Bekaert announced that it is taking wide-ranging steps to improve the company’s competitiveness that will include downsizing in Belgium—where it is based—cutting operational costs and shifting some operations and activities to be more cost-effective.
"We want to organize ourselves in a more agile and cost-efficient way," said a press release that noted that margins have suffered to where action is called for. It outlined steps in three areas.
The first calls for relocating some activities in Belgium to lower-cost locations. Those include: moving the production-related standard test lab activities to production plants that have a global service role; moving the spare parts activities to Slovakia, close to Bekart’s main production plants in Central Europe; and moving certain pilot line developments and upscaling pilot developments to industrialization. These activities would be located in the relevant "key learning plants" to speed up the development and time to bring product and process innovations to market.
The second step relates to the very competitive nature of the EMEA (Europe, Middle East and Africa) market for steel fibers in the European concrete reinforcement market, the release said. Because competitors have moved their manufacturing footprint to Central Europe or are sourcing fibers from low-cost countries, Bekaert’s Dramix® plant in Moen, Belgium, is not competitive with the current pricing trends in EMEA. As such, Bekaert will close the Moen plant and further upscale Dramix production at its plant in Petrovice, Czech Republic.
The third step is "to reduce certain activities and align them better with the business needs and the new organizational structure of the Group," the release said. This would include a downsizing of administrative and other support roles "by better leveraging the potential of standardization, centralization, outsourcing and relocation." As a result, the engineering, technology and functional departments in Belgium will focus "much more on their respective, global expertise roles and act as strategic business partners. They will be helping the business with the capability to deliver on the short- and long-term goals."
The release said that implementing the described actions "will improve our competitive position in the market place worldwide by significantly reducing our cost structure, which will help improve the financial performance of the Group sustainably."
The restructuring would affect 281 jobs in Belgium. Per a report in flandsersnews.be, the job losses include 70 at Moen, outside Zwevegem; a further 44 in Zwevegem itself; 106 in Deerlijk; and 61 in Ingelmuntser.
Citing a high cost basis and pricing pressure, Bekaert announced that it will close Bekaert Costa Rica SA plant in Orotina, Costa Rica, which manufactures Dramix® steel fiber, which will continue to be offered from other Bekaert plants.
A press release said that Costa Rica Bekaert currently employs 147 people in two legal entities in Orotina: Bekaert Costa Rica SA (64 people) and BIA Alambres Costa Rica SA (83 people). The Bekaert Costa Rica SA entity manufactures Dramix steel fibers for concrete reinforcement while BIA Alambres Costa Rica SA produces steel wire products for agricultural fencing and construction markets. Both entities belong to the same partnership in which the Bekaert Ideal Holding—an 80/20 partnership between Bekaert and its Ecuadorian partners, represented by members of the Kohn family—holds 73% of the shares and ArcelorMittal the remaining 27%.
Management has informed the employees about the decision, and plans to offer a transfer for 20 part-time employees to its sister plant.
The plant was opened in 2014.
Bekaert reports that it has reached an agreement in principle with the Ontario Teachers’ Pension Plan to buy out its 33% equity share in the Bridon-Bekaert Ropes Group (BBRG).
A press release said that the ropes and advanced cords business, which became the BBRG at the end of June 2016, will become a wholly owned subsidiary of Bekaert. “Taking full ownership ... fits within the ambitions and strategy of Bekaert to grow a global ropes and advanced cords business that will create significant value over time for customers worldwide and for the Bekaert Group.”
Bekaert CEO Matthew Taylor said in the release that it made sense for the company to follow this direction as BBRG was established in a period that saw weak markets and integration challenges. "Taking full control ... will allow us to accelerate the turnaround efforts, drive greater synergies between BBRG and the Bekaert Group and take advantage of the complementary nature of the businesses.” He noted that the deal reflects Bekaert’s commitment to and belief in BBRG, and will enable it to focus on helping the business achieve its true potential."
“I will personally take up the role of CEO of BBRG, alongside my existing role as CEO of Bekaert,” Taylor said. He praised the efforts of Bruno Humblet, who he noted had been the driving force behind creating and integrating the Bridon-Bekaert Ropes Group, as well as the Ontario Teachers’ "for the collaborative approach, active cooperation and drive they brought to the joint venture over the last two years."
The agreement, subject to customary closing conditions including regulatory approvals, is expected to be completed in the coming months, the release said.