer Relationships
• Years developing relationships in plant & head office.• Worked with our key customers through good & bad times• Steel Groups R&D work with us in our facilities.• Operators understand the value we bring to the table and
support us with purchasing.
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NorAm Steel MarketB. Jennings
October 10, 2006
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NorAm Steel Market
• 109 million Tonnes Shipped in 2005– Canada: 14 million tonnes– U.S.: 95 million tonnes
• 55 steel companies with approximately 135 facilities• 9.6% of the world steel production• Largest Markets: Construction and Automotive
– Other Key Markets• Machinery• Containers• Pipe/energy
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Global Steel Production
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China Europe NORAM C.I.S. Japan S. Amer India
Prod
uctio
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ilion
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NorAm Production
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'96 '97 '98 '99 '00 '01 '02 '03 '04 '05
Mill
ion
Tonn
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NorAm Steel Imports
0
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'06 '07 '08 '09 '00 '01 '02 '03 '04 '05
Tonn
es
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Consolidation of Industry
LTV BethlehemInland SidbecLukens GeorgetownWierton Dofasco
Arcelor/Mittal
USXNational Steel
USS
Nucor Auburn Birmingham SeattleTrico
Nucor
Gerdau AmeristeelMRM AtlanticCo-Steel North StarAmeristeel Cambridge
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Consolidating Steel Industry
Pre ConsolidationTop Three
Other68%
Nucor14%
USS10%
Beth8%
Post ConsolidationTop Three
Nucor18%
USS16%
Mittal25%
Other41%
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Impact of Consolidation• Steel Companies are stronger financially
– Manage supply with demand – Domestic & Global– Higher steel prices– Less cyclical production and pricing– New labour agreements
• Best Practice Approach– Utilization of best technologies– Global perspective– Value is important
• Value = Customer $ in yield, productivity, quality, etc. – “Foseco”• Centralize Purchasing
– Greater purchasing influence– Fewer suppliers– Price rationalization/down initiatives
• Reduced R& D. – Greatly reduced localized R&D capability.– More reliant on supply chain - “Foseco”
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Consolidation – An Opportunity for Foseco
• Financially strong market• Less cyclical market• Demand for innovative technology• Value is key• Market requires development resources
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Customers are strong and will Survive!!
• Consolidation provided financial stability• Global focus• Global customers – Automotive transplants• Low man-hours per ton• Raw material stability
– Iron ore, scrap
• Energy efficient• Technology leaders• New production facilities being built
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Foseco NorAm FocusB. Jennings
October 10, 2006
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Targeted Sectors
• Slab • Thin Slab• Special Bar Quality (SBQ)
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Targeted Sectors – Why?
• Customers who appreciate – Value– Technology– Supply chain
• Financial stability– Strong steel markets– Value added steels– Premium price steel producers.
• Similar targeting approach as Foseco
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Foseco’s Target - Flow Control on the Casting Deck
Why?
• Critical steel processes require innovative cost effective solutions
• Individually unique casting parameters demand customized solutions
• Application Expertise• Years of Experience in steel
containment, flow and solidification
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Why we succeed!
Customised products • Defining the customer’s needs and customizing solutions.
Multifunctional account management
teams • Managing the business at the account level
working with the customer
Engineering expertise • Robotic & automatic application systems . Water modeling services for Turbostop & Deltek
Technical support • Global experience and resource base
Highly trained field sales and marketing
team Understanding the process.
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NorAm Sales History
2000 2001 2002 2003 2004 2005 2006
SAL
ES
$
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Products and ApplicationsA. Dainton
October 10, 2006
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Foseco’s Core Business
The Steelmaking Process
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Continuous Casting Process
TUNDISH
LADLE
MOLD
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Product Split
CBC10%
Tundish17%
Other3%
Afax40% Turbostop
18%
SSM12%
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Where Afax products are used
AfaxMold Powder
AfaxTundish Flux
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Mold Fluxes NorAm Market
Stollberg55%
Metallurgica10%
Foseco27%
Others 8%
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AFAX - Continuous Casting Fluxes
• High cost of entry– Heavy investment in plant, quality
control and people• Highly technical product
– Each plant has different casting conditions
– Usually 4-5 different grades• High risk
– Last and most critical consumable in the hot end process
• Highly sustainable– Multiple formulations – Changing requirements– Regular re-engineering of product
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Low High
Low
Hig
h
Tech Sales Input
Offe
r Diff
eren
tiatio
n
Tundish Flux
“Integrated” Strategic Positioning
Med
Med
Afax Product Positioning
Mold Powder
Basic TD Covers
Engineered Mold
Solutions
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1986 1989 1992 1995 1998 2001 2004
Afax Sales DevelopmentSA
LES
$
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Where Turbostop is used
TURBOSTOPSYSTEM
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Tundish Flow Systems NorAm Market
Foseco41%
CCPI22%
Vesuvius20%
Others 18%
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Turbostop - Tundish Flow Systems
Key features• Highly technical product
– Each steel plant has different casting conditions
– Usually 4-5 different grades• High risk
– Steelmaking process re-engineered to custom design
• Highly sustainable– Multiple formulations – Changing requirements– Regular re-engineering of product
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Low High
Low
Hig
h
Tech Sales Input
Offe
r Diff
eren
tiatio
n“Integrated” Strategic Positioning
Med
Med
Turbostop Product Positioning
Custom DesignedTurbostop
Traditional Methods
GenericShapes
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Turbostop Sales
0123456789
1994 1997 2000 2003 06 Proj.
SAL
ES
$
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Where Deltek products are used
Deltek Ladle Shroud
DeltekStopper Rod
DeltekSES
Deltek SEN
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CBC Flow Control Systems NorAm Market
Vesuvius70%
Japanese11%
Foseco5%
Others 14%
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Deltek Flow Control Systems
• High cost of entry– Heavy investment in plant, quality
control and people• High risk
– Product issues result in high cost to steel plant
• Highly technical product– Each plant has different casting
conditions– Each customer has 3-5 shapes unique
to his plant– Requires custom design and modeling
of process• Highly sustainable
– Multiple formulations – Changing requirements– Regular re-engineering of product
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Low High
Low
Hig
h
Tech Sales Input
Offe
r Diff
eren
tiatio
n
Low endcommodity products
“Integrated” Strategic Positioning
Med
Med
Deltek Product Positioning
Custom Designed Products
Engineered Pouring
Solutions
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Deltek Sales
0
1
2
3
4
5
6
2001 2003 2005
SAL
ES
$
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Foseco Product Synergies
Deltek Ladle Shroud
DeltekStopper Rod
DeltekSES
Deltek SEN
AfaxMold Powder
AfaxTundish Flux
TURBOSTOPSYSTEM
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Casting Deck Synergy
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The Foseco Advantage
• Foseco is the only supplier that is equipped to provide integrated caster flow control and flux solutions
• All three product areas interact and have a significant effect on the quality and yield in the steel plant
• We have significant expertise in this area of the plant including equipment and software control
• Thus we can leverage and exploit the synergy
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Summary Strategic OverviewL. Plutshack
October 10, 2006
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Success - Clear Direction and Focused Approach
• Foseco business model can be applied in Steel• Steel has successfully repositioned itself to changing industry
requirements• Steel has an experienced team• Product lines of strategic interest
– CBCs are an important part of Steel’s future and we are very optimistic about our future success
– Turbostop and Mould Flux are also very interesting opportunities• Very successful where focused
– No. 2 to Vesuvius in Carbon Bonded Ceramics in Europe– No. 2 to Stollberg in Mould Flux in North America– Globalization of Turbostop
• Focus resource on value-added opportunity• Compete on technology & service• Exploit the synergies of our unique product portfolio• Steel profitability will improve