Business Environment

Understanding and Analyzing the Industry Environment Project Report Proposal: Iron & Steel Industry, Belgium

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Group 5, Section B 2012067 Ankita Jha 2012068 Ankur Chandak 2012082 Avirup Biswas 2012091 Bhavana Daga 2012107 Dhara Mehta

Dr Gajjavelli V

IMT, Nagpur

Introduction
Belgium Economy The modern, private enterprise economy of Belgium has capitalised on its central geographic location, highly developed transport network, and diversified industrial and commercial base. The first country to undergo an industrial revolution on the continent of Europe in the early 19th century, Belgium developed an excellent transportation infrastructure of ports, canals, railways, and highways to integrate its industry with that of its neighbours. Industry is concentrated mainly in the populous Flanders in the north, around Brussels and in the two biggest Walloon cities, Lige and Charleroi, along the sillon industries. Belgium imports raw materials and semi-finished goods that are further processed and re-exported. Except for its coal, which is no longer economical to exploit, Belgium has few natural resources other than fertile soils. Nonetheless, most traditional industrial sectors are represented in the economy, including steel, textiles, refining, chemicals, food processing, pharmaceuticals, automobiles, electronics, and machinery fabrication. Despite the heavy industrial component, services account for 74.9% of GDP, while agriculture accounts for only 1% of GDP. With exports equivalent to over two-thirds of GNP, Belgium depends heavily on world trade. Belgium's trade advantages are derived from its central geographic location and a highly skilled, multilingual, and productive work force. One of the founding members of the European Community, Belgium strongly supports deepening the powers of the presentday European Union to integrate European economies further. About three-quarters of its trade is with other EU countries. Belgium's public debt is about 98% of GDP. The government succeeded in balancing its budget during the 2000-2008 period, and income distribution is relatively equal. Belgium began circulating the euro currency in January 2002. Economic growth and foreign direct investment dropped in 2008. In 2009 Belgium is likely to have negative growth, growing unemployment, and a 3% budget deficit, stemming from the worldwide banking crisis.

Iron & Steel Industry - Belgium Economy The iron and steel industry has long been a major industrial sector for the Belgian economy. In fact, from the mid-19th century onwards, the largest factory in the world, in Seraing, owned by the company John Cockerill S.A., was located in Belgium, and this factory has continued to be a world leader in steel production for more than a century. The iron and steel industry in Belgium suffered a significant decline throughout the 1970s and 80s, due

largely to stagnating global demand and growing competition. The sector never really picked up again, despite a recovery in global demand. More recently, the formation of the Duferco and Arcelor groups has, however, enabled the historic steel producers to begin to conquer world markets, whilst maintaining and modernising a certain number of facilities. In fact, the current situation demonstrates how central the iron and steel industry remains to our economy. The emerging economies, Asian countries and new EU Member States, first and foremost, are large consumers of steel and its many by-products. Some of them have also become major producers. Factories located in Belgium, the fate of which seemed sealed not so long ago, have become profitable once more as a result of an explosion in global demand and hence rising prices for raw materials and steel products, before faltering again due to falling global demand. The emerging economic and environmental challenges have led the Bank to consider recent sector developments in terms of economic impact, and in relation to certain closely-linked global factors.

Industrial Context ArcelorMittal, Belgium The Belgian iron and steel industry is dominated by the ArcelorMittal group, followed by Duferco. Arcelor merged with the Indian steel producer Mittal in 2006. The Arcelor Group itself was formed in February 2002 following the desire of three European steel producers, Spains Aceralia, Luxembourgs Arbed and Frances Usinor, to create a world leader in the steel industry. The ArcelorMittal Group is involved in activities in four main sectors: flat carbon steels, long carbon steels, stainless steels and customized steel upmarket solutions at Arcelor Steel Solutions & Services. Based in the Grand-Duchy of Luxembourg, where it is the largest private employer 27, the group is a top-level operator in five major markets: automotive, construction, household electrical goods, packaging and general industry. ArcelorMittal owns sites at Ghent, Geel, Genk, Lige and Charleroi. Duferco is the second largest steel producer in the country, with a presence since 1997 following the acquisition and reindustrialisation of the Clabecq, La Louvire and Carsid sites, which specialise in hotrolled strip, coils and wires, and slabs respectively. As in other industrialised countries, the Belgian iron and steel sector has undergone considerable transformation over the last few decades. In terms of production processes, the share of electric arc furnaces has increased substantially, from 5 p.c. of production in 1980 to 25 p.c. today, due above all to the closure of a large number of oxygen blast furnaces. In terms of products, there has been a move towards flat products (including coated), in other words, high value-added products. Finally, Belgian production is destined primarily for outlets in France (28 p.c.), Germany (19 p.c.) and Belgium (14 p.c.). Only 10 p.c. of production is exported outside the European Union.