Best In France

Mon, 10 Dec 2007Prof. Michael SEGALLA

Corus Group In France

Beniamin SMOLIJSandor ERDEIKitty LIANGGa-Eun OH

Executive Overview

■ Introduction■ History of Corus & recent acquisition■ Steel Market ■ Corus in France

Introduction

■ Corus Group Aerospace, engineering, automotive, packaging,

construction, energy & power generation, consumer products, rail

■ Corus French subsidiary provides a range of rail products and railway

infrastructure services to the international rail industry

Corus Group Financial Performance

Sogerail

■ A subsidiary of the Usinor group(French company)

■ Employees : about 430 ■ Products: rail products■ Location : at Hayange in the Lorraine region of

France. ■ Turnover : 170 million euros

(March 1999 Recorded)

Birth of Corus Group

■ British Steel acquired Sogerail on 2nd October 1999 ■ British Steel merged with the Dutch steel producer

Koninklijke Hoogovens to form Corus Group on 6 October 1999

■ After this merger, conflicts led bad performance In 2001, operating loss touched ￡ 1.152 billion In 2002, losses stood at ￡ 458 million

■ In 2003, new CEO, Philippe Varin implemented ‘Restoring Success’ program

cost savings touched ￡ 680 million in 42 months, employee productivity rose by 5% in 2005

Acquisition by Tata Steel

■ In Oct 2006, the board of Corus decided to accept Tata’s proposal to acquire

■ Brazilian steel company CSN announced to participate in acquiring Corus Group

■ The price was getting increased due to competition

■ Tata Steel acquired Corus Group at 608p per share in April 2007

■ Tata Steel Group consists of Tata Steel & Corus Group Ltd

History of Corus Group

Koninklijke Hoogevens N.V..(Dutch)

Corus

British Steel

British Steel Sogerail

Tata Steel Corus

2006 Global Steel Industry

After the acquisition

World Steel Consumption

0

100

200

300

400

500

600

Mill

ion

Ton

s

EU-25 143 152 152 159 156 155 158 160 160 167 169 173 177 183

USA 108 116 111 115 102 103 101 116 104 110 111 113 115 117

JAPAN 82 70 69 76 73 72 73 77 78 81 81 81 82 83

CHINA 103 110 123 125 154 186 233 270 315 356 403 443 470 489

MIDDLE EAST 16 17 17 20 23 25 30 31 35 37 40 44 46 48

1,997 1,998 1,999 2,000 2,001 2,002 2,003 2,004 2,005 2,006 2,007 2,008 2,009 2,010

Sogerail British Steel

Entering the French Market

■ Rail is a steel niche market■ Access to European market through France.

Know-how Transport, logistics

Personnel Merge in France

■ Commercial unit moves to new French base■ 10 French employees laid off■ 30 British employees moved to France

■ British Nationals: 30■ French Nationals: 20

Differences in style emerge

■ Centralization■ Limited autonomy■ Bureaucracy

Cultural differences

■ Meetings: Highly organized Nice presentations Less decisions

■ Contacts The boss speaks only

to immediate subordinates

■ Language Bonjour, Merci..

■ Meetings: Less organized More discussions Faster decisions

■ Contacts The boss speaks to

every employee■ Language:

High expectations of English proficiency

English French

Corus rail today

■ Only 5 British employees remained from the original 30

■ These 5 settled down in France■ The British and the French couldn’t work

together in long-term

Negative effects of the merger

■ British tried to launch new products with their model, ignoring the French objections

■ Mr. Dabas and 3 other French managers left the company

Positive effects of the merger

■ More control than before the merger

■ less accidents, the factory is safer for the workers

Merger with Tata

Merger with Tata

■ We do not know the results of the Tata takeover

■ Mr. Dabas thinks: Tata doesn’t even know that Corusrail exists

■ Tata is too far from France

“Test of interests of Tata”

■ Corusrail will ask at the end of 2007 for investment

■ Increase Rail length 80 108■ Competitors have 120, but 108 can easier

transported■ Mr. Dabas advice: sell off Corus Rail

Conclusion

■ Give confidence to the former employee■ Don’t control everything■ Send people who know French culture or at

least are interested in it■ If the objectives are not met than discuss

We Thank

■ Mr. Gerard Glas CEO ■ Mr. Hubert Dabas Commercial Manager■ Ms. Laure Lafare Andministrative Assistant

Thank you for your attention!