Jun 15 2007
Hydro has decided to keep its Structures business, reversing an earlier plan to sell the unit, which produces automotive structural components. Hydro believes that a stronger management, a more future-oriented structure and a strong focus on financial results will help its automotive activities achieve firm profitability.
The Structures business unit, mainly involved in the production of extruded aluminium bumper beams in Europe and the United States, is part of Hydro’s Aluminium Products business area.
”The sales process showed us that our valuation of the business potential in these operations is greater than that estimated by possible buyers. This is an important reason for keeping and developing the business,” said Svein Richard Brandtzæg, head of Aluminium Products.
As part of a strategic restructuring of its aluminium operations, Hydro earlier this year sold its Castings business, which makes cast aluminium engine blocks and cylinder heads, as well as its part-owned production of magnesium-made automotive components, with a good profit. The Structures unit is a smaller organization with a different organizational structure and with different challenges than Castings.
The production of bumper beams has many characteristics in common with the company’s other downstream aluminium operations, and is therefore a better fit in the Hydro group than the casting activities.
“The automotive industry is a major consumer of aluminium, and the growth in demand for light materials in such applications is high,” Brandtzæg said, adding that there is no reason to believe that the need for Hydro’s advanced bumper beams – the main product for Structures – will decline in the years to come.
During the past months, the company has captured a number of new contracts for the production and delivery of bumper beams from its plants in Europe and the United States.
Hydro will aim to create a structure for its automotive activities that helps ensure more effective operations and better cost control.
Structures has 1,350 employees working in operations in the United States, France, Germany, Denmark, Sweden and Norway. The plants deliver structural components for most of the world’s largest producers of passenger vehicles, including BMW, Audi, General Motors, Renault, Nissan, Volvo, Jaguar, Toyota and Mercedes.
“We’re confident that we will achieve the first positive results from the turnaround already in 2008,” Brandtzæg said.