14 February 2006 Bekaert wants to strengthen its position in Russia
Given the increasing importance of the steel industry and market demand for advanced wire products, Bekaert wants to strengthen its position in Russia. The company has been active there for years and has built up an extensive customer portfolio. The most important products supplied are steel cord products for tire reinforcement, steel fibres for reinforcing concrete and other specialized wire products. In advanced materials the company sells textile products for the production of car windscreens and environment-friendly combustion systems, both of which are manufactured from Bekaert ultra fine metal fibres.
The majority of these products are supplied to Russia from Bekaert plants in Central Europe, since the company has no local production facilities in Russia.
The development of a strategic position in Russia is an essential part of the strategy of sustainable profitable growth. Therefore Bekaert intends to collaborate with the steel industry and technology centres in the country. In line with Bekaert’s global approach, it is also important for the company to have an own production platform in this future growth market.
Based on the growth potential in tire manufacturing for both passenger cars and trucks, Bekaert expects a significant increase in demand for steel cord products. On the one hand, there is a clear evolution in the demand for top quality products from Russian tire manufacturers; on the other hand, Bekaert’s international steel cord customers are expanding their tire production capacity in Russia. Therefore, Bekaert wants to have its own production capacity so that it can provide optimal service to customers in Russia, as it does in every major market. Bekaert recently opened talks on exclusive cooperation with Uralkord, Kordinvest en TTMP. Uralkord, located in Magnitogorsk (1 700 km, or 1 050 miles, east of Moscow) is one of the most competitive steel cord production platforms in Russia today and supplies around one fourth of the Russian market. Kordinvest is a management company located in Oriol (360 km, or 225 miles, south of Moscow), as is the engineering company TTMP, which manufactures equipment for the group. Both parties are keen to reach an agreement in the course of the coming months.
In addition, Bekaert expects the demand for high technology wire products for the manufacture of components for the car industry to undergo a major evolution. Given our extensive experience as a reliable supplier of these products worldwide, Bekaert will continue to study a number of possibilities in this domain.
Finally, Bekaert will take a closer look at the possibility of finding a local supply of wire rod, Bekaert’s most important raw material, as well as possible technological exchanges with universities and research centres which fit the company’s open innovation policy.