Flat Carbon Steel Europe Client Value Team

Fast prototypingA new service with unique advantages

Clients reap the benefitArcelor and Nippon Steel:

five years of collaboration

New logistical approachA close partnership with Lindab

Client magazine | June 2006

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Contents

Cover© LindabA company with its own technology for ventilation ducts

Editorial responsibilityCecile Van den HofArcelor Flat Carbon Steel Europe19, avenue de la LibertéL-2930 Luxembourgwww.arcelor.com/fcse

Editor-in-chiefCecile Van den Hof

EditorsDieter VandenhendePhilip van Ootegem (Aware)

Graphic designJulie Verzelen

Photographyp. 3, 5 and 17: Tom D’Haenensp. 6, 7, 12, 13-14 (top) and16: Philip van Ootegemp. 4: Fernand Konnenp. 8-9: Lindabp. 10: Studio Ponsp. 11: Paul Robinp. 13: Arcelor Research Industry Gentp. 14-15: Vaillantp. 18: Severstalp. 19: Dofascop. 20: Arcelor Eisenhüttenstadt

CopyrightAll rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission in writing.

3 Aboutchangeandgrowth

4 InterviewwithWalterVermeirsch

7 ArcelorSteelServiceCentre Slovakia Arcelor sets the tone in Central Europe

8 Lindabgetsacquaintedwith anewlogisticalapproach

10 Clientsreapthebenefitof ourcooperation Arcelor and Nippon Steel: five years of collaboration

12 Fastprototyping,anewtechnical servicewithuniqueadvantages

14 Vaillant,theheatingspecialist whokeepshiscool

16 Arcelorsteelreadyforthe hardestimpact New European standard for crash barriers

18 Arcelor:onestrongbrand

18 TheexpansionofArcelor • Laiwu • Sonasid • Severgal • Dofasco crucial to Arcelor’s growth strategy

20 Flash • Arcelor organises worldwide Health and Safety Day • Arcelor wins Toyota Award for the quality of its products • Acería Compacta de Bizkaia nominated for environment award

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Cecile Van den HofSenior Manager Communications

Everything that lives is in a constant state of change. So it is important to guide these changes in the right direction and ensure that objectives are attained. That is exactly what we are doing at Arcelor. As a client, you have had to get used to new names and new faces in our organisation. We came up with new products and processes and introduced new acronyms and methods. Through the medium of Update, we have always kept you informed about our objectives and our agenda. Today, in this issue of Update, we are presenting an interim report. A positive aspect of all this is that your needs and requirements as a client are what guide us in everything we undertake.

When we arrived to interview Walter Vermeirsch, the new Executive Vice- President of the Arcelor Client Value Team (CVT), he remarked that recently, he had received nothing but positive feedback from many clients about the direction in which Arcelor is evolving. He then explained to us how exactly Arcelor will succeed in attaining the OTIF 95 objectives by the end of this year. But that is certainly not the only result of our efforts over the past months. Walter Vermeirsch also told us about the first, promising innovations in the Supply Chain, and the important improvements which have been introduced in the Upstream sector of our production apparatus.

The way in which clients talk about their collaboration with Arcelor CVT bears out Walter Vermeirsch’s words. In our article on the Swedish company Lindab, for example, you can read about their positive experience with the first stages of our pilot project Committed Volume & Lead Time. The German company Vaillant is also very satisfied with its collaboration with Arcelor CVT.

Arcelor is changing... and growing. Dofasco has joined the Arcelor Group, for example. And in this issue you can also read about the alliance with Nippon Steel Corporation, the new Steel Service Centre in Slovakia, the minority shareholding in the Chinese steel company Laiwu and other new cooperation agreements. At the same time, Arcelor continues to innovate. In this magazine we also put the spotlight on our new technology for fast prototyping and explain why you are now better off with crash barriers made of Arcelor steel.

Happy reading!

Cecile Van den Hof

About change and growth

Client Value Team | Client magazine | June 2006

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Interview with Walter Vermeirsch

Transformations are bound to mean reshuffles at top management level. As of 23 January 2006, Walter Vermeirsch is the new Executive Vice-President of Arcelor’s Client Value Team (CVT). He took over from Christophe Cornier, who now heads Arcelor Flat Carbon Steel Europe and Automotive worldwide. Our hour-long interview with Walter Vermeirsch revealed him to be an experienced and methodical manager who has had a successful career to date in both production and client relations.

Since the summer of 2005, a wave of transformation has been surging through Arcelor, and the first results are beginning to appear. Is everything going well?The primary aim was to complete the integration of the different commercial teams that had continued to exist more or less side by side after the merger. Integration will always cause some turbulence, but we did not wait until the reorganisation had settled down completely before starting up a number of client-oriented projects. The most important project was certainly OTIF 95. From now on, we want 95% of all orders with the “superior service” label to be executed “On Time and In Full”. This project is running according to plan and we are now achieving OTIF figures of around 90%. This has led to very positive feedback from our clients.

What have you done to raise these OTIF figures?

We tackled the fundamental causes. In the first place, there is a quality problem. We have always had a good reputation for the quality of our products, but too many finished coils failed to pass quality control and have to be produced again. By introducing internal quality projects in our mills, we have succeeded in making significant progress here. If fewer things have to be done twice over, that obviously means you save time.

This is closely linked to the second problem – the complexity of our batch processes. When you set up an assembly line anywhere, you know more or less how it will perform in advance. It involves a continuous process with known parameters that can easily be adjusted if necessary. Steel production is a different matter all together. We have 16 blast furnaces in Europe, and no two are identical. If you adjust the settings for one of these furnaces, it may be weeks before you can evaluate the results. And each

‘We’re not called the Client

Value Team for nothing.’

Walter Vermeirsch

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furnace reacts differently. This is why we have now grouped all steel production mills together in one unit entitled “Upstream”. There is now more intensive exchange of know-how and benchmark-ing between the different companies. All this helps us to achieve more fundamental control of our batch processes and blast furnaces.

Administrative processing from order to invoicing is another bottleneck. Immediately after the creation of Arcelor, we launched an ambitious project to streamline our Commercial Processes and Systems. Today, 90% of the project has been completed, but the last phase is the most difficult. It should all be finished by the end of 2006.

The fourth problem is shipping. In many cases, clients are still receiving road and rail deliveries too late. A special optimi-sation project is now underway to deal with this problem. Arcelor is investing considerable resources, time and manpower in all these changes, but they are paying off. We are making progress and maintaining it as well. By the end of 2006, we will be very close to achieving the OTIF 95 target.

Last year, a Client Logistics & Services team (CLS) was also set up within Arcelor CVT to work out made-to-measure solutions, like the Client Technical Support teams (CTS), but in the field of logistics. What are the achievements of the new team to date?There are several. We created the team just in time, because today, the demand for steel worldwide far exceeds the supply, and that often disturbs the regularity of our deliveries. The CLS team has developed the CV&LT system for clients for whom regular supplies are essential. This stands for Committed Volume & Lead Time. Committed Volume means simply that we get together with the client and agree how much steel we will be supplying to them in the next quarter. That means that we reserve the necessary production capacity. Up to a certain number of weeks before the steel is to be delivered, just before our lead time starts to run, the client can alter the amount ordered. But per quarter, he can only change the agreed amount of his order within a fairly narrow margin. In other words, it is a two-way commitment. For many of our auto-motive clients, a system like this was

an absolute necessity and for a number of industrial clients, it could also be a welcome improvement on the present system.

Another important consequence of the transformation is that three Business Units have been incorpo-rated into Arcelor CVT. How is the integration process proceeding?ACB, Acería Compacta de Bizkaia, has made excellent progress on safety and quality as a result of the integra-tion. Its product range has also been expanded significantly. Arcelor Packaging continues to have problems with general profitability, but this Business Unit has also made noticeable progress on quality and product range. The universal intro-duction of best practices is now bringing all five Arcelor Packaging mills up to the same high level, in line with our image as one of the leading manufacturers of steel for packaging. Finally, Arcelor Tailored Blank has also made positive progress over the past few months. This Business Unit is now ready to start communicating openly again with its clients about the enormous advantages of tailored blanks regarding cost price, quality and functionality. Tailored blanks

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offer unique extra value for clients who have to produce large series of a specific formed component, but this is probably not yet sufficiently well known.

That brings us to Dofasco. This company produces top-quality flat carbon steel, tailored blanks, tinplate for the packaging industry and other products in North America. Was this the reason for the takeover?Dofasco is certainly the spearhead of Arcelor’s activities on the North American market. And as you pointed out, there is plenty of scope for synergy. In the first place, Dofasco has an excellent reputation with the North American automotive manufacturers. About half of Dofasco’s total output is destined for the automo-tive sector. We have an Arcelor Tailored Blank facility nearby, and that opens up perspectives. But I think that the most important advantage is that Dofasco now has access to all the technological innovations which have emerged from the cooperation between Arcelor and the Nippon Steel Corporation. Products like ExtragalTM, for example, a metallic coated steel designed primarily for the automotive sector, which was unknown on the American market. Japanese automotive manufacturers who have set up assembly lines in North American are particularly pleased about the takeover of Dofasco by Arcelor, since it means that they can now obtain the steel grades that they are used to working with. And Dofasco complements Arcelor very well in the field of steel for the packaging industry, so there are potential synergies there too.

What are your priorities for the months and years to come? For our industrial clients, there is no need for inter-continental product optimisation. But our automotive manufacturers are a different matter altogether. Car manufacturers like Toyota

and Honda want to use identical steel grades all over the world. Other manu-facturers use different steel grades in different continents. This is obviously an area that is still evolving, but we must be ready to serve our clients, regard-less of the direction in which the market develops.

In my opinion, we should aim for what I would call a “clock-wise factory”. In our coking factories, operations are fully under control and everything is timed to the minute – you can set your watch by it! Now we must do the same for our steel mills. Our batch processes should proceed as predictably as assembly processes.

‘Dofasco is certainly the spear-head of Arcelor’s activities on the North American market.’

On the commercial front, we must pay even more attention to the real needs of our clients. We must adjust our service according to the volumes they purchase and their activities in different markets. And we should not be afraid to reassess the way we collaborate with our clients on a regular basis. What works well today, may be out of date next year. It is also clear that the role of our sales agencies is changing. They are becoming more of an operational base for the client teams, who will be working more and more closely and intensively with our clients. As our commercial network finds ways of meeting our clients’ needs better, the extra value it represents will also increase. And that is what we are aiming for. We’re not called the “Client Value Team” for nothing.

Walter Vermeirsch, the new Executive Vice-President of Arcelor’s Client Value Team

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Arcelor Steel Service Centre Slovakia

Arcelor sets the tone in Central Europe

Peter Duriac, director of Arcelor SSC Slovakia, welcomes us into his warm office. ‘This Steel Service Centre (SSC) began as a real green field operation,’ he explains. It all started in 2004, shortly after Arcelor had decided to set up a new Steel Service Centre in Central Europe. Together with his team, he set out to find a suitable plot of building land in a strategic location for optimum accessibility from Austria, the Czech Republic, Slovakia and Hungary. Finally, the choice fell on Slovakia. The municipal council of Senica immediately realised that Arcelor could act as a magnet for other companies looking for a good place to set up business, and was extremely cooperative from the outset.

During the first phase, Arcelor invested 10.8 million euro in building this Service Centre. Building started in December 2004. Since the new Steel Service Centre was to be supplied from Bremen and Eisenhüttenstadt, a connection to the Slovakian railway network was vital, and Arcelor built a 600 metre railway line to link up with this network. In the second phase, starting in the summer of 2006, a further 5 million euro will be invested in the construction of additional production facilities for Arcelor Tailored Blank.

Unique possibilities

Over the last few years, more and more car manufacturers have set up operations in Central Europe. Skoda, Hyundai, Volkswagen, PSA Peugeot Citroën, Kia, Audi, Opel and Suzuki all have or are planning to open production centres within a radius of 200 kilometres of the Steel Service Centre in Senica. ‘The au-tomotive manufacturers’ subcontractors are also important buyers of our prod-ucts,’ emphasises Peter Duriac. ‘In 2006, 42% of our output is destined for the

automotive sector, 13% for manufacturers of domestic appliances and 45% for general industry.’

SSC Slovakia is starting with four processing lines. Close to the hall where the steel coils are delivered by rail, there is a decoiling line where the steel is un-coiled and cut transversally into sections. Then there are two slitting lines where the steel is slit lengthwise, and a multi-blanking press. ‘We can cut the steel transversally and slit it all in one process,’ explains Peter Duriac. ‘Our end products are both rectangular sheets and strips, and trapezium-shaped blanks for the automotive industry. Our technical capabilities are unique in this region.’

The large international companies in the region have been looking forward impatiently to the arrival of this Steel Service Centre. ‘The local clients are also very impressed with the quality of the products and services we can offer,’ says Peter Duriac. ‘For most of them, we are playing a pioneering role. For example, many local companies are not yet aware that the EU has ruled that as of July 2006, their products may no longer contain any hexavalent chromium (Cr+6). We brief them about this and ensure that they can purchase the right products. SSC Slovakia is the first real Western European steel company in the region.’

It is still early March. Snowfall slows down the busy traffic on the motorway between Bratislava and Brno, but we still manage to arrive on time at the new Arcelor Steel Service Centre Slovakia in Senica (pronounced “senitsa”). Arcelor aims to use this Centre to supply the growing number of automotive constructors, steel frame construction specialists and manufacturers of domestic appliances who have recently set up business in Central Europe.

Peter Duriac, director of Arcelor SSC Slovakia

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Lindab gets acquainted witha new logistical approach

Jonas Stenbeck, Key Account Manager at Arcelor, and Stefan Johansson, Senior Purchasing Manager at Lindab

One of the clichés about Sweden is that they manage to combine a strong economy with a good, healthy lifestyle. The town of Grevie in southern Sweden is proof that there is a lot of truth in this. It is a golfing Mecca to start with, where golfers can be seen trundling over the greens from early spring to late autumn. A good way to relax after a satisfying day’s work. Many of these golfers work for the Lindab Group, in one of the offices and production sites tucked away in the green parkland setting. Their efforts have achieved substantial growth for Lindab over the last few years. Some of these employees are now involved in an exciting logistics project that Arcelor has set up with Lindab.

The Lindab Group develops and produces ventilation systems and steel profiles for the construction business. They purchase about 260,000 tonnes of steel coils annually, and some of this comes from Arcelor. Lindab has its own Steel Service Centre where just under half of the steel coils are slit. ‘We ship off the majority of that steel straight to our 19 production sites in Europe and North America,’ says Stefan Johansson, Senior Purchasing Manager Steel.

Quiet technology all round

Lindab is famous for the outstanding quality of its products. According to Stefan Johansson, this reputation is founded in the first place on the quality of its ventilation and air conditioning systems. ‘These systems use water as a heat exchange medium for heating or cooling. The air conditioning in this room is a water-based system. Can you hear it?’ Complete silence reigns. ‘That is a perfect illustration of the advantages of our Comfort Line,’ says Stefan Johansson.

‘The water flows through flat beams, and the air passed over these beams is very quickly brought to the required temperature. Compared with air flow systems, Comfort Line is compacter and quieter and can be more accurately controlled.’

The company has its own very useful technology in the field of ventilation. ‘We opted for circular air ducts,’ says Johansson. Circular ducts ensure a better airflow and are much quieter than square ones. They also cause less turbulence and less dust collects inside them. The production process is much more straightforward too. Square or rectangular ducts have to be folded first and then sealed over the whole length. Our circular ducts are formed and spiral lockseamed in one continuous process.’

Lindab’s circular spiral lockseamed ducts are manufactured according to a patented method named after Spiro, the Swiss company that developed this

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Lindabinanutshell

• Lindab was founded in 1959 and had a turnover in that year of 1 million Swedish Krona (approx. 107,000 euro). In 2005 the annual turnover was 6.2 billion Krona (approx. 666 million euro).

• The company currently has a workforce of 4000, spread over 28 countries.

technique. Spiro is now a 100% subsidiary of the Lindab Group.

Lindab builds the new Europe

Since it was founded in 1959, Lindab has also been producing steel profiles for the construction sector, ranging from drainpipes and roof gutters to wall and roof claddings and profiles for panel- and-frame walls. ‘That is our other business area: profile,’ tells Johansson. ‘We have strengthened our position in continental Europe substantially through a number of strategic acquisitions, and we continue to expand our market share in central Europe, where there is a great deal of construction going on today.’

In 2002, Lindab took over the European operations of the Butler Group, then still an American company. This gave the Swedish company a controlling interest in a flourishing enterprise in Hungary specialising in pre-engineered industrial and commercial buildings. ‘They design the building and manufac-ture the components, but leave the actual erection process to certified building contractors,’ explains Johansson.

In September 2005, Astron also joined the Lindab Group. Astron is one of the leading European players in the steel construction sector. It has two production sites, one in Luxembourg and the other in the Czech Republic. Through Astron, Lindab is now the European leader in the field of pre-engineered steel buildings.

Committed Volume & Lead Time

Stefan Johansson describes Arcelor without hesitation as an excellent supplier. ‘But there was room for improvement,’ he adds. ‘We offer our clients prompt delivery dates, so we expect our suppliers to make a special effort with their lead times too. We keep

stocks to meet actual orders which are known for a period of less than two weeks. On the other hand, our steel suppliers ask us for a forecast of our requirements for the coming 8 to 10 weeks. If my clients suddenly order the less common grades of steel, I have a problem, because they expect me to deliver within two weeks, while my steel supplier needs at least a couple of weeks longer before he can deliver it to me.’

‘This is why we have set up a special project for organic coated steel,’ adds Jonas Stenbeck, Key Account Manager for Lindab. ‘We have drawn up an agreement regarding the steel coils that Arcelor will keep in stock ready to coat as soon as Lindab has the details of clients’ orders. In this way, we can reduce lead times significantly.’

Regarding the supply of hot dip galvanised steel, Arcelor CVT has launched the CV&LT project. That stands for Committed Volume & Lead Time. Lindab is a pilot client in this project. ‘First we agree the volume of steel that Lindab will purchase from us in the coming quarter. Then we agree the amount of the weekly deliveries,’ explains Jonas. ‘Under this new system, Lindab can book its orders with a stable lead time agreed beforehand. The system also allows for variations on the weekly deliveries, within predefined limits. Say Lindab orders 12,000 tonnes. This amount is divided by the number of weeks in the quarter, which in this case works out to 1000 tonnes per week. When Lindab places the order, it may adjust the planned weekly volume of deliveries, within the agreed limits. Of course, this system must be founded on clear and irrevocable commitment from both parties.’

‘This method is a great improvement,’ says Stefan Johansson. ‘In the past,

Arcelor sometimes had to extend its lead times from 7 to 12 weeks. That could seriously undermine our clients’ confidence in our reliability. This guaranteed lead time pilot project has had a very positive impact on our stock, and we can now achieve a much shorter reaction time for the orders of Lindab’s clients. And that brings us that much closer to the best of all possible worlds.’

Client Value Team | Client magazine | June 2006

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Clients reap the benefit of our cooperation

In 2005 the Arcelor Group invested 140 million euros in various research projects. Many of these are long-term projects for the development of new products and applications. On top of that, Arcelor spent an extra 50 million euros last year on collaborative research projects. Arcelor’s 1100 researchers in Europe plus 200 in Brazil are now working in close cooperation with their R&D counterparts at Nippon Steel Corporation, which means that Arcelor and Nippon Steel together now account for some 60% of the world’s research on steel. It was the clients who first called for cooperation between Arcelor and Nippon Steel. And of course, it is the clients who also reap substantial benefits from this Japanese-European collaboration.

In January 2006 the strategic alliance based on technical cooperation between Arcelor and Nippon Steel reached the five-year mark. Update went to talk to Vincent Guyot, Senior Manager CVT and Technical Coordinator Alliances & Joint Ventures, just back from a business trip to Japan. What were the reasons for working so closely with our Japanese colleagues? ‘There was one very important reason,’ he answered decisively. ‘We wanted to create more added value for our clients.’

On the client’s advice

On 22 January 2001 Usinor and Nippon Steel signed an ambitious cooperation contract. When Usinor became part of Arcelor, the contract was also taken over. ‘Since the mid-nineties, the European steel industry has realised that the steel business had to be organised globally,’ explains Vincent Guyot. ‘And it was mainly our automotive clients who encouraged us to do so, as they themselves were used to operating on a worldwide scale.’ Globalising Japanese car manufacturers urged their Japanese steel suppliers to set up partnerships with European steel companies and, from the European point

of view, the merger between Renault and Nissan in 1999 definitely heralded the need to act globally.

‘The desire to offer automotive clients a truly global range of products and services was therefore the primary motivation for the overtures between Arcelor and Nippon Steel,’ confirms Vincent Guyot. ‘But developments in the automotive sector were not the only reason behind this collaboration. Our contract with Nippon Steel also covers purchasing, steel for construction, stainless steel, environmental protection and R&D. Those were also important reasons.’

How is the collaboration progressing? ‘Very well. A Global Steering Committee (GSC) coordinates all joint projects covering the different domains of the alliance. The projects themselves are managed by working groups headed up by team leaders who meet three times a year, alternating between venues in Japan and Europe. In the initial phase, meetings were held more often, because of course the researchers had to get to know one another and build up mutual

Arcelor and Nippon Steel: five years of collaboration

Joint technical approach to customers Implement equivalent product range for worldwide cars

Propose common steel solutions and technologies for worldwide carsRespond more quickly to everyday quality/technical requirements

Key activitiesAutomotive steel alliance

Product list Global supply network of equivalent products

LicensingGlobal supply

network of equivalent products

Joint R&DFaster product development

New steel solutions and technology

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trust. Customer Technical Support teams are also set up regularly to investigate specific aspects.’

Major achievements for automotive

The driving force behind the strategic alliance based on technical cooperation between Arcelor and Nippon Steel is undoubtedly the cooperation agreement on steel for the automotive sector. This has already reaped benefits.

Firstly, Arcelor and Nippon Steel now have a common product list containing about a hundred products, including several high strength steels (up to 1500 MPa), and this is already available to clients in Europe, Japan, North & South America and China. ‘The list was prepared on the basis of a detailed comparison of both companies’ products and an assessment of their manufacturing processes,’ explains Vincent Guyot. ‘It is also updated periodically to include new products that have been developed as a result of joint R&D.’

Collaboration goes further than a common product list, of course. Arcelor and Nippon Steel have also set up “cross-licensing”. To date seven licences have been mutually granted and the number is still growing.

‘Joint R&D has already yielded some remarkable results,’ comments Guyot. ‘Over the past five years more than ten automotive-related R&D projects have been successfully completed. We have jointly developed new products, such as galvannealed (alliation of the coating after galvanisation) and galvanised 590 and 780 TRIP steels. Naturally we call these AN-TRIP steels, as AN stands

for Arcelor and Nippon Steel. Just as important are the new steel solutions that we have developed together, par-ticularly the powerful and very accurate numerical modelling of the forming process for high strength steel. Arcelor and Nippon Steel have also jointly applied for more than 50 patents, with more than 20 of these now co-owned by the two companies.’

‘Arcelor and Nippon Steel can now guarantee a global range

of products and services.’

Finally, there is also a joint technical approach to automotive manufacturers and Tier 1 suppliers. For instance, Arcelor and Nippon Steel are actively supporting these manufacturers with a view to increasing their use of high-strength steel. This approach has been successful, as major car manufacturers have now approved more than ten types of high-strength steel.

Thanks to this collaboration, Arcelor now has excellent contacts with many Japanese companies in Europe, and a host of synergy effects have also been generated for all partners. ‘It all comes down to the fact that our common aim is client satisfaction,’ explains Vincent Guyot. ‘Our clients now see Arcelor and Nippon Steel together as the most important players in their market.’

Threefold advantage for the client

The advantages of this approach are obvious. In the first place, Arcelor and Nippon Steel can now guarantee a global range of products and services. ‘Services are extremely important too,’ confirms

Guyot. ‘All the technical services Arcelor and Nippon Steel offer their clients have to be promoted as well, for example simulations, tool settings and everything connected with “early involvement”. We can support the client by offering products and advice in each phase of the development of a new model. If a car manufacturer wants to perform crash tests with Nippon steel, he can use our steel instead to save time, and vice versa. The products in our joint product range will all perform in the same way in these tests, regardless of where they were manufactured.’

The second significant advantage is Nippon Steel and Arcelor’s joint global supply network: anywhere in the world clients can obtain the steel grades they need through this global network or through our combined joint venture BNA in Shanghai. ‘But we are still competitors,’ emphasises Guyot. ‘Buyers know that we offer equivalent or comparable products, but they can negotiate with us separately. Nevertheless, we also stand by each other. For example, if there is a problem with Arcelor steel in a particular country, Nippon Steel can step into the breach for us, and we do the same for them.’

The third important advantage for the client is that both Arcelor and Nippon Steel are focusing on high-tech steels. That is crucial if we are to continue to come up with new and better steel solutions. ‘And because we pool our resources, we can also shorten our time-to-market,’ adds Vincent Guyot.

By now, Vincent Guyot has a wealth of entertaining anecdotes about cultural differences between Europeans and the Japanese. ‘But when it comes to product range, innovation and services, our shared values come to the fore: at Nippon Steel, they are just as passionate and un-compromising as we are,’ he concludes.

The objective of developing a global product range for our clients was initiated by the automotive market, and is now also extending to the general industry sector. That is why Arcelor will be marketing SuperDyma® under licence from Nippon Steel. You can find out more about the launch of this revolutionary self-repairing steel in a future issue of Arcelor Update.

Client Value Team | Client magazine | June 2006

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There are two traditional methods of making a prototype from sheet steel. One method involves deep drawing the prototypes on small presses using lightweight dies. The other approach is to make the prototype entirely by hand, which naturally results in visual imperfec-tions. In spite of all their disadvantages, these two traditional methods have been in use for a long time, simply because there was no good alternative. But at the end of last year we reached a turning point.

Vertical walls as well

‘Arcelor is continually expanding its range of products and services,’ emphasises Olivier Brun, Manager Technical Service Offer of Arcelor CVT. ‘Since the end of last year, we have been offering our clients a Fast Prototyping solution that is much faster and many times cheaper than all conventional systems. And of course, the larger the number of prototypes to be made, the lower the price per proto-type.’

Arcelor based this technique on Japanese technology and the Arcelor Research Industry Gent team added a number of improvements and some fine-tuning. For example, unlike the original machine, Arcelor’s adapted version can also produce vertical walls. The researchers also developed a method guaranteeing perfectly smooth surfaces. Fast Proto-typing looks like an important break-through for the steel processing industry.

‘Our point of departure for Fast Proto-typing is always the Computer-Aided Design (CAD) file supplied by the client,’ says Pieter Vanduynslager, a Steel Solutions & Design researcher at Arcelor Research Industry Gent. ‘Our equipment scans in the design data and uses them to mill a model from a soft material like plastic or wood. When it is finished,

it stays in place on the machine and we clamp a sheet of steel above it.’’

Skilled work

The new Fast Prototyping technique is based on the principle of local deforma-tion by means of a series of exchangeable punches with a hard, spherical tip. ‘When the steel sheet has been clamped in place over the model, we mount a punch with a large or small tip, depending on the model. A pneumatic system presses the steel gently down against the model. At the same time, the tool is also pressed down and starts to move along the path dictated by the CAD programme, starting at the highest point of the model. As the tool revolves in ever wider loops along the contour lines of the model, moving lower step by step, it moulds the steel against the contours of the model. When it has finished, the steel sheet fits closely over the whole surface of the model. The shorter the distance between the successive loops the tool describes, the lower the likelihood of ridges or an uneven finish on the prototype,’ explains Pieter Vanduynslager.

The Arcelor Research Industry Gent team can also provide the finishing touches to the prototype. ‘As soon as the punches have finished, a 3D laser cutter removes the flanges from the prototype. If neces-sary, we can also apply a colour and then it is ready for use. Depending on the quality of the CAD file and the complexity of the prototype, we can usually deliver a prototype to the client within a few days,’ says Vanduynslager.

The machine can turn out prototypes of 2 x 1.3 metres with a maximum height of 0.5 metres. ‘But we can make much larger components too,’ adds Vanduynslager. ‘We simply make several smaller pieces and weld them together.’

Fast Prototyping, a new technical service with unique advantages

Prototyping is an essential part of the process of developing a new dishwasher, machine or car. A prototype visualises the design and helps the client to see whether it is technically feasible. Making steel prototypes according to traditional methods is an expensive, time-consum-ing business. But all that is about to change, now that Arcelor has come up with a new Fast Prototyping technique. Using the data in a CAD file, a specially designed machine guides a metal punch or indentor to mould a steel sheet against a wooden or plastic model, step by step. The result is a faultless prototype with a virtually perfect surface, which can usually be produced within a day.

Pieter Vanduynslager, a Steel Solutions & Design researcher at Arcelor Research Industry Gent, and Olivier Brun, Manager Technical Service Offer of Arcelor CVT

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Immediately impressive

But a prototype can only give a visual impression of what the component will look like after deep drawing. It tells us nothing about any tearing that may occur during the deep drawing process. ‘The principle of local deformation is very different from that of a real deep drawing process,’ states Olivier Brun. ‘Consequently, the strength of a prototype is not the same as that of the real thing. To predict the real-life deformations and where exactly the steel could tear, we use Finite Element Method analyses (FEM) which enable us to perform a parallel simulation of the deep drawing process.’

A prototype of a car component cannot be used in a crash test, for example. Does that mean that prototypes cannot be used for any kind of testing? ‘Not entirely. The prototype is made of steel, so you can test it for the qualities inherent in the steel, such as its electromagnetic performance,’ replies Vanduynslager.

According to Olivier Brun, the new Fast Prototyping technique can be used in a wide variety of sectors. ‘This technique could be extremely valuable in the manufacture of domestic appliances, industrial equipment and components for steel frame building. We have already produced a number of prototypes, and when people see how this Fast Prototyping technology works, they are won over straight away. There are simply no serious alternatives in the steel industry.’

Preparation of the tool pathOn the basis of a CAD drawing of a specific component, a CAM tool slices the component into a number of layers across the vertical axis. Each cross section in a plane perpendicular to the vertical axis of the CAD drawing describes the route that the forming punch must follow.

Plastic model for incremental formingThe next step is to make the model from a soft material like wood or plastic. This can be done quickly on the incremental forming machine itself, which will be equipped with a milling cutter for this phase.

The successive stages in the incremental forming of a componentNow the steel component can be made. A steel sheet is clamped in position above the model.

Then, the forming punch then describes its first loop, after which it is lowered to the next level.

When the forming punch has completed all the loops, the prototype is ready.

Finishing the componentArcelor Research Industry Gent also has various facilities to finish the component. For example, it can be laser cut or coated.

Are you interested? Visit our website at www.arcelor.com/fcse to view a video presentation of this technology. Or request further information direct from your usual contact person at Arcelor. On the basis of a CAD file, we can examine the feasibility of a project and calculate the cost price. One to three weeks after you have given us the go-ahead, we will supply you with an outstanding prototype.

Client Value Team | Client magazine | June 2006

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Vaillant, the heating specialistwho keeps his cool

Johann Vaillant could claim to be the inventor of hot water. Literally. In 1894, shortly after setting up his company, he patented his sealed bath heater for a continuous supply of hot water for the bathroom. He perfected his invention and in 1905 took out a patent on an appliance he called a “geyser”, which is still around today in the form of a gas-fired geyser. Since then, inventiveness, innovation and quality have continued to be the Vaillant trademark.

Today, Vaillant is the European market leader in heating technology. The company operates all over the world, with some 8600 employees annually producing over 2.5 million hot water boilers, geysers, solar panels, and now also air conditioning systems. In 2005, that yielded a turnover of 1.8 billion euros.

At the head office in Remscheid, just to the east of the Cologne-Düsseldorf corridor, Christine Weitzmann coordi-nates the purchase of all raw materials for all of Vaillant’s production sites. One of the most important raw materials is of course steel. Christine is an enthusiastic supporter of the Cologne ice hockey team. Thomas Quattelbaum, her front-line contact at the Arcelor sales agency in Germany, happens to support the Düsseldorf team. The evening before our interview, Cologne lost to Düsseldorf, and our conversation naturally started with a short evaluation of the match. ‘The Düsseldorf players are softies,’ jokes Christine. ‘Cologne has a much more

aggressive style, and that cost us some points. A pity, because I like a good fight.’ Does that apply to commercial contacts too? Christine Weitzmann agrees with a laugh.

Heating expert cools it

The Vaillant Group has expanded rapidly over the last few years. First, the company strengthened its market position and this was soon followed by a series of strategic acquisitions. In 2000, Vaillant took over the Italian Bongioanni Pensotti Kalore, and the year after Hepworth PLC, a British company that had already taken over Glow-worm (a UK company), Saunier Duval (France), AWB (the Netherlands) and Protherm (the Czech Republic).

‘All these companies were active in what we call the HVAC sector,’ explains Christine Weitzmann. HVAC stands for Heating, Ventilation and Air Conditioning. ‘The Vaillant Group concentrates on heating technology, but we have recently added air conditioning as well. As a heating

Thomas Quattelbaum, the frontline contact at the Arcelor sales agency, and Christine Weitzmann, head of purchasing at Vaillant

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specialist, you develop a natural interest in cooling too. And at the same time, we started producing solar panels and cells. These new applications belong to the new Renewables division, which will undoubtedly be growing in importance over the next few years.’

The Vaillant Group purchases up to 24,000 tonnes of flat carbon steel each year. Arcelor supplies about 10,500 tonnes of this, mainly cold rolled material and Alusi®. Most of the cold rolled steel is painted on Vaillant’s own organic coating lines, and destined for casings. Alusi® (steel with an aluminium-silicon coating) is the raw material for all heating elements, because of its excellent heat resistance. For the water storage tanks for boilers, Arcelor supplies hot rolled steel that is enamelled on-site to give it life-long protection from corrosion. Finally, Vaillant also purchases hot dip galvanised and electrogalvanised steel.

‘In Germany, we only produce under the Vaillant trademark,’ tells Christine Weitzmann. ‘These products are sold all over the world. In the UK, we manu-facture both Vaillant and Glow-worm appliances. Glow-worm is an exclusively British trademark. At our plant in Nantes (France), we also produce a number of models under the Saunier Duval trade-mark, mainly for the French market. And in Skalica (Slovakia) we produce both Protherm and Vaillant products. In fact, we have transferred the entire production line for floor-standing boilers to Skalica.’

Going East

The Vaillant Group is presently introducing standardisation across the board. That means that in the future, they will be able to manufacture more and more products on the same platform. ‘This will enable us to rationalise our production, while maintaining the

flexibility we need to respond to the needs and budgets of the different markets,’ explains Christine Weitzmann.

How is the company preparing to meet the competition from countries like China and Turkey, who are making their presence felt more and more on the European markets? In Remscheid they obviously believe that attack is the best form of defence, since according to Christine Weitzmann, Vaillant intends to play an active role in China. ‘We are presently building a new facility near Shanghai, where we will be producing a wall-hung boiler for the Asian market. And we can tap into a huge potential market for our airconditioning systems there. By the end of 2006 we will be operational in China, and then we will start buying raw materials there too.’

That will mean wider responsibilities for Christine Weitzmann, since she will be coordinating the purchasing activities in China as well. What she expects of her suppliers is primarily quality, flexibility and partnership. Arcelor scores well on all three. However, Christine Weitzmann also stresses that good price positioning and price stability is still an important issue. ‘Of course, we also work with Steel Service Centres,’ she continues. ‘They can guarantee more flexibility than steel manufacturers. Sometime we expect our suppliers to meet lead times of 5 to 7 days, and unfortunately, that is impossible for steel manufacturers. But I still think it is important to work in close cooperation with a steel producer like Arcelor. They have specialised research

centres and can give us well-founded technical advice. In the future, we will be buying more steel coils and less pre-cut material.’

Positive evaluation

Working together with a large group like Arcelor has significant advantages, according to Christine Weitzmann. ‘We are now taking part in the Quantum project. That means that Arcelor supplies us directly with deep-drawn material. We are also extremely satisfied with the way electronic data interchange (EDI) simplifies doing business.’

Christine has mixed feelings about the consolidation movement in the steel sector and the role Arcelor plays in it. ‘Of course, I have to admit that Vaillant is also aiming for consolidation, and I do see that it is necessary. The positive aspect is that all sites will now be able to supply the same grades and qualities. But I hope that this does not mean higher prices.’When we asked for her reaction to the recent transformation within the Arcelor Group, Christine Weitzmann replied without hesitation: ‘Positive.’ Her first contacts with Arcelor were via Liège, Mouzon and Florange. ‘In those days, I had to deal with too many different contact persons. Now I always deal with Thomas Quattelbaum, and that is much easier. In fact, I would be happy to negotiate with him for all the products we purchase from Arcelor. We may support different ice hockey teams, but that needn’t be a problem. Quite the contrary, in fact.’

Johann Vaillant: claiming to be the inventor of hot water

Client Value Team | Client magazine | June 2006

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Arcelor steel ready for the hardest impact

In 1999 the European Union launched the target of halving the number of fatal road accidents by 2010. The national authorities are therefore taking increasingly tough action against irresponsible behaviour on the roads. But that alone is not enough to reduce the number of deaths on the roads sufficiently. Changes are also needed to the infrastructure of our roads, and in this context, the European Committee for Normalisation (CEN) has issued a new standard for crash barriers: EN 1317. This will enable national and local authorities to install crash barriers that are suitable for the type of traffic on their roads. Arcelor can help them here.

Impact level and working widths

The severity of the impact suffered by the driver and passengers in case of a collision is one of the most important criteria for the classification of roadside crash barriers according to the new standard. The CEN employs the Acceleration Severity Index (ASI) for this classification. The index was developed for research into injury caused by sudden acceleration resulting from the use of ejector seats in fighter planes. The impact level is divided into three classes: A, B and C. Each class corresponds to a specific range of ASI values. The higher the values, the more serious the injuries sustained by the driver and his passengers.

ImpactlevelAcceleration

SeverityIndex(ASI)

Class A ≤ 1.0

Class B ≤ 1.4

Class C ≤ 1.9

An ASI value between 0.1 and 1 causes damage to the vehicle, but the driver and passengers sustain only minor injuries.

ASI values larger than 1 and up to 1.4 may entail broken bones and short loss of consciousness. Higher ASI values of up to 1.9 correspond to serious or very serious injuries and irreparable damage to the vehicle. The good news is that collisions with steel crash barriers only produce Class A or B impact levels. However, concrete crash barriers cause Class B or even Class C impact levels.

Good roadside crash barriers must of course also prevent vehicles skidding off the road or colliding with traffic moving in the opposite direction. The EN 1317 standard therefore also takes account of the degree to which a crash barrier yields to cushion the impact. The technical term for this is the “working width”.

The new standard specifies that both the working width and the ASI values of roadside barriers must be established by means of crash tests. To measure the ASI values, 900 kg passenger cars are launched against the barrier at a specific angle. Crash tests with heavy goods vehicles weighing 10 to 38 tonnes determine the working width. Not surprisingly, concrete roadside barriers have less “yield” than steel barriers. They therefore score better on working

New European standard for crash barriers

‘We would not wish it upon you, but if your car should

ever collide with a crash barrier, we hope for your

sake that it is a steel barrier, not a concrete one!’

Thierry Renaudin, Senior Manager Steel Solutions & Processing at Arcelor CVT

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width, but steel barriers are also well within the specifications of the new standards, and have unequalled advantages when it comes to shock absorption.

Mathematical models

In recent years, we have seen more and more steel crash barriers replaced by concrete safety barriers. Was that the wrong decision, and should we reinstate the traditional steel barrier? The answer is not as clear-cut as you might expect.

‘Most of the old steel roadside barriers were made of low-grade hot-dip galvanised material,’ explains Thierry Renaudin, Senior Manager Steel Solutions & Processing at Arcelor CVT. ‘We have better solutions today. Many of the new grades of steel specially developed for car manufacturers are also perfect for the production of crash barriers. They offer maximum shock absorption on impact and at the same time guarantee greater resistance. These new grades of steel can be coated with zinc in a continuous process, producing a protective layer of 600 to 900 grams per square metre. That is sufficient to protect them from corrosion for over ten years.

Exciting times are ahead for manufac-turers of roadside safety hardware. They will have to work to the new European standard and explore the interesting properties of the new types of steel. ‘Naturally, we will be glad to help them,’ says Thierry Renaudin. ‘Researchers at our R&D centre in Liège are currently developing a series of mathematical models. These will undoubtedly help our clients to produce outstanding products using our steel.’

Arcelor already offers its clients all the technical support they need, and will continue to do so. The mathematical models will be used primarily to establish the optimum dimensions and geometry of the new crash barriers. ‘That is a complex operation,’ explains Renaudin. ‘On roads carrying a high volume of heavy goods vehicles, we now need double barriers to restrain a forty-tonner safely, for example. By using new, stronger types of steel and developing a special geometry, we can substantially improve the performance of lighter crash barriers. We now want to inform our clients as quickly as possible about the possibilities these new technologies open up. And by the end of 2006, we will be able to offer them a whole

range of extra tools with which they can successfully design new, high- performance barriers based on this new technology.’

More steel as of 2008!

We would not wish it upon you, but if your car should ever collide with a crash barrier, we hope for your sake that it is a steel barrier, not a concrete one! Steel barriers cushion the impact, reduce the likelihood of serious injury and at the same time, guarantee that even the heaviest vehicle will not skid off the road. Unfortunately, many crash barriers are still made of concrete today. But all that is set to change very soon, in the light of the new European guidelines and standards. Arcelor’s steel is ready to take the impact and make Europe’s roads safer.

Client Value Team | Client magazine | June 2006

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Arcelor: one strong brand

Our clients are often more familiar with the names of the individual companies that belong to the Arcelor Group than with the Arcelor brand name itself. A direct result of the diversity of these companies, who nevertheless still uphold the same values and share the same targets. Now the time has come to make this unity more visible by consistently using one and the same brand name. It’s a matter of instant recognition, added value and business excellence.

So Arcelor is introducing a new house style, with just one logo from now onwards: the familiar Arcelor logo. This is more than just a cosmetic exercise. In creating our new house style, we have aimed above all for simplicity and clarity. And one strong brand is a good thing for everyone, including our clients.

Rebranding also means new names for the steel companies and sales agencies in our Group. The old names will disappear for good and be replaced by a new name combining Arcelor with the name of the location. For example, the mill you have known until now as “Stahlwerke Bremen” will now be renamed “Arcelor Bremen”. At our website you can find an overview of the flat steel mills and sales agencies of Arcelor Flat Carbon Steel Europe: www.arcelor.com/fcse, in the module About us > Where we are.

Arcelor acquires minority shareholding in Laiwu

The Chinese steelmaker Laiwu Steel Group, which produced over 10 million tonnes of steel in 2005, agreed on 24 February

2006 to allow Arcelor to acquire a 38.41% stake in its subsidiary

Laiwu Steel Corporation. Laiwu Steel Corporation is China’s largest producer of steel sections and beams. The partnership with Laiwu will give Arcelor a platform for providing an optimum service for its clients in China, and Laiwu Steel Corporation will be able to tap into Arcelor’s advanced technology and extensive commercial network.

According to Arcelor’s Senior Executive Vice-President Roland Junck, the stake in Laiwu offers Arcelor an opportunity to be an active player in the largest and fastest growing steel market in the world.

Sonasid reinforces Arcelor’s position in markets with high-growth potential

On 3 March 2006, Arcelor, the Société Nationale d’Investissement (SNI) in Morocco and the reference

shareholders of Sonasid (Société Nationale de Sidérurgie) signed a strategic partnership agreement to develop the position of Sonasid on the Moroccan market. The agreement gives Sonasid access to Arcelor technology, and strengthens Arcelor’s position in a number of growth markets.

Sonasid already occupies a dominant position in the steel industry in Morocco today, and is the market leader for long products (rebars and wire rod) with an annual output of some 1.4 million tonnes.

Severstal and Arcelor open Severgal

On 13 April 2006, repre-sentatives of Severstal and Arcelor, the two partners in this joint venture, per-

formed the opening ceremony launching the Severgal galvanising line. The Severstal Group has a 75% shareholding in Severgal, and the Arcelor Group 25%.

Severgal is located in Cherepovets, about 400 kilometres north of Moscow, right next door to the Severstal production site. The joint venture will be producing mainly ExtragalTM, a high quality coated steel for the growing automobile market in Russia. ExtragalTM is based on Arcelor technology, and in his opening speech, Vadim Makhov, Chairman of the Severgal Board of Directors, emphasised that it was thanks to Arcelor that Severgal could introduce a coating technology which is unique in Russia. The opening ceremony was held in the presence of Christophe Cornier, Deputy Senior Executive Vice-President of Arcelor, and Prince Guillaume of Luxembourg.

Severgal will employ 300 people and at a later date, it will also produce Galvalia, an iron and zinc coating for wide strip.

The expansion of Arcelor

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Arcelor is aiming for international growth. Not only to take advantage of the growth potential of rapidly developing countries, but also and more importantly, to be able to supply Arcelor products and solutions to global clients worldwide. This is why we are always looking out for special opportunities in the steel sector.

Dofasco crucial to Arcelor’s growth strategy

Dofasco and Arcelor: two of the three steel companies listed on the international Dow Jones Sustainability Index

Dofasco is often described in the media as “the jewel of the Canadian steel industry”. There are good reasons for this. The company was established in 1912 in Hamilton, just outside Toronto, and concentrated in the early years on producing steel castings for the Canadian railway company. Today, Dofasco supplies high-quality flat carbon steel, tubes and laser-welded blanks to clients all over North America. The company currently

employs about 12,000 people in Canada, the United States and Mexico.

The hub of Dofasco is its Hamilton steelmaking complex, which includes two blast furnaces, a basic oxygen steelmaking furnace and an electric arc furnace using 100 per cent recycled steel feedstock while minimising process emissions and offering the best in energy-efficient production. The site also has two slab casters, three coking plants, two tube mills and various finishing facilities including five galvanising lines and Canada’s only electrolytic tinning line.

Dofasco produces some 5 million tonnes of flat rolled steel annually, and around 40% of this is used in the automotive sector. This expertise and experience was a crucial factor in Arcelor’s acquisition of Dofasco. Guy Dollé, Arcelor’s Chief Executive Officer, recently declared

quite openly that Dofasco was central to Arcelor’s growth strategy in North America, as “the North American cornerstone of our continued worldwide leadership in the automotive steel market.”

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Arcelor wins Toyota Award for the quality of its products

On 30 March, Arcelor received a Supplier Award for Achievement in Quality from Toyota Motor Europe. The presentation took place in Brussels at the annual Business Meeting held by Toyota Motor Europe for its suppliers.

Prizes were awarded in various categories, including “project management” and “quality”. Arcelor was honoured to receive an Achievement Award for the excellent quality of the products supplied. This is not the first award Toyota has presented to Arcelor. In 2002 we received two Certificates of Recognition for an out-standing performance in the categories “supply” and “quality”. Arcelor is actually the first steel producer ever to receive a Toyota Achievement Award.

This new award reinforces the close collaboration between Arcelor and the car giant Toyota Motor Europe, which is now planning to ask Arcelor to play a key role in the production of its innovative, high-quality cars in the future.

With a market share of over 50%, Arcelor is by far the largest supplier of steel to the European automotive sector. In 2006 we shall be supplying 200,000 tonnes of steel to Toyota Europe alone.

Acería Compacta de Bizkaia nominated for environment award

On 23 February 2006, ACB, Acería Compacta de Bizkaia, was nominated together with eleven other companies as a candidate for the European Business Awards for the Environment. The European Commission presents these biennial awards to companies who have made an outstanding contri-bution to the sustainable development of European industry. This is a broad field, and prizes are therefore awarded in different categories: Products, Processes, Management and International Cooperation.

ACB – a Spanish company and the only mini-mill in the Arcelor Group – is competing for an Award in the Management category. The jury considers that ACB has succeeded in introducing far-reaching management measures in favour of the environment while also maintaining competitiveness. Arcelor regards this nomination as important recognition of the sustained effort made by ACB’s management team and their co-workers. It is also a strong stimulus to keep it up!

Arcelor organises worldwide Health and Safety Day

On Wednesday 29 March, Arcelor held its first Worldwide Health and Safety Day. In over 700 Arcelor sites in 60 countries, 96,000 employees (110,000 including Dofasco) focused their undivided atten-tion for a whole day on health and safety in the workplace. This was an initiative of our Group Management, organised in partnership with the Group’s European Works Council.

Over the last few years, Arcelor has already invested a great deal of time and resources in the safety and health of staff, clients and those living in the vicinity of Arcelor sites. This has certainly been effective. In 2005, the frequency rate of accidents causing work stoppage in the Arcelor Group was 2.4, a reduction of 73% since 2002 and one of the best results in European industry as a whole. The severity rate of accidents in the Group for the same period went down by 45% to 0.23 days off work after an accident per 1000 hours worked.

At all the Arcelor sites, just about every conceivable safety and health theme was tackled on 29 March, ranging from alcohol consumption, smoking and healthy eating to lifting heavy weights, working at a computer screen, safety guidelines for working with various production lines, and the evacuation of the workplace. A day like this raises awareness and brings Arcelor a step closer to the ultimate goal: zero accidents and zero health risks.