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Bringing advanced technology and investments to Brazil

For a long time now, Brazil has demonstrated favorable market conditions for Bekaert’s activities: political stability, sound economic policies, good availability of natural resources, well-trained personnel, a large domestic market allowing economies of scale and an export-oriented economic environment. Bekaert, in consensus with its joint venture partner in Brazil, has pursued a growth strategy in the country for many years



Steady expansion and smart optimization

Since 2002, total capital expenditure efforts in the Bekaert joint ventures have increased significantly. Our goal has always been to keep a finger on the pulse and cater to local demand for industrial products in markets such as automotive, civil engineering, consumer goods, energy, offshore, mining and fencing. Coordination of all expansion projects was in the capable hands of the local teams.

In 2009, Bekaert’s strategy for sustainable, profitable growth was put into practice with several growth projects in our joint venture plants at amongst others Itaúna, Feira de Santana and Contagem. The expansion and modernization of the production platforms cater to increasing demand and serve various market segments, such as automotive, consumer goods and construction. Due to a significant need for major infrastructure, such as bridges, high-rise buildings and railways, the construction segment showed a booming domestic demand for prestressed concrete. Preparations for the 2014 FIFA World Cup and the 2016 Olympic Games will continue to contribute considerably to these higher volumes.

At Contagem, Belgo Bekaert Arames is preparing for future needs. The goal is to invest in the expansion of capacity of profiled wires to take full advantage of the expected resurgence in the country’s petroleum extraction industry. Brazil has a huge potential for the exploitation of the oil wells off its coast. These ‘pre salt wells’ under a thick salt layer represent the world’s largest offshore oil exploitation site. Further research has also been conducted to determine the investments needed to participate in the Brazilian ‘sour gas wells’ which will be exploited over the next few years.

Besides creating additional productive capacity through plant extension, we optimized the layout of some of our plants. In this way, internal logistics could be minimized in order to guarantee manufacturing at the lowest possible cost.

Investing in R&D and further down the value chain

In specific cases the decision was taken to invest further down the value chain. For example, at Feira de Santana, Belgo Bekaert Nordeste is now able to supply springs for spring boxes just in time. In this way our customers do not need to invest in additional spring coiling capacity and are able to focus on their end markets. At the same time it allows our joint venture to capture a larger part of the growth in this market segment.

In response to the growing demand in the domestic market for hi-tech wire solutions, the local Bekaert joint ventures established a focused regional development center at Contagem, employing a staff of 25, to develop solutions to domestic technology needs.

Brazil

The excellent investment environment and large domestic market of Brazil enabled us to record strong growth since our early presence in 1975. Today we staff 3 850 people spread over 8 locations.



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Global approach to fast inventory reduction

One of the biggest challenges at times of economic uncertainty lay in adequately managing and reducing the working capital. The global financial crisis had come suddenly and caused our inventories to surge to unprecedented heights. The fast and globally executed response of our teams successfully reduced Bekaert’s inventories to healthy levels again. The steelcord ‘Global Supply Chain Organization’ team was one of the key contributors in realizing this challenge.



Strategic measures locally executed

In defining our targets, we clearly defined the number of stock turns we wanted to achieve and used our best inventory practices as a base reference for the new alignment.

Our dedicated team carefully monitored our excess and obsolete stock in all locations and briefed, steered and coached our people locally responsible for inventory management. Plants in the same region supported one another in consuming excess stock. All through this process we made sure that these moves represented the most cost-efficient solution.

In close cooperation with some of our customers we further implemented the concept of Vendor Managed Inventory (VMI). This has brought us a clearer picture of what level of inventory we really need in order to meet customer needs. By working with our VMI customers, we were able to significantly reduce the overall inventory.

Successful approach to be continued

The results – achieved in close cooperation with Purchasing, Operations and Marketing & Sales – were most satisfying. By weekly monitoring, defining and redefining our actions, Bekaert nearly doubled its overall stock turns: from 3.2 to 5.6. Our steel cord inventories came down by over 20%.

Bekaert aims to further optimize its inventory management. In the supply chain process, we will strengthen our collaboration with both customers and suppliers. We are preparing to move to VMI with our suppliers and are looking into collaborative planning and Electronic Data Interchange (EDI). Sound market information is to be the basis of our inventory targets. We will continue to measure our forecast accuracy, on-time delivery performance and our real lead-times. The thus gathered knowledge will help us set optimal inventory levels and equip us with the right tools to manage our working capital.

global approach

The global supply chain team played a key role in fast inventory reduction throughout 2009.



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