Our strategy

Who we are

Bekaert is a world market and technology leader in steel wire transformation and coating technologies. We pursue to be the preferred supplier for our steel wire products and solutions by continuously delivering superior value to our customers worldwide. Bekaert (Euronext Brussels: BEKB) was established in 1880 and is a global company with almost 30 000 employees worldwide, headquarters in Belgium and € 4.4 billion in annual revenue.

What we do

Bekaert employs unique metal treatment technologies to deliver a quality portfolio of drawn steel wire products and coating solutions on a global scale. We purchase more than 3 million tons of wire rod per year as our basic material.

Depending on our customers’ requirements, we draw wire in different diameters and strengths, even as thin as ultrafine fibers of one micron. We group the wires into cords, ropes and strands, weave or knit them into fabric or process them into an end product. Our products reduce friction, improve corrosion resistance, or enhance adhesion with other materials.

How we work

better together sums up the unique cooperation between Bekaert and its business partners. We create value for our customers by co-creating and delivering a quality portfolio of steel wire solutions and by offering customized services in all continents. We believe in lasting relationships with our customers, suppliers and other stakeholders and are committed to delivering long-term value to all of them. We are convinced that the resilience, trust and integrity that bring our employees worldwide together as one team, form the fundamentals of sustainable and successful partnerships, wherever we do business.

Our strategy

Our strategy is aimed at consistently driving value creation for our shareholders by cost effectively creating superior value for customers.

Our vision and core strategies form the foundation of a transformation of our business towards higher level performance. They have been the basis of the company’s priorities and actions in 2015 and will continue to drive our focus in the coming years.

Our vision

Consistent with our better together aspiration, we relentlessly pursue to be the preferred supplier for our steel wire products and solutions, by continuously delivering superior value to our customers around the world.

With this Vision statement, Bekaert has explicitly determined its ‘field of play’: it describes what we want to be, where we want to compete and invest in, and how we want to differentiate ourselves.

Our Core Strategies

Five core strategies form the basis of Bekaert’s priorities and decision making process towards driving value and growth. These strategies put the company’s vision into practice and reflect the direction and priorities:
  1. bring the customer into the heart of our business;
  2. drive growth by providing superior customer value;
  3. accelerate Bekaert’s technology leadership and speed-to-market in target products and processes;
  4. leverage our scale to greater effect, and reduce our complexity to facilitate this;
  5. deliver the value proposition we want to offer the customer, at the lowest total cost.
The vision and strategies were defined at the end of 2014 to drive direction and focus in Bekaert’s process of transformation toward value driven growth. This transformation journey has been making our teams act faster, prioritize better, and engage in the delivery on the five core strategies.

While Bekaert’s transformation process has only begun in 2015, our change programs supporting the company’s vision and strategies are beginning to have a greater impact in scope and speed. The results, which are expected to come to their full potential in the coming years, already show their effectiveness through recent business portfolio decisions, various pilot programs and the strong financial performance of Bekaert in 2015.

The first core strategy is about driving the customer into the heart of our business.

Bekaert has always believed in customer collaboration and co-creation as drivers of sustainable partnerships and customer satisfaction. 
  • In 2015, Bekaert’s Rubber Reinforcement team made supply excellence to Pirelli Tyre a highlight in its mission to serve the tire industry with constant quality and outstanding service. Bekaert has been a trusted partner of the tire industry for many decades and has proven its ability to be their preferred supplier. The Pirelli deal was unique as it was the first time in history a tire manufacturer sold its entire captive steel cord capacity at once. 
  • In a co-creation project to develop a new-generation of medical injection pens, we have worked together with our customer to fully understand the challenges they and their customer face. Following this approach we knew exactly how we could improve the functionality of the pens with our spring wire. By focusing on the end application we were able to provide a solution that creates value throughout the supply chain, in a market with promising growth potential. 
  • After the Bekaert Rome (US) plant was temporarily shut down due to a fire, the team clearly showed their commitment and determination in proving their capability and ambitions to serve US-based customers with optimal quality and service. Bekaert teams have worked closely together with the customers to ensure continuity of supply during the reconstruction phases. The plant was rebuilt and equipped with Bekaert Engineering’s state-of-the art, high performance production lines. All customers appreciated our efforts and were present at the official reopening in October 2015. 
While these examples illustrate Bekaert’s clear ambition to deliver upon customer needs and expectations, we know we can do better. In 2016 we will focus much more explicitly on commercial excellence and make it a priority in our transformation journey, as we believe we can improve significantly on driving customer centricity at the core of everything we do. In 2015 a global customer excellence program has been developed that will help us deliver on four objectives: to anchor a customer-centric mindset across Bekaert; to differentiate ourselves in the market; to drive sustainable profitable growth by providing superior customer value; and to build a best-in-class commercial organization. The program has been launched in early 2016.

The second core strategy is about driving growth by providing superior customer value.

In 2015 we have analyzed and screened our product portfolio against the elements which are at the core of our Vision and we have determined the strategic plans that will enable the Group to move forward in the set direction. In implementing this strategy, Bekaert has made a clear prioritization of where we want to grow and how we can provide superior value to differentiate ourselves from the competition.

In 2015 we targeted and achieved organic growth in, amongst others, our rubber reinforcement and sawing wire activities. Bekaert has become a preferred supplier to the tire industry thanks to continuous innovation and the delivery of consistent quality and outstanding service. In 2015 we have successfully driven up value creation in the product mix by launching more advanced products which lower the total cost in the value chain. Bekaert’s value proposition in sawing wire markets is based on the same objectives and strengths. Our approach to capture growth included innovation in the product mix with a new-generation sawing wire that lowers the total cost of ownership. Bekaert’s technological leadership in this market also enabled our Chinese operations to manufacture the high-end product ranges with domestic wire rod, making our offering independent from the cost and currency effects of imports.
Important achievements in improving Bekaert’s business portfolio also came from very important mergers and acquisitions in businesses where we actively seek growth, and from divesting activities in which Bekaert has not been able to create value.
  • The Pirelli steel cord integration for instance, added double-digit profit to Bekaert’s rubber reinforcement business and strengthened our market share in the global tire market to about 30%.
  • We also acquired a ropes activity in Australia from Arrium which added margin-accretive market share to complement our ropes platform.
  • At the same time we divested some activities, either by selling them to another group, or by exiting the market.  We sold the loss making carding solutions activities to a leading company in textile equipment, but maintained our profit generating carding wire activities and made this part of the deal, with a long term supply contract. Bekaert also stepped out of the stainless steel wire business after years of loss making. Both exits are an illustration of prioritizing our portfolio to where we are capable of creating value and achieve the right returns.
  • On 7 December 2015, we announced the intended merger of the ropes and advanced cords businesses of Bekaert and Bridon. The Bridon Bekaert Ropes Group will be established as a 67/33 joint venture between Bekaert and Ontario Teachers’ Pension Plan, upon the final closing of the transaction. The new group will leverage the scale and complementary strengths of both Bekaert and Bridon by combining their ropes and advanced cords activities. Upon completion of the deal, the transaction is estimated to add approximately € 350 million to Bekaert’s consolidated sales on an annual basis. The definitive merger agreement is subject to customary closing conditions including regulatory approvals and is expected to be completed in the first half of 2016. Until closing, both businesses will operate separately and continue to serve their customers autonomously.
The third core strategy is about accelerating Bekaert’s technology leadership and speed-to-market in target products and processes.
  • Bekaert implemented the remodeling of its innovation strategy in order to speed up R&D in co-creation with customers. Seven challenges that are essential to deliver technology leadership and speed were defined. This way, our R&D processes and priorities have become much more customer-driven. Our focus is oriented toward fewer projects, to faster and better innovation results, and to opportunities with bigger impact.
  • In 2015, Bekaert and University College Dublin (UCD) have established the Bekaert University Technology Centre. The new joint UCD-Bekaert center, located within the UCD School of Mechanical and Materials Engineering, will focus on world-class research in characterization, design and optimization of materials, components and processes, ultimately leading to advanced next generation wire products. This initiative raises our research co-operation to a higher level and supports a broader scope of fundamental research but it also ensures that the research is rapidly and successfully applied in our process and product applications. Product cycles are becoming shorter and next generation products are entering the market faster.
  • Bekaert has extended the test scope of its revolutionary new coating on tire cord, TAWI® or ‘Ternary Alloy Wire coating’. This new Cu-Zn-Co coating reduces the amount of cobalt salts in tires by 80%. Early 2015, the patented invention was nominated for the prestigious Tire Technology of the Year 2015 award. TAWI® won bronze in the Belgian Business Award for the Environment, organized by the Belgian association of companies VBO, in the category Products. TAWI® is herewith entitled to participate in the European Business Award for the Environment competition in 2016.
  • Bekaert’s R&D processes and priorities are closely connected with the innovation and growth strategies of the business platforms. We co-create new products and solutions with our customers to better understand the current and future product requirements and application challenges, such as in the development of flat and profiled wires for flexible pipes.
Leveraging scale and reducing complexity 

This core strategy is to leverage our scale to greater effect, by reducing complexity and focusing more on our opportunities and strengths, with more standardization at best-in-class levels. 
  • In 2015 Bekaert has started to implement a global manufacturing excellence program to create greater standardization of methodology in our operations, to ensure quality and delivery, to enhance safety, to free up capacity, and to raise cost-efficiency throughout the business, among others by better managing and allocating the product diversity (SKUs) by plant. The program was launched in two pilot plants in Belgium and China. The implementation scope expanded over the course of 2015 in additional plants in Slovakia, China, the US and Ecuador and continues to gain ground and impact. The manufacturing excellence program has led to a very encouraging level of engagement and idea generation coming through all operations already involved. It is running ahead of schedule thanks to the enthousiastic participation of the teams and the promising results which are starting to show effect.
  • In North America Bekaert improved its supply chain efficiency and effectiveness. The purchasing team narrowed the supply field to three suppliers per plant and adopted a three-tier approach by which half of the supply needs of each plant are being allocated to one dedicated supplier. Another significant part of the needs are allocated to a back-up supplier and a limited share is reserved for spot buys and development related supplies from new entrants.  This program was launched in the second half of 2015 with the ambition to create stronger partnerships with suppliers at a better total cost.
  • Another illustration of the actions implemented in 2015 to reduce complexity and non-value adding structures, came from changes in ownership in a number of entities where partnerships had not led to efficient and successful forms of cooperation. In 2015 Bekaert took full ownership in its Dramix® and Jiangyin-based steel wire plant in China, in the Dramix® sales & distribution activity in Australia/New Zealand, and in the Malaysian steel wire and rope activities. Bekaert also deconsolidated the activities in Xinyu, China, reflecting the change in control and the ongoing negotiations to exit the business.
Excellence at the lowest total cost  

This fifth strategy is about ensuring that in the process of providing the best value creating solutions to our customers, we organize ourselves in a very cost-effective way.
  • In 2015, activities and processes that don’t add value have been evaluated and simplified or eliminated. A large group of people across the company have engaged in change programs to make the company leaner and faster and help drive the transformation journey toward value creation.
  • Savings actions have led to stable overheads as a percentage of sales, despite of increased consultancy costs due to the manufacturing excellence program and the high M&A activity in 2015.
  • Notwithstanding the integration of the acquired businesses and a high level of capital investments, Bekaert managed to drive net debt below the year-end balance of 2014, thanks to better cash generation and a significant reduction of the working capital.