Clever inventory positioning on semi-finished products (e.g. They adopt strategies to reduce lead time, improve delivery performance and managing inventories for their customers. Therefore, many metals companies move towards offering differentiated services.

This is despite the fact that many metals products are still engineered to order, something that puts significant pressure on the operational costs. The rapid expansion of manufacturing in emerging countries has increased the commoditization of standard product offerings and has led to price erosion. Manufacturing elevators or ship building is a way to diversify the product portfolio. To cope with such industry market conditions, metals companies try to expand downstream in a vertical way adding products with higher value and more stable demand. Note that the strength and duration of downturns is changing significantly in recent years with the trend being for shorter but deeper disruption cycles. Cycles of boom or bust are normal and can be tremendously severe. Facing these challenges the industry keeps looking for attractive consolidation deals in order to increase price leverage and economies of scale.Įxtreme market cyclicality is a long time characteristic of the industry. The combined R&D resources can also be better leveraged. Likewise, a better utilization of production assets is possible. This fragmentation leads to a high operational cost for serving the global market. This is evident across several layers of the business, including raw material suppliers, processing facilities and key customers like automotive and construction entities. Despite the consolidation efforts of the last 20 years, the metals industry remains highly fragmented.

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