Our resilience... tested and confirmed in 2009
The challenging market conditions as a result of the fundamentally changed economic climate have put Bekaert’s resilience to the test. But we proved our ability to cope with the strains put on our business. We have responded promptly by focusing on cost control and by re-aligning production to reflect changing demand. Our Operational Excellence programs have proved crucial in this regard.
At the same time we have maintained our investments in people, in productive capacity and in a broad-based product portfolio. We anticipated the economic upswing in certain regions. To be ready for that, we keep monitoring the global economy, the different industries and our customers. It is in their changing behavior that our opportunities lie.
The annual figures for Bekaert in 2009 are concrete proof of the overall effectiveness of this strategy. Moreover, when the economic activities resume their former growth trend, these structural measures will continue to provide us with a competitive edge.
Optimizing our debt position
In order to optimize its debt position, Bekaert issued two retail bonds in 2009 for a total amount of € 300 million. Both tranches were fully subscribed in less than an hour, a clear statement from investors expressing their confidence in our strategy. With these bonds, we were able to optimize the balance between our short- and long-term debts.
Cash is king
We were able to decrease our consolidated net debt position by over 35% in the course of 2009. This was made possible thanks to a substantial decrease of our working capital, stringent cost control and a healthy cash generation. As for our working capital, we reduced our inventories quickly and efficiently by over € 120 million. On the cost side, we reduced and controlled fixed costs and kept a sharp focus on our variable cost structure. In addition, we also restricted salary raises, temporarily limited recruitment, and controlled costs such as travel and entertainment expenses.
Adjusting capacity
In the mature markets we adjusted capacity to reflect the changing demand. We spared no effort to ensure that our production lines would run more efficiently; that they would be fit to process different products and handle larger volumes. As part of our endeavor to streamline our operations, we consolidated activities of the plants in Clarksdale (U.S.) and Scholes (U.K.) into other parts of our production platforms. In Spain and Slovakia too we introduced restructuring programs.
Investing in growth markets
We continued to invest in additional capacity, with a deliberate focus on the emerging markets. The start-up of the plants in Chongqing (China) and Lipetsk (Russia) are fine examples of this course of action.
Optimizing our product portfolio
Current and future product development remained central to our investment policy. We broadened our product portfolio in China, but also in Indonesia, where we added Dramix® and wire production and in India, where the product offering was expanded with more steel cord, stainless steel wire and filtration products. In the mature markets, in all of our plants, we invested in process improvements or product portfolio changes. Examples are the wire plants in Van Buren, Shelbyville and Orrville (U.S.) and in Zwevegem (Belgium), and the reconversion of the steel cord plants by introducing machine capacity for new product applications in Rogers (U.S.), Aalter (Belgium) and Burgos (Spain).
Turning production downtime into opportunities
During production downtime, we prepared our plants for economic recovery by improving production lines and by looking into new ways of optimizing our production processes. At the same time, we also offered our employees extensive training in different components of Bekaert’s Operational Excellence programs. As we kept our employees operational and on stand-by, we were the first to respond when the economy began its recovery. Our production plants in China especially benefited from this strategy.
Staying close to our customers
Our worldwide sales teams kept in close contact with our customers so as to listen to their changing needs. As soon as the markets picked up again, we were able to manufacture the products they desired. This close proximity to our customers and contractors proved successful wherever demand rose suddenly after the downturn. Our Sales Performance Excellence project allows us to better understand the latent needs of our customers and to offer the right answers to their expectations. A unique example of close cooperation with our customers can be found in the ‘mini-companies’ in Latin America. This concept is based on the philosophy of offering, instead of single product solutions, total customer solutions and a profound industry-specific expertise.
Strengthening positioning of Bekaert through e-applications
Through the use of modern applications, we succeeded in improving our company’s e-presence. We optimized our purchasing activities by introducing software that makes it possible for suppliers to offer their services in an easily navigable way via the Internet. Moreover, our newly launched corporate website guides visitors to the information they need in a userfriendly and efficient way.