Restructuring for new challenges

February 11, 2002, 00:00 CET

Hydro Aluminium is retooling into a lean, more cost-efficient business to handle tighter markets and the integration with two major companies.

The year 2001 was not kind to Hydro Aluminium, says Jon-Harald Nilsen, executive vice president for the business area.

Markets for aluminium - especially in automotive and other extrusion applications - were weak last year. The US market was hardest hit. Aluminium consumption in the Western world shrank 6 percent, the largest single annual decline in 20 years. Hydro's magnesium business didn't escape, either. Growing exports from China have put tremendous pressure on prices, contributing to the closure of Hydro's magnesium plant in Porsgrunn, Norway.

"We had to look at our cost levels and competitive position," Nilsen says. The result was the Light Metals Organization project, which redrew the lines between business sectors. The reorganization led to both internal gains and market benefits.

"We had to reduce costs in sales, administration and support and simplify the organization. It was also in preparation for the integration with VAW and Technal.

"But the gathering of activities under Automotive and North America will make us a stronger and better partner with our customers in the various business sectors," Nilsen says.

With the integration of the German company VAW, Hydro Aluminium will become one of the leading suppliers of rolled products in the world and will be one of the largest automotive suppliers. In addition, the new Hydro Aluminium will rank no. 3 in the US extrusion industry and will maintain its leading extrusion position in Europe.

This year, the market will continue to challenge Hydro Aluminium in the first half, Nilsen explains, but the second half is expected to bring better times.