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voestalpine Further Expands its Presence in Southeastern Europe

10/08/2007 - The voestalpine Group continues its expansion in southeastern Europe with the construction of a new steel service center in Romania, which follows the startup of another steel service center in Poland earlier this year.

The voestalpine Group continues to expand its presence in southeastern Europe with the construction of a steel service center in Romania. The new center follows the company’s opening of another steel service center in Poland earlier this year.
 
The company’s expansion is prompted by a booming construction industry and accelerated automotive and automotive supply expansion plans, as well as growing demand for steel in the region. The investment in this location on the Danube will be about 18 million euros, with the start of production planned for the first half of 2009.
 
“We have always emphasized that ‘our China’ is in Eastern Europe, so to speak, right outside our door. We see the greatest long-term growth opportunities in this region,” said Wolfgang Eder, CEO of voestalpine AG. “In the Romanian town of Giurgiu, about 60 km south of Bucharest, we have found a location, which is directly on the Danube and therefore a logistically ideal site that can be reached cost-effectively from Linz.”
 
Construction of this production site, which will be voestalpine’s fourth location in Romania, will begin in 2008. Production, primarily the high-precision cutting of sheet metal exactly according to customer specifications, should begin in the first half of 2009. Because demand continues to grow strongly, the company said that additional steel service center locations in Turkey and the Ukraine could follow in the medium term.

Romania demonstrates the current strong growth in southeastern Europe. The automotive and the automotive supply industries, as well as the construction industry, which are of great importance for voestalpine, are growing by more than 20% annually—many times faster than the economy overall in this booming region. According to market research, flat steel products demand in Romania and Bulgaria will more than double by 2011, and in the entire Black Sea region (which also includes Russia, Turkey, and the Ukraine), the demand for steel will also more than double in the next ten years. The region also offers very good direct shipping transport routes from Romania to Russia and Turkey.
 
Steel Service Centers—voestalpine’s Stahl Service Center GmbH custom tailors both voestalpine sheet metal and material from other manufacturers according to customer requirements, cutting precisely and delivering just-in-time. The company currently operates five steel service center locations: Linz, Austria; Cittadella, Conegliano, and Vicenza, Italy; and Tychy, Poland. According to the company, expansion of the existing locations and, most importantly, the development of new markets should increase the annual operating capacity from currently 1.5 million to 2.6 million tonnes of steel by 2015.
 
Automotive Division—The voestalpine Group has been present in Central and Eastern Europe for a long time with a number of sales and production locations. During the 2006/07 business year, about 10% of the Group’s sales (just above EUR 700 million of a total of EUR 7 billion) was generated in this region.

The voestalpine Group already has locations in Romania. Since 2004, voestalpine Elmsteel, a British subsidiary and part of the Automotive Division, has had a plant in Satu Mare, which produces 50 million steel tubes annually for the automotive industry. Additionally, construction of a press plant by the German automotive supplier Dancke, which belongs to the voestalpine Group, is set to begin shortly. The new facility in Arad, in western Romania, will manufacture press parts for both the local and the Western European market.
 
Railway Systems Division— voestalpine’s Railway Systems Division is also profiting from this upswing through the switches (turnout systems) manufacturer VAE APCAROM, which is active in the region. As a leading supplier of turnout and rail technology, voestalpine recently received a follow-up order to modernize the Bucharest public transit network. Additionally the VAE Group, the world market leader for turnout systems, also has a local production joint venture in Bulgaria.
 
Furthermore, the company’s Special Steel Division has also built a strong presence in southeastern Europe, including sales subsidiaries in Romania and Poland, both established in 2005, and a production site in Turkey.