By Malay Mukherjee, Chief Operating Officer, Mittal Steel
Three factors were important in shaping operational developments in 2004: the integration of new and recent acquisitions; the advancement of the Group’s programmes in the area of continuous improvement, knowledge management and customer satisfaction; and the strengthening of the corporate office in Rotterdam together with the creation of a new regional management structure for Central
and Eastern Europe (CEE).
Mittal Steel also stepped up its capital expenditure, laying the ground to capture future opportunities, and continued with its strategy of building and developing both upstream assets in iron ore, coal and coke and downstream product manufacturing capabilities.
The biggest acquisition completed in the year was that of Polskie Huty Stali,
now Mittal Steel Poland, with annual production capacity of approximately 8.3 million tons. Management was faced with a major task in aligning the operations’ functions, services, controls and systems with Mittal Steel’s philosophy. A major programme was immediately initiated aimed at integrating Mittal Steel Poland into the Group - and in particular developing synergies in areas such as purchasing, technology, product mix and marketing. It also initiated the PLN 2.4 billion Capital Investment Programme. With a 20 per cent increase in output over the past year, a highly satisfactory turnaround in performance was achieved.
In 2004, Mittal Steel also took control of Iscor, now Mittal Steel South Africa.
The move allowed it to integrate the company for the first time into the Group’s worldwide marketing programme. A new management team has been given the task of implementing a three-year plan focusing on increased output, further cost reduction and the optimisation of synergies available from the company’s integration into Mittal Steel.
The Group’s Continuous Improvement and Knowledge Management Programmes were broadened and deepened during the year, reflecting the number of substantial acquisitions completed in recent years. Continuous Improvement and the culture
of learning have been at the heart of Mittal Steel’s management approach from the
very beginning and have played a major role in sustaining the focus on world-class technology and processes, advanced product development, quality and efficiency.
In 2004, the Continuous Improvement team achieved significant productivity improvements – particularly in the CEE and Kazakhstan.
A new customer service initiative was launched to integrate customer relationships, previously managed either separately by different business units or on a regional basis, and reinforce the Group’s standing as a global steel supplier to the world’s largest corporations. As the Group has expanded it has become increasingly important to reinforce the message that customers’ needs are given paramount attention at Mittal Steel. Product standardisation, the provision of common levels of service and the development of an online customer centre to present a single face to customers and suppliers alike – all are playing their part in making it easier
for the world’s global corporations, as well as local customers, to deal with Mittal Steel in every corner of the globe.
The strengthening of the corporate office in Rotterdam and the creation of a new regional management structure for the Group’s CEE operations (also run from Rotterdam) reflected both the dramatic expansion in Mittal Steel’s operations and its emergence in 2004 as the number one steel producer in the CEE.
The new CEE team covers all the key functions of finance, sales and marketing, logistics, projects, human resources, legal and internal assurance. To staff the new team senior hires were achieved with executives joining from a host of top companies and consultancies including BP, Shell, Unilever, GE, Dow Chemical and McKinsey. The role of the CEE team is to co-ordinate sales and marketing and improve the cost-effectiveness of the CEE operations, upgrade the product mix and ensure potential synergies are maximised.
This new CEE team will now form part of the enlarged European team,
as we recently announced that we would be merging our Central and Eastern European operations with our Western European operations to form one unified European business structure. The European organisation will be headed by Roeland Baan, who will assume responsibility for the operational management of all European business units and the implementation of the business plan across this region, further improving Mittal Steel’s competitive position in Europe and ensuring the Company captures all possible synergies.
Mittal Steel progressed its Capital Expenditure Programme throughout the year, with the investment judiciously focused on the following areas:
- Meeting higher standards for environment and health and safety performance
- Enhancing productivity, quality and cost competitiveness
- Meeting the future demands of our customers for the highest quality products
Investment in these three areas is vital in ensuring that we continue to take advantage of all of the future opportunities, and we will be continuing to further build
and enhance on the progress made in 2004 throughout 2005. A list of the main projects can be found on page 51.
Looking ahead to 2005, one of our main priorities will be the integration of International Steel Group into the operating culture of Mittal Steel. This will include
identifying, analysing and capturing the various synergies arising out of
optimum asset utilisation; examination and appropriate allocation of product mix
and grades; and the rationalisation and improvement of customer service.
The operations of Inland and ISG are naturally complementary and we have
every confidence that the new Mittal Steel USA will emerge as a high quality,
customer-focused market leader.
We also remain focused on moving the management and governance practices
across the whole Company towards best-in-class. Finally, as Mittal Steel continues
to grow, attracting and retaining the best talent must become an even higher priority. We have been implementing a number of new policies in the past year relating to this area and will continue to further develop and enhance this framework in 2005.
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