The new Arcelor Mittal Group

Combining the best of both worlds

Fiat Grande PuntoThe partnership behind the success

Electrical steels for transformators

Innovation as an answer

to economic challenges

Client magazine | December 2006

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Contents

CoverTransformers at Pauwels N.V. (Belgium)Photo: Tom D’Haenens

Editorial responsibilityCecile Van den HofArcelor Commercial FCSE19, avenue de la LibertéL-2930 Luxemburgwww.arcelor.com/fcse

Editor-in-chiefCecile Van den Hof

EditorsDieter VandenhendePhilip van Ootegem (Aware) Maeve Kelly (The Wide Agency)Marie-Laure Piérard

Graphic designJulie Verzelen (Aware)

Photographyp. 3: Tom D’Haenensp. 4-5: Britt Schillingp. 9: Tom D’Haenens (concept Philognos)p. 10-11: Tom D’Haenensp. 13: Korado, Philip van Ootegemp. 14-15: Fiatp. 16: Manon Fleuryp. 17: Walter Tjantelép. 18-19: Tom D’Haenens, Jeroen Op de Beeck, Philippe Vandenameele, Claude Rombauts p. 20: ATB, Tom D’Haenens

CopyrightAll rights reserved. No part of this publicationmay be reproduced in any form or by any meanswithout prior permission in writing.

3 Levellingup

4 InterviewwithMichelWurth

7 ArcelorMittalProfile

8 Steelbonnettoprotect pedestrians A promising generic solution

10 Technicalinnovationas ananswertoeconomicchallenges Non-grain Oriented steel: an alternative for transformer manufacturers

12 Re-inventingthewheel More style, less weight, more durable and cheaper thanks to high-strength steel

13 Acosyfuture forKorado

14 FiatGrandePunto:the partnershipbehindthesuccess

16 TPM:underpinning manufacturingexcellence

18 BehindthescenesatI-R&D inGhentandLiège

20 Flashes • CE label for hot rolled steel in the construction industry • Tailor Welded Blanks: Arcelor Mittal and Noble International join forces

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Cecile Van den HofCommunications

Arcelor Mittal Flat Carbon Europe

When the merger between Arcelor and Mittal Steel was finally announced, it sparked off a wave of positive reactions, especially from the financial world. But we wanted to know what you thought of the merger too. Of course, we were bombarded with questions and comments from clients. We put them all to Michel Wurth, who is responsible for Flat Carbon Europe in the new Arcelor Mittal Group. You can read his response in the detailed report of our interview.

Michel Wurth urges clients of Arcelor and Mittal Steel to take maximum advantage of the unprecedented potential of the new Group. Arcelor Mittal can significantly reduce the Total Cost of Ownership for its clients, and has powerful tools to raise the level of service, quality and reliability to new heights.

Mittal Steel has always reacted extremely quickly and accurately to market develop-ments. Arcelor was less reactive, but excelled in quality and innovation. Michel Wurth is convinced that Arcelor Mittal will succeed in combining the strong points of both companies to offer fast service as well as quality and innovative excellence. Levelling up, in fact.

The new organisational structure of the Group is being drawn up with this aim in mind, and will be put into practice straight away. Since there is little overlap between Arcelor and Mittal Steel, certainly in the flat steel sector, no radical restructuring is necessary. That means that no valuable time will be lost and that there will be no adverse effects for clients as a result of the merger.

Naturally, communication plays a crucial role in this process of fundamental change. This is the last issue of Update as a purely Arcelor magazine, but the editing team will certainly continue to update you regularly and in detail on everything that is happening at Arcelor Mittal.

Our internal dynamism remains remarkably high during the merger process, as you can see from all the other articles in this issue. We present a number of impressive innovations. The first introduces interesting new applications for our electrical steels, and the second outstanding innovation is the development of a high-strength steel car bonnet designed to protect pedestrians in case of an impact. You can also read all about the Innovation and R&D client days at our research centres for Industry in Ghent and Liège. And finally, we present the new steel wheels for cars and trucks, which are made of new types of steel and represent an excellent alternative to aluminium wheels. Then there are articles about our Total Productive Maintenance and our close collaboration with clients such as Fiat and Korado. As you can see, we are set to remain your permanent steel partner.

Happy reading!

Cecile Van den Hof

Levelling up

Client magazine | December 2006

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Interview with Michel Wurth

During the relatively quiet summer months, the policy-makers of the new steel group Arcelor Mittal set up their new Group Management Board (see page 7). As announced earlier, Michel Wurth was appointed as a member of this Board with responsibility for Flat Carbon Europe 25, Automotive, Heavy Plate, R&D, Packaging and the alliance with Nippon Steel. Update met him in his office in Luxembourg and naturally, we fired a salvo of questions at him based on all our clients’ reactions and concerns.

You have very substantial responsi-bilities and tasks in the new Group. How are you going to tackle all this?My mission is clear and my tasks form a homogenous package. In the first place, I am responsible for the Flat Carbon Europe business unit in the 25 European countries in which we operate. The scope also includes Romania and Turkey and other countries, and therefore covers a wider geographical area than the Euro-pean Union alone. The scale of industry in this area also makes this the largest busi-ness unit in the whole Group with respect to industry. In addition to this, I am also responsible for Automotive, Heavy Plate, Packaging, R&D and the strategic alliance with Nippon Steel (NSC). That means that I have all the leverage I need to ensure that we give our clients high-quality service.

Together with my colleagues in the Group Management Board, I intend to integrate

all the different entities as quickly as possible, to form one united, efficient Group: Arcelor Mittal. We shall do that by sharing best practices and launching knowledge transfers. Challenging times for the leaders of the new Group! The new enterprise needs to perform at the highest possible level as soon as possible. That is what our clients expect, and they are entitled to no less.

Automotive is now a global remit. What difference will that make for clients?Arcelor had a particularly strong business model for the automotive sector. But until now, all commercial, technical and logistical services were integrated under Arcelor Flat Carbon Steel Europe. With the creation of Arcelor Mittal, that is no longer possible. In the NAFTA countries, Arcelor supplies some 8 million tonnes of steel to the automotive industry every year. We can hardly tell our clients that they will fall under Flat Carbon Europe from now

‘A new Group has emerged that can offer its clients the very best in service, quality, R&D and innovation.’ Michel Wurth

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onwards. Arcelor Mittal supplies about 10 million tonnes of steel annually to auto-motive clients in Europe. Together with the American operations, this amounts to 18 million tonnes annually. That’s a lot of steel. Our clients in the automotive sector are the most demanding with respect to service and quality, and they are also the driving force behind technological advances. For example, they are behind our R&D collaboration with the Japanese Nippon Steel. Consequently, we have decided to give our activities in the auto-motive sector a separate and immediately recognisable status.

What do you see as the greatest challenges today?Arcelor and Mittal Steel each had their own style and their own methods. Both companies had their own impressive strong points. As I said before, it is up to us to take the best of both companies and create a new enterprise. It will not be easy, but it is certainly possible. Mittal Steel always reacted very promptly to signals from the market. They rapidly came up with a sharp analysis, and developed extremely efficient action plans that were implemented immediate-ly and successfully. Arcelor had different priorities aiming above all for the best possible quality, service and innovation. If we can successfully combine all these strong points – speed, quality, service and innovation – we can certainly establish our Group as the unrivalled leader in this sector.

Do you have the means to achieve this?We will certainly ensure that the means are available. But acting faster does not necessarily mean that costs will go up, and introducing the highest quality standards everywhere need not slow down the speed of our operations. We must work towards finding a new balance. This is what our clients expect of us.

There was a tough battle over this merger. Does the management team see eye-to-eye now, so that we can meet these high expectations? Two teams did battle in the public arena, and our clients naturally wonder whether these two teams can now work together to achieve our ambitious targets. Well, I can assure you that we get on fine with each other! The Arcelor side did what the shareholders expected of them and played a tough negotiating game, and the Mittal team did exactly the same. The battle was mainly in the field of finance. And precisely because both sides played such a hard game, we respect each other all the more today. The storm has passed, skies have cleared, and clarity, peace and respect reign once more. We are presently busy sharing out responsibilities, and believe me, we are not trying to build walls around our own domains. Quite the opposite – we are building bridges to each other. And we are tackling things very pragmatically. Let me give you an example. I am responsible for automotive, plate, packaging and flat steel business, which together account for 35 to 40% of our turnover in the NAFTA countries. Aditya Mittal is in charge of flat steel in the US, so I work very closely with him to optimise the new Group’s operations and profits in the NAFTA countries. We have no differences of opinion. That would be simply counterproductive. It is in the best interests of employees, shareholders, clients and all others involved that we make this merger a success.

Aren’t you afraid that there is a credibility gap here? The press made the most of the very public takeover battle.The press did indeed splash some lurid stories in the papers now and then. But Arcelor has always defended the interests of its shareholders. When it became clear that the offer was sufficiently attractive, the board recommended it

to our shareholders. From the moment we started negotiating with Mittal Steel, we did it in a thoroughly professional manner. And during these sessions which took place behind closed doors, we got to know each other, to respect our counterparts and finally, to start working together.

So there is mutual understanding at the top, but have things settled down in the mills and among technical, logistical and commercial staff? Arcelor and Mittal Steel were two very complementary companies, with almost no overlap. We had very few common clients, which opens up good prospects for the future, since clients will now have an opportunity to learn more about the products and services of the other part of the new Group. So there is no reason why the merger should have any negative effects for clients or employees. Initially, clients will still be talking to the same contacts.

Client magazine | December 2006

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A much more important question is whether this will open up new opportuni-ties. The opportunities are certainly there, because for the first time in the history of our industry, clients can now take advantage of the services of a truly global company. We shall offer them the same service and quality all over the world, wherever they may be. Our Group has a vast body of knowledge, experience and R&D resources at its disposal, and clients can tap into this to their own advantage. We can help them to move forward with new applications and innovative ideas.

Another source of concern among clients is the fact that there is now one supplier less in the market. Arcelor is no longer an alternative to Mittal Steel, and vice versa. There is no need for concern here either. Even after the Arcelor Mittal merger, the steel market remains very fragmented. Clients still have the option of ordering from one of our strong competitors or importers. We will certainly not be monopolising the market. Instead, we will be offering clients an opportunity to make active use of new possibilities. A group like ours can significantly reduce their Total Cost of Ownership, and offers unprecedented possibilities with respect to service, quality, reliability, inventory management and much more. We want to move forward together with our clients. We will soon be contacting them to hear about their requirements and explain how we can work with them to help them achieve their goals.

Some clients are also concerned that there may be a levelling-down of service and quality.In other words, they are afraid that Mittal will take over the weak points of Arcelor and vice versa. We are aware of that and are doing our best to stimulate the necessary synergy effects to improve performance all round. After all, that is

why the Arcelor Mittal Group was created, as a group that can offer its clients the very best in quality, R&D and innovation, all over the world.

So where exactly are you going to look for these synergy effects?When there is a merger, there are usually a number of very concrete synergy effects and that can result in the closure of plants. But because there is little or no overlap between Arcelor and Mittal Steel, there will be no drastic restructur-ing with negative social consequences in the Arcelor Mittal Group, and in particular in the flat steel division. Synergy effects will be found in the field of best practices, purchasing and logistics. We can also let some mills specialise more. In this way we can avoid double expenditure and under-use of production capacity. We have also taken a number of decisions regarding the modernisation of the East European mills which will offer new opportunities to the rapidly rising number of our clients investing in this new growth area.

In the course of the coming months, we will be intensifying communication with clients and employees. To sum up: we want the new Arcelor Mittal to be much more than the sum of its parts, both for our clients and our employees.

‘We will combine the best of both worlds:

speed, quality, service and innovation.’

Michel Wurth

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Nippon Steel

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Posco JFE Baosteel US Steel

Arcelor Mittal Profile

Arcelor Mittal is the world’s number one steel company, with 330,000 employees in more than 60 countries. The company, which will be incorporated in 2007 following the successful tender offer, brings together the world’s leading steel companies, Mittal Steel and Arcelor.

Arcelor Mittal is the leader in all major global markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks.

With an industrial presence in 27 countries across Europe, the Americas, Asia and Africa, Arcelor Mittal has a balanced geographic diversity within all the key steel markets, both developing and developed.

Arcelor Mittal Pro forma revenue in 2005 showed combined revenues of 62.2 bn Euro and approximate production capacity of 113 million tonnes, which represents about 10% of the world’s crude steel output. More info on the new Group can be found on www.arcelormittal.com.

Crude steel production 2005 (source: IISI – million tonnes)

Nr 1 in North America Nr 1 in Western EuropeNr 1 in Eastern Europe

and CIS

Nr 1 in South America Nr 1 in Africa

Leading position in most attractive markets

Client magazine | December 2006

Arcelor Mittal Group Management Board

From left to right: Lakshmi Mittal (President of the Board of Directors, CEO), Michel Wurth (Flat Carbon Europe, Auto, Heavy Plates, R&D, Nippon Steel Alliance and Packaging), Malay Mukherjee (Stainless, Mining, Asia & Africa), Roland Junck (Health, Safety and Environment, Marketing, International affairs, China, Commercial Co-ordination and Human Resources), Aditya Mittal (Chief Financial Officer, M&A and Flat Americas), Gonzalo Urquijo (Long products and Distribution)

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Steel bonnet to protect pedestrians: a promising generic solution

For the bonnets of segment C cars (small family cars), a number of carmakers have opted for aluminium. ‘Our aim was there-fore to show them that specially designed steel grades could represent an excellent compromise, improving pedestrian safety with very little extra weight and a signifi-cant cost reduction,’ explains project leader Grégory Gatard. ‘The first phase of the project was to analyse the vehicles in segment C with an aluminium bonnet and draw up a benchmark. On the basis of this, we designed a reference model and worked together with two respected partners in the automotive sector to optimise the material, design and produc-tion process to develop the best possible steel solution. Our partners were Matra Engineering for the design and functional validation of the safety performance, and Gestamp, Europe’s leading stamper, to demonstrate the industrial feasibility of the drawing and assembly processes.’

2010 target for pedestrian impact protection

Project director Michel Soler explains: ‘We designed and evaluated our model on the basis of the pedestrian safety criteria defined in the European directive for 2010, and the known functional

specifications for car bonnets.’ The pedestrian impact test focuses on three impact zones: the leg, hip and head. In the 2005 version of the test, an “­impactor” weighing 3.5 kg and simulating the characteristics of a head is projected at 35 km/h. The directive for 2010 proposes two tests, one simulating an impact with a child’s head (2.5 kg) and one with an adult head (4.8 kg). The speed of projec-tion is to be increased to 40 km/h and the Head Impact Criteria (HIC) threshold re-duced to 1000 in all zones of the bonnet. ‘These criteria pose a real challenge for designers of tomorrow’s car bonnets,’ emphasizes Christophe Cazes, Manager of the Steel Solutions & Design department, ‘because the solution does not lie in op-timising the design of the bonnet alone; we also have to consider its interaction

European directive 2003/102/EC specifies the standards to be met by 2005 for pedestrian protection in case of impact with a vehicle and the stricter standards to come into force in 2010. Carmakers are therefore increasingly turning their attention to solutions that will comply with the 2010 criteria. In view of this, Arcelor decided in 2004 to develop a generic solution demonstrating the advantages of using new steel solutions to design a bonnet offering greater protection for pedestrians while equalling or even improving on the performance of aluminium bonnets, but at a lower cost. This project, which was carried out by the ­Automotive­Applications­Research­Centre at Montataire (France), has met all its targets, and more: innovative design and materials have enabled them to come up with a blueprint that offers substantially improved safety results for only a very limited increase in weight, plus an overall cost reduction of 35%.

Project leader Grégory Gatard and project director Michel Soler of the Automotive Applications Research Centre in Montataire (France)

Dual Phase steelDP 500 GI / 0.64 mm

DP 780 GI / 1.00 mm

DP 500 GI / 0.77 mm

Bake-hardening steelBH 260 GI / 0.57 mm

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with neighbouring structures (rigid zones such as the motor block, the hinges etc.). In addition to the safety aspect, we also tried to optimise the main functional criteria: overall rigidity, so as to meet user expectations in terms of perceived robustness, and handling constraints dur-ing the manufacturing process; resistance of the “­skin” of the bonnet to blistering and denting; and resistance to excep-tional forces such as those exerted on the lock when opening it, or when a gust of wind catches an open bonnet.’

Our objective was twofold: for each impact point, we aimed to achieve levels of pedestrian protection and functional performance equal or superior to those of the reference bonnet, and at the same time we aimed to optimise the weight, cost and performance ratio, without exceeding a specific mass of 8.5 kg/m2 (weight/m2 of the bonnet) and while achieving a cost reduction of 4 Euro for each extra kilo of weight compared with an aluminium bonnet.

Innovative design and materials

To achieve this, we optimised both the design and the materials, selecting inno-vative steels with very high yield strength. The lining is perforated so as to arrive at the best compromise between strength and rigidity, and pedestrian protection in case of an impact. We worked on

the concept of meltable components assembled by clinching, which would detach from the structure in the case of an impact.

For the lining, BH 260 (bake-hardening) steel combines good formability with a good resistance to exceptional forces (thanks to cataphoresis, which increases its rating by some 40 Mpa), while at the same time, the thickness can be reduced to 0.57 mm.

For the “­skin”, DP 500 (Dual Phase), a grade with one surface suitable for an exposed part, provides good resistance to indentation with a reduced thickness of 0.64 mm.

For local reinforcement, the required level of resistance to exceptional forces was attained by using 1 mm gauge DP 780 around the hinges and 0.77 mm DP 500 for the striking plate of the lock.

We used digital simulation to test the per-formance of the model and establish the feasibility of the drawing and assembly procedures.

All objectives were achieved or exceeded: pedestrian protection was significantly improved (see text in the right upper corner), a level of static rigidity and impact strength of the skin in accord-ance with ISO standards was achieved,

plus improved resistance to exceptional forces, a weight of 8.2 kg/m2 and a cost reduction of over 4 Euro per additional kg. Thanks to savings made on the cost of materials and processes, the overall cost of the bonnet has been reduced by 35%*.

From a generic solution to a dedicated solution for a specific carmaker

‘A generic solution is just one possibility among many based on a numerical model, and not a turnkey solution for everyone,’ emphasises Grégory Gatard. It is an excellent tool for presenting our steel solutions to the client and demon-strates their feasibility in a very specific context. We are now entering the roll-out phase, and aim to collaborate with carmakers on the problem of pedes-trian protection, taking their specific constraints into account and offering them the support they need to select the right steel for their applications.’

With this bonnet designed with pedes-trian protection in mind, Arcelor has once again demonstrated its ability to antici-pate carmakers’ needs and offer them solutions that meet their requirements in terms of safety and energy-saving well in advance, so that they can comply with increasingly demanding regulations.

* Cost of materials in January 2006, not including recuperation of aluminium waste

Better protection for pedestrians Numerical simulation of the impact of a child’s head in 11 zones (the most representative results of the bonnet’s performance) has demonstrated that in over 80% of the zones tested, better HIC ratings than those of the reference bonnet were achieved, and in 7 zones, these were under 1000. The clinched components played a crucial role by improving the performance significantly (by 6 to 15%) in 3 zones. Only the 3 frontal zones close to the wings and the hinges still exceed a 1350 HIC rating.

Picture used in an Arcelor Auto advertisement about this theme in Automotive News Europe

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Technical innovation as an answer to economic challenges

Since 2005, demand for GO steel has continued to rise, and there are several reasons for that. In the first place, there is the rapid industrialisation of countries like China and India. This expansion of industry has led to a dramatic increase in energy consumption. To meet the demand for electricity, the governments of these countries decided to extend their electricity network and increase its capacity, as quickly as possible. Since about a year ago, China and India have been installing new, powerful transform-ers at a fast rate, and of course these contain large quantities of GO steel.

Another factor behind the increasing demand for Grain-Oriented steel is the decision of the American government to replace all the old transformers in the country with new, energy-efficient models, from 1 January 2007. The efforts of the US to reduce energy consump-tion therefore contribute to the urgent demand for GO steel, in a market that is

already having difficulty in meeting the demand today.

The challenge: NO instead of GO?

Grain-Oriented (GO) steel is not the only type of fully-processed electrical steel. There is also Non-grain Oriented magnetic steel (NO steel). These two types of electrical steel result from different thermomechanical production processes which give the material very specific properties.

GO steel has anisotropic electromagnetic properties, which means that it shows optimal magnetic behaviour in one direction – the direction in which it was rolled. This is precisely what makes it so suitable for static machine parts such as transformer cores where magnetic fields are induced in one direction only. But in rotating machines like motors and generators, magnetic fields are induced in alternating directions, for which an

Non-grain Oriented steel: an alternative for transformer manufacturers

In May 2006, the Coil Winding, Insulation & Electrical Manufacturing Exhibition (Cwieme) in Berlin was once again “the place to be” for manufacturers of electricity generators, motors and trans-formers. One question was on the lips of virtually every transformer manufacturer: who can guarantee us a prompt and reliable supply of Grain-Oriented (GO) electrical steel? At the Arcelor stand, we could not give them the answer they were hoping for, since this is one of the few steel grades we do not produce or sell in Western Europe. But that does not mean we sent our visitors away with empty hands – on the contrary. At Cwieme we introduced them to a technologically and economically attractive alternative to GO steel.

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isotropic material like Non-grain Oriented (NO) steel is much more suitable.

Until recently, transformer manufacturers therefore automatically ruled out the use of NO steel in their applications. But in 2004 all this changed, when a leading manufacturer asked Arcelor to examine whether it would be possible to replace GO M6 steel with the cheaper M 235-35 A NO steel, under specific circumstances. A request that was prompted by simple economic common sense. However, the manufacturer also made it very clear that there could be no concessions on quality or performance. This presented us with an exceptionally interesting challenge.

There were also other factors that aroused the interest of more and more trans-former manufacturers in the possibilities of NO steel. The most important of these were no doubt the successive increases in the price of copper and aluminium, the material from which the conductive windings are made. The price of copper has increased almost fivefold since 2002, while the price of aluminium has “­only” doubled. These enormous price rises have prompted transformer manufacturers to take a fresh look at their existing designs and construction methods. Arcelor could step in straight away here, since we could offer NO steel as an attractive alternative for the most important – and increasingly scarce – raw material, GO steel. The high-est quality NO steel is roughly half the price of the lowest quality GO steel, which has a substantial impact on the total price of the transformer.

But to be able to offer competitive solutions, the Arcelor Research Industry

Gent research team first had to investi-gate how substituting NO steel would impact on the design of the transformers. Our researchers used the Finite Element Method to calculate the ideal geometry of the cores and windings. Transformers with NO steel cores are indeed larger than comparable transformers made with GO steel, but in spite of the increase in volume and material used, the economic advantage is still substantial, while the technical performance remains equally high.

By now, a number of manufacturers have already switched to the new design. It is now a proven fact that for transformers of up to 400 kVA, NO is a perfect substitute for GO steel. For larger transformers in the NVA range, GO steel is still irreplaceable.

Cwieme 2006 and after

Predictably, Arcelor’s innovative solution attracted lively interest from virtually all European users of electrical steel at Cwieme 2006 in Berlin. Arcelor had wisely taken a larger stand than last year to accommodate the many visitors expected, and in the course of the 3-day event, discussions were held with over 100 users of electrical steel. Most of these discussions took place at our stand, but Arcelor staff also visited manufacturers and users of transformers at their stands to introduce our new solution.

Our clients construct most of their transformers in accordance with the very strict specifications of the compa-nies managing the national electricity networks. Arcelor therefore decided to introduce technical staff of these

companies to the new potential applica-tions for NO steel. Here too, this aroused lively interest among the representatives of the electricity networks. They now intend to adjust their specifications so that transformer manufacturers can take maximum advantage of Arcelor’s solutions.

Arcelor certainly intends to pursue this project further. Our researchers are hard at work and we will soon be able to offer NO steels with even better properties. This is a product with a rosy future. The involvement of the commercial teams will be essential, and collaboration between research and sales staff will form the basis of the marketing campaign to ensure optimum realisation of this product’s potential, so that NO steel can take the place it deserves in the market.

Client magazine | December 2006

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Re-inventing the wheel

Let us get one thing straight before we start: most car wheels have always been made of steel, and still are. However, aluminium is a formidable competitor, and is likely to remain so. Many motorists are won over by the aesthetic possibilities of aluminium, but apart from attractive styling, aluminium has little more to offer. In terms of strength and cost price, steel beats aluminium every time.

‘High-strength steel has remarkably high tensile strength, which is obtained, for example, by the addition of phosphorus or niobium,’ explains Hervé Luccioni, Manager Steel Solutions. ‘In comparison with conventional steel grades, you need less high-strength steel to obtain the required strength. This means that a high-strength steel wheel is much lighter than one made of conventional steel and even lighter than an aluminium wheel.’

Although lighter wheels are an advantage for motorists, weight is rarely the reason why they opt for aluminium rather than steel. Recent research has shown that motorists simply choose a wheel that looks good. Often they do not even know what it is made of. So the obvious question is: could we make “­designer” wheels in high-strength steel, comparable with those in aluminium? ‘Well,’ answers Luccioni, ‘it’s true that high-strength steel is not an easy material to use for complex designs. But we have succeeded in developing new techniques which enable our clients to design superb style wheels in high-strength steel.’

Arcelor’s simulation software can offer clients valuable support in their search for the strongest possible wheel for trucks as well as other vehicles. The software simulates exactly how a high-strength

steel wheel will behave under increasing loads. This method guarantees optimal results and also saves time and money on prototypes and trials.

The steel wheel makes a comeback

We may be able to overcome technical problems, but what about commercial obstacles? Doesn’t aluminium have a much more upmarket image? ‘Market research has shown that only a small minority of buyers spontaneously opts for aluminium, because aluminium wheels are generally considered to be too expensive,’ reports Luccioni. ‘That is why the cheaper, lightweight metal style wheels are almost always offered as part of an optional equipment package. Everything argues in favour of using high-strength steel, and this certainly includes the commercial aspect.’

There was a time when all wheels were made of steel. Does high-strength steel herald the comeback of the steel wheel? ‘Yes, I think so,’ replies Hervé Luccioni with conviction. ‘Carmakers have realised that they can save up to 300 Euro per car by using high-strength steel instead of aluminium, without the slightest compro-mise on quality, performance or appear-ance. We have also noted that the market for aluminium wheels is stagnant or even declining. That is proof that carmakers have been convinced by our arguments.’ It really looks as though high-strength steel is about to blaze a new and exciting trail in the history of the wheel.

The invention of the wheel has left an indelible mark on history, and in partner-ship with high-strength steel, the wheel now has exciting new potential. In the past, if you wanted stylish, lightweight car wheels, that meant opting for alu-minium. But now there is a very attrac-tive alternative, and Arcelor is backing it wholeheartedly. Today, we are opening a new chapter in the six-thousand- year-old story of the wheel.

More style, less weight, more durable and cheaper thanks to high-strength steel

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In 1990, just a year after the Velvet Revolution put an end to the Czecho-slovakian Communist regime without bloodshed, František Menlík, Ludvík Petr, Miroslav Vobora and Bedřich Brabec took a decisive step. They first set up their own company, Korado, and then took over Koventa, the company they had been managing.

Going East

The entrepreneurs updated the produc-tion facilities and modernised their sales methods. In their search for external capital, they approached the European Bank for Reconstruction and Develop-ment (EBRD) in 1997, which has actively supported the development of the company ever since.

‘Over the last 15 years, Korado’s output has gone up from 180,000 radiators per year to almost 1.7 million today,’ says Vojtĕch Čamek, Financial Director and Director of Controlling. ‘At the same time, consolidated turnover had grown to about 90 million Euro in 2005. Since 2003, the enterprise has also been generating a healthy profit, which means that the difficult changeover from state company to private enterprise has been success-fully completed.’

Today, Korado serves mainly the Central and Eastern European markets. The Czech Republic is still their largest client, followed by Germany and the Ukraine, Romania, Greece and Russia. ‘But our future lies in Eastern Europe,’ declares Vojtĕch Čamek. ‘We have found a fast-growing market in Russia and the Ukraine, where housing is being renovated on a large scale.’

Extra lines

After the privatisation, the number of employees at Korado went down initially.

‘But then we launched a greenfield project in 1995,’ tells Miroslav Vobora. ‘We built a completely new production facility in Česká Třebová, which was officially opened in 1997. Today, three production lines are in constant use and two extra lines will be added in the course of the next two years.’ Korado works exclusively with cold rolled coils that are decoiled and cut up at the beginning of the production line. The various components are then folded or deep drawn and welded together straight away.

Every year, Miroslav Vobora purchases some 60,000 tonnes of cold rolled steel, partly from Arcelor. For the outside walls of a radiator, steel 1.2 millimetres thick is required, but a thickness of 0.5 millimetres is sufficient for the internal parts. The steel does not have to have a metallic coating to protect it from corrosion. ‘Modern central heating in-stallations use completely closed circuits,’ explains Vobora. ‘The water soon loses all its oxygen, which means that there is no danger of corrosion.’

Bringing together the best of both groups

Arcelor is one of Korado’s most important steel suppliers. ‘You always ensure that our orders are delivered on time and in full,’ comments Vobora appreciatively. ‘Moreover, you guarantee to provide excellent quality material, fair prices and ever better technical and logistical support.’

‘We do not expect this to change after the merger with Mittal Steel – in fact, we are counting on it,’ adds Vojtĕch Čamek. ‘As things are today, we work with both Arcelor and Mittal. If you can bring to-gether the best of both companies, then the takeover is bound to be a success.’

A cosy future for Korado

Korado is the Czech Republic’s fifth largest manufacturer of flat steel radiators. The company was set up just 16 years ago, but it was founded on an older industrial tradition. Koventa, the precursor of the present company, was founded in 1965, and also produced radiators. In the course of its relatively short life so far, Korado has successfully survived a radical privatisation process and achieved spectacular growth. Today, Korado is the largest purchaser of cold rolled steel in the Czech Republic, and consequently one of Arcelor’s regular customers.

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Fiat Grande Punto: the partnership behind the success

As the best-selling car in Europe, the Fiat Grande Punto has achieved impressive ratings on performance and safety, and these are behind its exceptional commercial success. This third generation Punto represents a real competitive leap, and Arcelor has been a major contributor to this success through our exemplary technical partnership with the Italian carmaker. Jean Lamontanara, the Arcelor resident engineer for the Fiat Group, worked on the project in close cooperation with Claudio Federici, who is responsible for the development of flat steel at Fiat’s Materials and Processes, and Gianfranco Del Nero, who is now responsible for Fiat’s body-in-white projects, and previously in charge of the superstructure of the Grande Punto. They tell us the inside story of their remarkable achievement.

‘We are focusing on two main priorities,’ explains Gianfranco Del Nero. ‘One is to improve passive safety, and the other to reduce the weight of the vehicle so as to reduce CO2 emissions. Our objective in all these projects is to achieve our targets while reducing lead time by introducing new steel solutions across the board and close collaboration with the steel supplier and the stamper in the development phase. Our partnership with Arcelor goes back a long time, but our collaboration has taken on a new dimension with this project. After the first successful trial run in 2002 for the development of the Panda, our cooperation moved into top gear for the Grande Punto and we introduced two revolutionary new departures. The first was to increase the percentage of high strength and very high-strength steels in the body-in-white to 67%, as against 10% in the first generation Punto in the 90s and 50% in the Panda three years ago.’ Claudio Federici adds: ‘The second radical new departure was that instead of using only the steel grades available in the Arcelor catalogue, we now have access to new pilot grades before they are available on the market, and we are helping Arcelor to develop these new materials in the framework of a co-designing project.’

67% high-strength steel in the body-in-white

‘In our company, materials science and project management are fully integrated,’

continues Claudio Federici. ‘When de-signing a body-in-white, we rely on the support of materials specialists who act as the interface with our steel supplier. We worked on the basis of Arcelor’s steel solutions that matched our development planning. This enabled us to design an intrinsically simple structure which simplified the assembly process and therefore reduced costs.’

Arcelor’s new Very High-Strength steels – Dual Phase, TRIP, ferritic-bainitic, IF-HS – offer outstanding performances. But their use entails modifying the manufacturing processes, in particular the deep drawing process. ‘In this “­revolutionary” project, everything was new,’ explains Gianfranco Del Nero. ‘It called for a lot of fine-tuning of the deep drawing process. Arcelor provided detailed “­clinical supervision” by following up the process together with the stamper and the toolmaker, not only during the development and industrialisation phase, but right up to mass production… In this way, we were able to ensure that all problems were resolved in the initial phases, so that full-scale production could then proceed smoothly.’ The central pillar is a typical example. ‘Before designing this component, we carried out a study of the springback effect,’ tells Jean Lamontanara. ‘Using our Outifo software, we proposed a new design which would allow us to optimise the deep drawing process. Then we advised the stamper on nesting,

Claudio Federici, Jean Lamontanara and Gianfranco Del Nero

Arcelor wins Fiat Supplier Award

At the Fiat Supplier convention in Turin (Italy) on 25 October 2006, Arcelor was proud to receive the Qualitas Supplier Award. Over 1000 Fiat suppliers listened to addresses by Sergio Marchione, CEO of Fiat Auto, Gianni Coda, Vice-President Purchasing for the Fiat Group, and others. After Toyota in March 2006, Fiat has now followed suit and selected a steel supplier for the first time as the winner of this prestigious award.

Jean-Martin Van der Hoeven (on the left), Vice-President Automotive Zone 3, received the award from Mario Sabena (on the right), who is responsible for purchasing metallic components for Fiat.

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Mild steel33%

HS + UHS67%

fine-tuning the process and tool manufacture.’

Technical reactivity and logistical performance

Quite apart from the implications for the deep drawing process, using new materi-als impacts on all the processes involved,’ adds Claudio Federici. ‘We need to estab-lish the optimum thickness of the mate-rial for welding, its compatibility with organic coatings, etc. Arcelor’s resident engineer is the central figure who must ensure that the technical team functions correctly and that each individual has the information he needs.’

‘It is also essential that the resident engi-neer reacts quickly,’ adds Gianfranco Del Nero, ‘so that we can complete our devel-opment work as quickly as possible. Lead times are getting shorter and shorter – just fifteen and a half months for the Grande Punto, for example, as against 22 months for previous types of cars. When we discovered that insufficient plasticity in the front cross member prevented us from achieving the required performance, Jean Lamontanara acted immediately by helping us to develop a new solution using TRIP 800 steel.’ Of course, logistical services must be able to ensure delivery of samples in time as well. ‘Our prototype department needs small quantities of blanks at short notice,’ says Claudio Federici. ‘To do that, we rely on

our Usiproto unit, which cuts the blanks we need from coils destined for other clients,’ explains Stéphane Tondo, Key Account Manager in charge of Fiat Auto. ‘In this way, we can guarantee to supply automotive-grade steel which meets the specifications in full and corresponds to the simulations, so that Fiat can produce “­meaningful” prototypes that are a true representation of the final mass- produced product. A carmaker cannot afford to make mistakes with prototypes that can cost up to 500,000 Euro… We have supplied virtually all of the blanks for the three prototype phases of the development of the Grande Punto on time. This means that our logistics depart-ment is certainly equal to the challenge!’

An open-hearted relationship

A partnership like this, based on total mutual confidence, is equally profitable to both parties.

‘It’s a truly open-hearted relationship’ says Claudio Federici proudly. ‘We are always on the lookout for new materials and we rely on the innovative solutions Arcelor proposes to help us take advan-tage of new developments and maintain our competitive edge. And at the same time, we help Arcelor to develop its new materials faster by offering them a “­life-size laboratory” to validate their solutions on an industrial scale.’

‘The Grande Punto will serve as a blueprint for a whole new generation of B sector class vehicles, the city cars’, concludes Gianfranco Del Nero. ‘We certainly intend to continue this colla-boration, to develop components using new and even stronger types of steel with an improved deep drawing perform-ance, by working on iron-manganese steel grades (X-IP) and steels for hot deep drawing’.

Grande Punto: impressive track record • 5 stars in the Euro NCAP crash test, with the best performance for vehicles in its class (54 km/h for side impacts, which is over 4 km/h more than the standard)• 3 stars for pedestrian protection• Lower weight for the same volume - 50 to 100 kg less than its competitors in segment B• Voted Best City Car in 2005 and 2006 by the magazine “60 millions de consommateurs” and the “Ligue contre la violence routière”• Volant d’Or award 2005• Best-selling car in Europe

DP 450-600-1000TRIP 800, FB 450-600

BH 220HSLA 270-340

Low Carbon

Client magazine | December 2006

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TPM: underpinning manufacturing excellence

At Arcelor Flat Carbon Steel Europe, Total Productive Maintenance (TPM) is an integral part of our continuing drive for improvement in competitiveness and customer service. Because it actively supports reduced unplanned downtime and maintains sustained product throughput levels, we are better positioned to ensure consistent quality and timely product delivery.

A world class, lean manufacturing strategy, TPM is designed to improve the effectiveness and efficiency of any production system or process and the people who work with it. Its implemen-tation affects organisation structure, work flow management systems, employee responsibilities, performance measurement, incentive systems, skill development and the use of information technology. ‘We see TPM as a coher-ent way to manage our manufacturing activities,’ says Robert Dapère, who is Director for Business Excellence at Arcelor Flat Carbon Steel Europe. ‘It’s crucial for the long-term success of many of our improvement initiatives.’

Most advanced companies in Europe, in terms of manufacturing results, are implementing TPM. The success rate for implementing such large-scale change is less than 30 percent for most organi-sations. But when successful, TPM can achieve better and more lasting results than isolated programmes because there is a fundamental change in people’s knowledge, skills and behaviour during the progress.

Investing in long-term improvement

Anyone who is involved in TPM knows it is a long-range “­living programme”. Some of our plants have been working with the programme for a decade already.

One of its key elements is autonomous maintenance, which means operators

are responsible for maintaining their own equipment. Although this initially places additional work demands on staff, experience shows that the process actually increases employee morale and job satisfaction. People understand better how their line works and everything is cleaner and more efficient. Overall, production and maintenance functions become more closely linked, and every-one works in a more organised way.

‘When you look at a plant that has implemented TPM over 10 years, you’ll see it runs smoothly,’ explains Robert Dapère. ‘This is because, when something goes wrong, it is solved by people on the ground, where the incident occurs.’

Arcelor’s maintenance people play a key role by providing back-up on solving abnormalities, implementing improve-ments and helping to achieve zero breakdowns in activity. ‘This is probably the most interesting part of TPM – we now know how to achieve zero breakdowns,’ says Robert Dapère. ‘In fact, some ma-chines are already achieving this target.’

Active employee participation

For TPM to work effectively, shop floor people need to be 100 percent involved in helping to identify abnormalities and proposing improvements. There are very specific targets, too. For example, the programme requires that each individual propose one improvement a month. ‘That sounds like a lot, yet our figures show

Robert Dapère, Director Business Excellence at Arcelor Flat Carbon Steel Europe

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that our production people are actually exceeding this,’ comments Robert Dapère. ‘We are working constantly to process and execute improvement suggestions. It is a reflection of the tremendous support for the programme in the plants.’

Efficient training

Throughout the implementation of TPM, our operators and production technicians are regularly trained on equipment/process-related knowledge and skills. Everyone follows standard operating procedures that minimise variations in the production process. ‘We defined a special two-week training course for TPM Instructors ten years ago,’ says Dapère. ‘Since then, we have trained more than 600 TPM Instructors, 12 TPM Masters and around 20 Senior Instructors. Supported by the Arcelor University, we are well positioned to deliver all the necessary training in-house.’

Our training ensures that line operators know how to detect errors and, for the most part, also know how to repair them. Increased autonomy and active participa-tion in the improvement and upgrading of equipment mean the whole team develops a greater feeling of ownership and pride.

Significant resources are invested in ensuring that people get the tools they need on an on-going basis. Robert Dapère and his team spend around 40 percent of their time in the plants,

giving advice, coaching, training on specific issues, and providing general support for TPM.

What a TPM award means for our clients

The recognition process is gaining more and more importance. In Europe espe-cially, it is used as a way of demonstrat-ing that equipment and product quality have been improved, that procedures are in place to maintain equipment to the highest levels, and that this process is permanent.

The TPM Institute recognition process is based on a strict set of requirements. A TPM award testifies that a plant is truly on the road to being world-class – that it is highly productive, that it produces only top quality products, that it maintains its equipment in top shape, and that it has a teamwork-based culture. Arcelor is among the few companies in the Western world to have been given TPM awards. At Arcelor FCSE, we have received a total of 33 to date.

We are currently working with the Japan Institute for Plant Maintenance (JIPM), who invented TPM and acts as consult-ants and auditors. Until recently, the JIPM was the only organisation to award prizes at world level. Now Arcelor – together with three other global companies (Fiat, BPB/St. Gobain and Campbell) – has created the “­World Class Manufacturing Award” which is given in 2006 for the first time.

Client magazine | December 2006

Achievements rewarded

Below is a list of plants that received TPM awards for 2005 from the JIPM in Yokohama, Japan, on 16 February this year. To date, 16 plants have applied for the 2006 awards.

Award for TPM Excellence 1st Category

• Arcelor Florange (steel mill) • Arcelor Dunkerque (blast furnaces) • Arcelor Dunkerque (general maintenance

department)• Arcelor Liège (cold rolling Marchin plant)• Arcelor Florange (cold rolling & coating

department) • Arcelor Dudelange• Arcelor Piombino • Arcelor Gent (Sidgal) • Arcelor Packaging Florange • Arcelor Fos-sur-Mer (steel mill) • Arcelor Fos-sur-Mer (general maintenance

department)

Award for Excellence in Consistent TPM Commitment 1st Category

• Arcelor Dunkerque (transport)• Arcelor Dunkerque (steel mill)• Arcelor Liège (Eurogal)

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Behind the scenes at I-R&D in Ghent and Liège

On 24 and 25 October, Arcelor invited some of its Industry clients to take a look behind the scenes at our research centres in Ghent and Liège (both in Belgium). This I-R&D event showcased the close coopera-tion between our clients, the Client Value Team and our market-oriented research centres. During the academic session, it emerged very clearly that Innovation and R&D would continue to be a priority at Arcelor Mittal. All those present were convinced that I-R&D is essential if we are to continue creating value in the long term.

Arcelor Research Industry Gent: focus on material characterisation, problem solving, fast prototyping and co-engineering

The guided tour of the research centre in Ghent and the new visitors’ centre intro-duced our 170 guests to the most promising developments in the fields of advanced steel grades, metallic and thin organic coatings, new surface functionalities and product safety. And of course they also looked at solutions for optimised assembly methods and co-development, which can offer clients a shorter time-to-market and lower Total Cost of Ownership.

Sven Vandeputte, Managing Director of Arcelor Research Industry Gent, welcomes the international guests.

‘The acoustic insulation properties of Sollight®AC steel were new to me, and it was integrated perfectly into the experimental house.’ Danny Comyn, quality & engineering, Sadef (Belgium)

‘Now that we have been introduced to the broad spectrum of research undertaken here, we have a better understanding of how our steel supplier can do much more for us.’ Grazyna Paliwoda-Porebska, materials engineering, Whirlpool (Poland)

‘We are really impressed with our steel supplier’s technical know-how, especially with respect to co-designing and co-engineering. The electrical steel grades and the anti-corrosion properties of the zinc-magnesium coatings were two of the absolute highlights of this visit.’ Christian Glaab, product developer, Siemens VDO Automotive (Germany)

‘It is reassuring for us to see that our steel supplier is at the spearhead of technology and materials science research.’ Gabriel Araújo, enamelling line chief, BLB Roca Group (Portugal)

‘The steel industry has a conservative image, but the innovative spirit we saw here puts steel in a new perspective. A surprise, and a very positive one!’ Roberta Bernasconi, global technology manager, Whirlpool (Italy)

What did our clients think of it all?

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In his speech during the dinner at the Tram museum in Brussels, Jean-Louis Pierquin, Vice-President Global R&D at Arcelor Mittal, spoke about the future: steel solutions for a better world.

Michel Beguin, Managing Director of Arcelor Research Industry Liège, invites the clients for a guided tour of the research centre and a visit to the pilot lines in Ivoz-Ramet.

‘We are constantly looking out for new products to use in furniture, staircases and domestic appliances. The experimental house in particular was a great source of inspiration on the combination of all kinds of materials with the latest steel grades.’ Ignacio Aguirre, design manager, Fagor (Spain)

‘During the guided tours in Ghent and Liège I was introduced to a number of really amazing innovations. First, the new anti-bacterial coating; we are interested above all in the new coating with an additive that gives organic coated steel a spectacularly longer lifespan. And secondly, fast prototyping opens up a whole range of new possibilities. We now intend to examine the feasibility of these two concrete examples.’ Bruno Curial, technical director, Panelco Plasteurop (France)

‘I have 40 years experience with steel, but I was amazed to see the cutting edge technology here. The innovations in the field of functional surfaces, such as surfaces with anti-bacterial properties, are highly original, pioneering work. Perhaps it is not for tomorrow, but this material is certainly the material of the future for domestic appliances.’ Dino Bellotto, quality director, CLN Magnetto Group (Italy)

Arcelor Research Industry Liège: focus on new coatings and steel solutions for the construction industry

The guided tour in Liège took place in two sites: the research centre in Sart-Tilman and the pilot lines at Ivoz-Ramet. In Sart-Tilman, clients discovered the very latest coatings for steel and solutions for steel construction, and visited the experimental house. At the Ivoz-Ramet site, clients visited the unique pilot lines on which pioneering coating technology can be simulated on an indus-trial scale.

Client magazine | December 2006

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On 27 October 2006, Arcelor Mittal and Noble International Ltd. announced that they intended to join forces by setting up a joint venture merging the activities of Arcelor Tailored Blank (ATB) and Noble. This will also make Arcelor Mittal the largest shareholder in Noble International, the leading North American manufacturer of laser welded blanks. The transaction will be completed as soon as all the permits have been issued and the shareholders have voted in favour of the plans, and when the anti-trust commis-sion has given the project the green light. Everything is expected to be signed and sealed by March 2007.

ATB has nine production sites in Europe, one in the US and a joint venture in China. The company employs 670 people and is the European market leader. Noble is the most important player on the American market for the production of flat laser welded blanks for the automotive industry. On 12 October 2006, Noble took over Pullman Industries Inc., a leading manufacturer of tubular and shaped structures for the automotive sector. Following the merger with Pullman, Noble now has a total workforce of about 2000 employed in twelve mills spread over the US, Canada, Mexico and Australia.

According to Michel Wurth, a member of the Group Management Board of Arcelor Mittal, the joint venture reinforces the position

of ATB as an automotive industry supplier. ‘This will be a significant advantage for our clients, who have emphasized the importance of access to a really world-wide service.’

Dirk Vandenberghe, General Manager of Arcelor Tailored Blank, agrees. ‘This joint venture will enable us to launch a whole range of innovative solutions

to reduce the weight and the cost price of a vehicle and increase its crash resistance at the same time. We will certainly be exchanging a great deal of knowledge and experience, and we will also share licences, so that we can manufacture each other’s products for our own clients. We at ATB are delighted about this joint venture and I have no doubt that our clients will soon see the positive results of our cooperation.’

Hot rolled steel for the construction industry wins CE label

It has been in the pipeline for a long time and now it is a fact: from 1 January 2008 onwards, all hot rolled steel for construction purposes (EN 20025) must bear the CE label. The European direc-tive of 21 December 1988 specifies that building materials are only entitled to a CE label if the manufacturer has a control system for his production process that allows him to guarantee that his prod-ucts meet the technical specifications.

Since 1 July 2006, all Arcelor mills that produce EN 20025 construction steel grades are certified. All steel coils produced at these mills therefore bear the CE label, and from now on, Arcelor will supply the documents to prove it, together with the steel. This is important for clients who produce components for the construction industry, since finished products in this sector are only entitled to a CE label if the materials from which they are made also have a CE label.

For this label, Europe naturally follows the internationally valid EN standards. This is another good reason to use the EN standards when you order your steel. Moreover, the old national standards and names will be phased out of our order system in the longer term.

Tailor Welded Blanks: Arcelor Mittal and Noble International join forces