Dr. Heinz Jörg Fuhrmann - Schau Verlag Hamburg

STEEL TECHNOLOGY INNOVATION LIFE
stil
I N T E R N A T I O N A L
THE SALZGITTER AG MAGAZINE
www.salzgitter-ag.de
Steel and
Technology
Salzgitter AG: a company
based in Germany

We
are
Salzgitter
stil
stil

in this issue in this issue
Welcome!
Salzgitter AG – Steel and
Technology – has been active as
a stock market listed company
for 10 years. In the course of this
time, the overriding corporate
goal has remained unchanged:
maintaining entrepreneurial
independence through profitability
and growth.
Bernd Gersdorff, The Group has undergone
Head of Corporate some remarkable developments
Communications
in the process. Following the
major growth step in the year
2000 with the acquisition of Mannesmannröhren-
Werke, as well as portfolio additions in the divisional
areas of steel, trading and tubes, Salzgitter
has advanced to a new dimension in the meantime.
Since 2001, the share has been listed on the
MDAX and has impressed with its far above-average
performance, also in competitive comparisons.
And we continue to write new chapters in the
“Made in Salzgitter” success story: In 2007, we
acquired Klöckner-Werke AG, a manufacturer of
special machinery, filling and packaging systems.
These activities now form the core of the new
Technology Division.
In order to increase our competitive strength
and secure our key locations, the Group will be
committing an investment volume of 1.7 billion
euros over the next years to equipment, plants
and processes. The topics featured this time in
stil revolve around the present and future of the
Salzgitter Group, as well as the people who work
here. These topics are not only presented as facts,
figures and interviews, but also through entertaining
reports from all corners of the globe.
Two double-page spreads at the front and back
of the magazine are dedicated to how our employees
see themselves and their colleagues. These,
in the best sense of the word, nonprofessional
snapshots emphasize our people’s strong connection
and identification with our company.
Incidentally, the title stil – the letters stand for
“Steel”, “Technology”, “Innovation” and “Life” – is a
German play on words. stil is pronounced like the
English word “steel”, but its meaning also implies
“style”, in the sense of good taste, aesthetics and
cosmopolitan flair.
We hope you enjoy reading our magazine!
Steel
Coiled for customers:
Coils at the Salzgitter
Logistics Center
Petrol Heads
Tracking down vintage
cars in the uSA
Trading
A visit to Houston
Dr. Wolfgang Leese, Chairman of the Executive Board of Salzgitter AG
PEOPLE 2
We are Salzgitter
SALZGIT TER 6
Chairman of the Executive Board
Dr. Wolfgang Leese: “Our objective is
continous improvement”
NEWS REPORT 10
Petrol heads: stil accompanied two
Germans who source coveted automobiles
of yesteryear and ship them to Europe
HSD steels for the automobile manufacturing
of the future
TuBES 18
Strong demand for Mannesmann tubes
across the globe: current projects in Europe
and the Near East
SALZGIT TER 22
Executive Board member Finance
Dr. Heinz Jörg Fuhrmann: “We couldn't
wait for Prince Charming”
TECHNOLOGy 2
Growth and diversification in technology:
Salzgitter AG has now increased its stake
to 86 percent of capital stock
STEEL 28
Salzgitter Steel Strategy 2012: On the
offensive with high-quality products.
Wide-ranging investment program in steel
SALZGIT TER 30
New large-scale equipment for research.
All-new forming press, test rolling mill,
hot dip galvanizing simulator and an
annealing simulator
GO: The Salzgitter AG Generation
Inspiring the next generation with a love of
technology: Salzgitter AG addresses school
pupils and students
TRADING 3
“Demand in India is set to increase”
Interview with Executive Board member
Heinz Groschke
The market in Asia: From importer to
exporter. How the steel market in China
has changed in the course of a few years
A visit to Houston: Salzgitter Mannesmann
International uSA. The Texan metropolis
has become the center from which the
Group serves the American market
PEOPLE 2
We are Salzgitter
Published by: Salzgitter AG, Eisenhüttenstr. 99, 38239 Salzgitter, telephone: 00 9 (0) 3 1 / 21- 01, www.salzgitter-ag.de.
Overall responsibility: Bernd Gersdorff (Corporate Communications). Coordination: Olaf Reinecke. Magazine orders:
Michaela Kruffke, kruffke.m@salzgitter-ag.de. Realization: Schau verlag GmbH, Grüner Deich 1, 20097 Hamburg,
telephone: 00 9 (0) 0 / 32 87 27 - 0, info.stil@schauverlag.de. Editor-in-chief: Carsten Wurr. Layout: Katharina Osterwald.
Printed by: Ruth Printmedien GmbH, 3811 Braunschweig. Translations: Baker & Harrison, Munich
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PHOTOS: uDO BOJAHR / SIG-BEvERAGES / CARSTEN WuRR

salzgitter salzgitter
The Salzgitter Group Executive Board
The six members of the Salzgitter Group Executive Board:
(front, from left) Peter-Jürgen Schneider, Personnel & Services; Dr. Wolfgang Leese, Chairman of the Executive Board;
Dr. Heinz Jörg Fuhrmann, Finance & Technology; (back, from left) Wolfgang Eging, Tubes;
Heinz Groschke, Trading; Hans Fischer, Steel
Annual interview with Dr. Wolfgang Leese, Chairman of the Executive Board of Salzgitter AG
“Our objective is continuous improvement”
The Salzgitter Group is in top form, says “Manager Magazin”
The magazine compared 500 of
Europe’s top companies – and
Salzgitter came out ahead of the
pack: Number one in the raw
materials segment and second for investor
friendliness and portfolio recommendation.
Based on a Europe-wide analysis of
500 quoted companies in all industries,
“Manager Magazin” awarded top marks to
the Salzgitter Group.
The magazine survey (issue 11/2007)
looks at the information in the reports
filed by these 500 companies over the past
three years. Carried out as a regular event,
the object of the analysis is to identify
those companies that generate higher returns
than those generally expected by
stock and bond market investors.
stil international talked to dr. wolfgang
leese who chairs the Executive Board of
Salzgitter AG about this tribute, as well as
addressing the strategies needed to remain
successful and major Group acquisitions.
stil “Manager Magazin” has accorded
Salzgitter AG an extremely positive rating
in its Europe-wide survey. What value do
you place on this acknowledgement?
dr. wolfgang leese The assessment criteria
are well known. I am delighted that the
Group’s performance has proven so strong
in comparison with Europe’s top 500
companies.
stil What are the causes underlying the
Group’s good performance?
leese The causes lie in a bundle of
measures that have been initiated in
recent years. The first of these were
the successful optimization of processes,
the change in leadership cul-
ture with the introduction of target-based
management and the active control of our
Group portfolio. And we are continuing
the process by positioning ourselves as a
niche supplier in the various product
market segments we serve. Contrary to
the traditionally advocated approach of
keeping a tight focus, we rely on a broadly
distributed product portfolio.
stil Even long-standing steel industry experts
have never known a steel boom continue
for so long. What reasons do you see
for this?
leese The main causes are the dynamic
rates of growth in the economies of the
BRIC states (Brazil, India and China)
which have created an enormous demand
for steel for various applications.
stil How long do you expect this development
to last?
leese As has been said many times, I can
see this trend continuing for some time
yet. On the other hand, one should not
lose sight of the prospect of over-capacity.
stil Is the success of Salzgitter due only to
the economic situation?
leese The fact that our position is due to
more than the economy alone is clearly
evident from a comparison between our ➢
stil stil 7

A keen eye on the future: Dr. Wolfgang Leese working out at the Group’s own gym
performance and that of our competitors
whose figures are significantly less impressive.
The reasons for this lies in the measures
I have already referred to as well as the
profitability improvement programs that
have contributed several hundreds of millions
of euros to our bottom line. Management
and a combination of managers and
employees with good ideas, suggestions for
improvement and personal commitment
have also played a substantial part.
stil Salzgitter has taken some important
steps on the path to growth with the acquisition
of precision tubes manufacturer Vallourec
Précision Étirage and a stake of
around 86 percent in plant and equipment
manufacturer Klöckner-Werke. What were
the intentions behind this?
leese Besides the significant world market
Steel
External sales: � 3, 7 billion
positions in different product segments
that these acquisitions have brought us,
we are creating added value for our shareholders.
stil Klöckner-Werke operates in an industry
in which Salzgitter AG has not previously
been involved. What were the objectives for
this commitment?
leese Klöckner-Werke AG forms the nucleus
of our new Technology Division
which offers the prospect of continuous
growth that will in turn have a stabilizing
effect on the Group.
stil Will there be any further growth of this
kind, maybe at the new Technology Division?
leese Certain rounding-off acquisitions
and expansions are currently under consideration
at this division.
Salzgitter Group
External sales cons.: � 10,1 billion Employees: 24 000
Tubes
External sales: � 2, 04 billion
Trading
External sales: � 5,021 billion
PHOTO: PETER LENKE
stil You took up your present post in the
year 2000 with the motto of “independence
through profitability and growth”. How secure
is the Group’s business independence?
leese In the light of our success in recent
years, the firm position of the State government
and the comments made by
Minister President Christian Wulff, our
other stable shareholders and the buyback
of ten percent of our shares, I am less
concerned about our independence.
stil The process of concentration in the steel
industry continues unabated. Salzgitter regards
itself as a niche player. What opportunities
and risks does this position hold?
leese The continuing concentration process
being played out among the dominant
players in the steel industry offers some
outstanding opportunities for us as a
niche player. It is our high-quality products,
our flexibility, our close ties to our
customers and our reliability that set us
apart.
stil Where do your see Salzgitter AG in
three years’ time?
leese We are quite clear on that: We intend
to continuously increase sales to between
13 and 15 billion euros. And over the cycle
we are targeting an ROCE (return on capital
employed) of on average 15 percent.
In addition to that, we also want to enhance
our already positive image.
stil Since you have been Chairman of the
Executive Board, one of your main concerns
has been to increase the willingness at all
levels of hierarchy to embrace change. Are
we fully up to speed by now?
leese We’re moving, but future competition
will make further demands on us
with the result that we must become progressively
faster and fitter.
Services
External sales: � 1,1 billion
Technology
External sales: � 0,5 billion
The History of the Salzgitter Group
Steel and the climate
Steel is part of the solution, not the problem. New materials for the automotive sector
Words like natural resources
and energy efficiency are
on everyone’s lips
nowadays. Hardly a day
passes without climate change featuring
in news broadcasts, talk shows and documentaries.
Only the emphasis varies, from
cutting emission budgets in the context of
CO 2 certificate trading, to missed trends
in the automotive industry or attempts to
ban light bulbs.
The steel industry finds itself squarely involved
in this irreversible process of discussion
and development. On the one hand,
there is the question of the CO 2 released by
our production processes. On the other hand,
however, it is also essential to consider the
contribution that the use of our steels can
make towards increasing our customers’
energy efficiency.
Input materials such as ore and scrap, reduction
agents and energy account for up to
three quarters of the cash cost of steel production
in Germany. For this reason alone,
there is of necessity a sustained economic
pressure at all levels of our undertaking to
conserve resources wherever possible in the
production of steel. For example, iron effi-
ciency has been increased to 0 percent to
date. Similarly, the reduction of around 40
percent since 1 0 in our specific primary energy
consumption per ton of crude steel demonstrates
the successful efforts we have made.
But does this mean that, given the successes
already achieved, the steel industry feels no
further obligation to increase the resource and
energy efficiency of its own production processes?
Indeed not, for at Salzgitter the issue of
efficiency is also an indicator of innovation.
Our continuing achievements in the development
of new materials for the automotive sector
are a prime example. With the production
here in Salzgitter of high- and ultra-highstrength
steels for automotive applications we
are already making a significant contribution
towards protecting the climate. It has been
shown that the development and use of these
steels compensates for a good 15 percent of
the process-dependent non-reducible emissions
during manufacture. This is a great opportunity
for steel products to prove themselves
in the climate debate. Developments in
the field of final-size casting offer the prospect
of new steel grades for the automobile industry
that will allow even greater scope for lightweight
autobody designs. It is becoming very
1923
Foundation
Klöckner Werke AG
clear that in the debate on climate change,
steel as a material is less a part of the problem
than a future-oriented element in the endeavors
by the economy as a whole to increase resource
and energy efficiency.
In future the companies that lead the field
will be those that make most effective use of
their employees’ skills and knowledge, not
least in matters of resource-efficiency. An
analysis of our profitability improvement
program, as well as our employee suggestion
scheme shows that almost a third of the
achievements made concern the consumption
of energy and resources. Climate change
can only be overcome through the knowledge-based
networking of processes and
products. Hysteria and scaremongering will
most certainly not resolve the problem. However,
one-dimensional approaches such as
curtailing highly efficient production as a result
of emissions trading are equally unlikely
to bring us any closer to the desired result.
Making the most of the available opportunities
on a global scale is dependent on deploying
technically intelligent solutions as a helping
hand to enable the developing economies
to use resources and energy efficiently in their
pursuit of growth.
stil stil
1858
Foundation
Ilseder Hütte
1970
Stahlwerke
Peine-Salzgitter AG
1989
Preussag Stahl AG
1998
Salzgitter AG
Steel and
Technology
1937
Foundation
“Reichswerke”
1945
Salzgitter
Hüttenwerk AG
1992/95
Privatization
and Integration
1597
Foundation
Ilsenburger Kupferhammer
1945
Nationalization
since 1946
Production of heavy plate
2000
Acquisition MRW
2007
Acquisition KWAG
1890
Foundation
Mannesmannröhren-
Werke AG (MRW)
1970
Cooperation
Thyssen (steel) /
Mannesmann (tubes)
2000
Takeover by Vodafone
1979
Acquisition
Holstein und Kappert
1994
Divestiture of the steel
production

PhoTo: Udo bojAhr
news report
Petrol heads
The more sensible and economical new cars become, the more some folk yearn for
the classic automobiles of yesteryear. stil accompanied two Germans who source
these coveted classics in the USA and ship them over the pond
news report
A Mustang among mustangs: Jens Wolfram
and Stefan Meyer found this coupé on a farm
near San Diego. A little long in the tooth, but
sound in wind and limb. A good catch
10 stil stil 11

PhoToS: Udo bojAhr
February in Los Angeles. A rainy Tuesday, to be precise.
oldie-hunters jens Wolfram and Stefan Meyer are on
their way to a specialist dealer when they find themselves
next to a cool blonde in a beige Mustang convertible.
The two guys from hamburg exchange a quick
glance and nod: “We gotta have it.”
Now it’s time to move fast. Signal, change lanes, catch the green
light – and don’t let the roaring ’67 beauty out of your sight. Finally
the lady stops at a gas station. Putting on a casual air jens
Wolfram strolls over to the driver. he sets the scene, “Wow, you
sure have one powerful automobile!”, then gets right to the point:
“I’ll buy it off you! Is 17,000 dollars okay?”
Try making small talk like that at a German gas station – and
hold on to your hat. but people in the USA are more laid back.
The cool blonde takes only a moment to recover. She hadn’t intended
to sell the car. but all that money? right now? jens Wolfram
explains, “Americans are more flexible about these things.”
The lady fetches the title – the registration document – and 60
minutes later the deal is done. At a Texaco station in orange
County. For cash.
A lot of the business that jens Wolfram and Stefan Meyer do
in the USA follows a similar pattern. just over a year ago the two
man customer. They’ve been traveling for a good three weeks,
with better than 3,000 miles under their belts. of the 150 or so
cars they’ve viewed, they have bought 18. They are by no means
dissatisfied with the score to date. They have nowhere near filled
all their orders, but they have just one week left.
Wolfram and Meyer are perfectionists. The two bachelors are
choosy about what they buy, even though the condition of older
vehicles in California is generally far better than back home. “one
reason is the climate,” says Stefan Meyer. “Away from the coast it is
so dry that the worst the body panels suffer from is a little surface
rust. The engines too are mostly in good condition for their age
and mileage, because Americans hardly ever drive at full throttle.”
Two suits that can judge the condition of a car? jens Wolfram
laughs, “We’ve always had a weakness for cars. Add to that the experience
gained over the past year and a few helpful measuring
instruments. And if we are still in doubt, there is always our mechanic
in hamburg who we can contact online at any time.” but
that’s not all: Since 1963 to 1977 Porsches are among the classics
most in demand and the two guys have been on a special crash
course in Zuffenhausen.
40 year-olds from hamburg set up Westsidecars. They buy classic
cars in the USA, whip them into shape, sort out the paperwork
and ship them to Germany – a package deal to whet the appetite.
You’d prefer to hunt up your own automobile? No problem: For €
1,000 euros a week you can tag along.
both Wolfram and Meyer made their first careers in marketing.
Top jobs beckoned, offering plenty of dough but also
enough stress to invite an early grave, as well as “job practices
that just weren’t fun any more,” as jens Wolfram puts it. When his
boss pulled the rug from under a trip to the USA on which he had
planned to buy the classic car he yearned for, he chucked it in and
went anyway. on that occasion back in january 2006 he didn’t
find the Mustang he wanted for himself, but he did find cars for
eight friends who had heard of his trip and gave him the money
to go shopping. “I realized then just how big a demand there is in
Germany for good vintage cars,” jens explains. Meanwhile, Westsidecars’
client list includes even the directors of some of Germany’s
major companies.
back to California. The evening after their gas station deal finds
the two guys sitting exhausted in a motel room in huntington
beach. Stefan Meyer has taken the Mustang to a shop they use
regularly where the car will be brought up to scratch for the Ger-
Exotic sets of wheels at a car
dealer’s lot in San Diego
So what else do customers order? Stefan Meyer: “1965 to 1968
Mustangs are popular, as are Corvettes from 1962 to 1973. A top
seller recently has been the Mercedes 560 SL built between 1986
and 1989, which was never available in this version in Germany.
And lately there has been a demand for the bMW Coupé 3.0 up
to 1975.” but what about the cost? jens Wolfram: “You can buy a
Mustang convertible from us in tiptop condition with all paperwork
for upwards of 30,000 euros, delivered to your door.” Not
exactly chickenfeed, but a lot cheaper than from a normal dealer.
The oldie-hunters find their prospective purchases on the Internet
and in magazines. They also receive a lot of tips from a network
of sources they have meanwhile built up. “We often spot interesting
vehicles in people’s front yards as we’re driving by,” says
jens Wolfram. “Many Americans tend to collect automobiles.
When they buy a new car, they don’t sell the old one, it just gets
parked up somewhere.”
Next day, next appointment. From a distance the Mustang
looks well preserved. but a look underneath soon shatters the illusion.
Where did the floor go? What used to be metal is now a
huge hole. The next prospect has a similar problem. A classic
“THE CLIMATE, THIS LIGHT – AND ON TOP OF THAT THE FANTASTIC LANDSCAPE:
CALIFORNIA IS A DREAM, NOT JUST BECAUSE OF THE CARS”
The paintwork is picture perfect – typical
of vintage cars in California
Hot: A hot rod, with
saleswoman
A complete kitchen
on wheels
12 stil stil 13

In mint condition:
A Chevrolet Special Deluxe
from the 1940’s – spotted
on a street in San Diego
Mb 560 SL, good looking and low mileage. “rotten,” Stefan
grunts from under the car, “Another one rusted right through.”
It’s dark already by the time they get to the highlight of the day.
Their flashlight beam picks out first a stack of lumber, then a
blue plastic sheet. Isn’t that a cup rim? Could be a Porsche under
there. “do you mind?” they ask the seller as they shift the lumber,
pull back the sheet and – wow! A 1973 Porsche 911 T. A bit tatty
round the edges, with a lot of parts strewn inside. but no rust at
all on the body, and the engine sounds good. Now it’s down to the
price, they haggle – and shake hands.
11.00 p.m. in another motel. Thinking about the Porsche under
the woodpile, Stefan Meyer suddenly shivers. “do you realize,
14 stil
the wheel housings were full of black spiders? It’s lucky I had
gloves on, but if one of those things had bitten me…!“
The final day. jens Wolfram and Stefan Meyer stop off in Long
beach before catching the flight home. That’s where the vehicles
they have bought are loaded into containers and shipped back
to Germany. jens Wolfram lovingly runs his hand over a fender,
checks the new soft top on the red Mustang in the far corner and
casts one last glance over the paperwork.
jens and Stefan love their automobiles – which is why they
spread cat litter in every vehicle. It’s guaranteed to soak up the
moisture during the six-week sea voyage. “You wouldn’t want
mold on the roof lining, now would you?”
Dream Porsche at a
dealer in L.A.
An Austin Healey 3000, vintage 1962
PhoToS: Udo bojAhr
Steel makes cars lighter and more economical
From material design to components
There are many facets to the relationship
between steel and
the car. From the earliest days
when automobiles were little
more than motorized carriages, steel has
been the key to stability.
This symbiosis between steel as the
material and the car as the end product
has survived one technological development
after another, despite the fact that
our expectations of the car have risen
steadily over the decades. Progress has
been consistently driven by demands
for comfort, safety, economy of manufacture,
availability of resources and of
course ecological considerations.
In the meantime, a contest has developed
between materials, in which the
variety and versatility of steel play to its
advantage.
There are four aspects in particular
which stand out. Steel offers:
■
■
■
■
an attractive price-performance ratio
greater rigidity than comparable materials
excellent formability, which in combination
with rigidity means that steel
can deliver substantial reductions in
weight
steel can be cost efficiently recycled
on the other hand, it is no longer
enough just to make and supply steel:
When developing new qualities of steel,
the manufacture and, to an increasing
extent, the processing to be carried out
by the customer must also be considered
at an early stage, in order to fulfill
market requirements for high-quality
steel products and successfully conform
with the product lifecycle envisaged by
the customer. Following a long-established
practice in the automobile industry,
steel makers are increasingly turning
to “steel prototypes” and “virtual
materials” in order to minimize the
cost-intensive field trials inherent in the
material design process. A fundamental
understanding of both the production
and operation of steel components
is essential in order to
use all of the properties of steel
to the fullest benefit of processing
users as well as end consumers.
Component trials conducted
jointly with customers at an early
stage deliver maximum information
and know-how gains needed
to exploit the potentials of new and
modified grades of steel.
Customer support extends from ini-
tial consultations on the development of
new components with particular characteristics,
via the creation and testing
of prototypes, and all the way through
to the approval of the material and/or
component for mass production.
Today, the steel industry plays a decisive
role in the design and
construction of lighterweight
motor vehicles.
In this field, the ScaLight project –
a cooperative undertaking by Salzgitter
AG and Wilhelm Karmann Gmbh –
is both an expression of this advanced
thinking and a platform on which to
present new ideas, material qualities
and production technologies and realize
these in steel.
ScaLight – the Scalable Autobody
Lightweight Concept – can be used by
automobile manufacturers to build a
variety of body styles such as soft-tops,
roadsters and sport utility convertibles.
This method combines a series of
benefits and options: The vehicles are
lighter and therefore consume less fuel,
which is an important consideration,
especially against the backdrop of current
discussions on climate change.
What’s more, they can also be produced
more cost efficiently.
The importance of this economic aspect
was underscored by dr. André
Kröff, project manager at Salzgitter AG:
“We have developed a complete production
plan, including a business case
and cost model, which extends from
Scalable autobody architecture
– exemplified
by an open-top SUV
Built-up prototype demonstrating scalable
architecture
the choice of materials for individual
components through to the production
plant itself.”
This proves that lightweight construction
need not be expensive, and that tomorrow’s
requirements can already be
met with high-strength steels today.
In partnership with Corus, Salzgitter
has also been developing what are
termed hSd steels. hSd stands for
high Strength and ductility. “These
new steels exhibit very high strength,
while also offering excellent formability,”
explained Prof. dr. Matthias Niemeyer,
Managing director of Salzgitter
Mannesmann Forschung. “In addition
they are also five percent less dense
than steels in use today, which helps to
save weight and opens up potentials for
lightweight designs.”
stil 15

Precision steel tubes in the automobile industry
Precision tubes are absolutely essential in modern automobile manufacturing. Salzgitter
has strengthened its position in this segment in a targeted manner
gas springs
ultra high-pressure
diesel injection lines
Common rail system
cam shafts
balancer shafts,
turned parts
airbags
Passenger / side airbags
power steering cylinders
ball cages
drive shafts
Monobloc and 3-piece
cardan shafts
stabilizer bars
shock absorber
cylinders
hydroformed
components
Hydroforming
16 stil stil 17

tubes
Largest individual order in the history of EUROPIPE
Baltic Sea Pipeline contract signed
The order calls for 860,000 tons of large-diameter pipes to be produced in Mülheim.
Capacity utilization is assured
Nord Stream AG and EURO-
PIPE GmbH have signed a
contract for the supply for
steel pipes to construct the
Baltic Sea Pipeline. EUROPIPE will provide
around 75 percent of the pipes for
the first leg of the 1,200 kilometer pipeline
from Vyborg in Russia to Lubmin
near Greifswald in Germany. The order
for the other 25 percent went to Russian
pipe producer OMK.
EUROPIPE’s share of the deal
amounts to 860,000 tons of high-quality
steel pipe, representing an investment in
excess of a billion euros by Nord Stream
AG, the international joint venture set up
to design, build and subsequently operate
the Baltic Sea Pipeline.
The contract is itself an important step
towards completion of the first section
of the line slated for 2010. By the time
construction work begins in 2009,
roughly a third of the pipe – 400 kilo-
Interview with Wolfgang Eging, Director of Tubes
With contracts safely signed, from left: Henning Kothe and Matthias Warnig, both of Nord
Stream, and Dr. Michael Gräf and Lauri Malkki, both of EUROPIPE
“Securing and extending our leading
position worldwide”
The Tubes Division of Salzgitter AG has undergone some changes: We talked with Tubes
Director Wolfgang Eging about growth strategies and concentration on welded tubes.
stil In business terms, the Tubes Division of
Salzgitter AG is in outstandingly good
shape. How much of this is due to the strategic
decision to focus on welded steel tubes?
wolfgang eging The Tubes Division has
now been highly profitable for 4 years in
succession. In the 20 years before that,
there was never a comparable period in
which we were so successful. Following
the takeover of Tubes by Salzgitter AG in
the year 2000, there was very soon a question
mark over the industrial leverage
that came with our interest in Vallourec
as a manufacturer of seamless tubes. We
had only limited scope to exercise any influence
over the listed Vallourec Group,
and as the Tubes Division evolved, we felt
it made sense to separate ourselves from
V&M and our stake in VLR. With this
in mind it was logical to focus on welded
tubes, at the premium end of the market.
We aim to achieve growth by offering
sophisticated solutions in order to secure
and extend our leading position
worldwide. The resources released from
the seamless side of the business are being
used proactively.
stil The tubes business is becoming increasingly
international – not just in the
field of large­diameter pipes. What challenges
do you see facing precision tubes?
eging As a result of our concentration on
the premium segment, based on our activities
and our growth strategy we see ourselves
very well placed to come out on top.
That is particularly due to the acceptance
that our products enjoy in the marketplace
and their popularity among our precision
tubes customers in Europe.
PHOTO: EUROPIPE
meters – must be in store at various logistical
depots, ready to be laid. Which
means that by then the entire production
chain must be completed, from steelmaking,
plate rolling, tube manufacturing
and coating through to transportation
to the storage sites.
The 860,000 tons of large-diameter
pipe booked by EUROPIPE represent the
largest single order in the company’s history.
EUROPIPE will manufacture the entire
order at its Mülheim works. The
plate required to produce the pipes will
be ordered by EUROPIPE from its shareholders
Dillinger Hütte and Salzgitter.
For Salzgitter’s part, the input material
The pipeline will connect
Russia and the European Union
will be supplied from the plate mill at
Mannesmannröhren Mülheim GmbH.
This order alone represents capacity utilization
in excess of 40 percent over 18
months at EUROPIPE. The internal coating
and external corrosion-proofing included
in the order will be carried out by
EUROPIPE’s subsidiary MÜLHEIM
PIPECOATINGS (MPC) GmbH, which
in turn will benefit from as much as
60 percent capacity utilization.
stil What role does the acquisition of manufacturers
in France and the new company in
Mexico have to play?
eging By acquiring VPE and the plant in
Zeithain producing input stock, we have
laid the foundation on which to become
Europe’s market leader. We intend to develop
this position and use it to offer sophisticated
solutions for our customers in the
automotive and other industrial sectors.
The acquisition in Mexico provides a
nucleus for development outside of Europe.
In future, we aim to secure a strong
position for our automotive business in
the NAFTA territories.
stil The high prices for oil and gas are adding
impetus to pipeline projects the world
over. On the other hand, steel and tubes
production is very energy­intensive. At
what point will this development become
critical?
eging Let’s think back to the 80’s and 90’s
when an oil price of 30 US dollars a barrel
was judged to be the balance point between
exploration and the risk of under-
The total cost of the Baltic Sea Pipeline
will be in the order of six billion euros.
That’s around 15 percent less than for an
overland pipeline – including the operating
costs for a 25-year period. This is due
mainly to the comparatively high operating
costs for a land-based pipeline and
the associated compressor stations. The
mining the development in gross
national product.
As we now know, this boundary
has shifted with sustained effect.
Worldwide demand for energy
continues without a break and
we have already reached an oil
price of 100 US dollars a barrel.
The demand for tubes for oil and
gas exploration, transportation
and energy generation is huge. Among the
particular factors dictating this demand
are the tremendous growth dynamics in
the BRIC countries (Brazil, Russia, India
and China) and the need to replace existing
power stations.
stil It has long since ceased to be enough
just to make quality tubes – customers demand
comprehensive service. What do we
offer our customers?
eging As a business model, simply manufacturing
tubes is a thing of the past. We
have been offering our customers far more
for a long time now. We support them
with customized solutions, from the initial
pipeline will connect Russia and the European
Union via the Baltic. EU demand
for imports of natural gas is expected to
reach 536 billion cubic meters by 2015 –
compared with 336 billion in 2005. The
Baltic Sea Gas Pipeline will be able to
fulfill around 25 percent of the additional
demand.
The natural gas pipeline across the Baltic Sea
Wolfgang Eging
idea through to production. Our
Trading Division, which is a global
organization, and also the Group’s
own research and product-based
development facilities play an outstanding
role. As a Group, we offer
consultancy, production, supply,
an international logistics network
and other support functions,
all from a single source.
stil The companies that make up the Tubes
Division have changed their names and
logos. What were the reasons behind this?
eging Our brand name is Salzgitter Mannesmann.
What we are doing is combining the
Mannesmann product name, which is recognized
worldwide as a synonym for quality
and competence in tubes, with the success
story that is Salzgitter. For this reason, as has
already happened at the Trading Division,
we have prefixed all of our companies with
the name “Salzgitter Mannesmann”. So both
the Tubes and Trading Divisions now equally
underscore the solidarity between Salzgitter
and the synonym for tubes (Mannesmann).
18 stil stil 19
tubes
Planned Nord­
Stream­Pipeline
Planned service
platform
Pipeline of the
European natural
gas network
Pipeline planned
or in construction
Territorial
border

salzgitter group
QATAr
SAudi-ArAbiA
PerSiAN Gulf
Abu dhabi
uNiTed ArAb
eMirATeS
Sharjah
dubai
fujairah
OMAN
Gulf Of OMAN
The pipelines in the
Gulf region
EUROPIPE is to supply the pipes
needed for both the gas line commissioned
by Dolphin Energy from Taweelah
to Fujairah (orange) as well as for
the IPIC pipeline from the oil
fields in Habshan to Fujairah (gray)
PHOTO: CORBIS
Pipes for two pipelines in the Middle East
Lucrative 200,000 ton order for EUROPIPE
Profitable pipes business for
Salzgitter,” the Frankfurter Allgemeine
Zeitung recently proclaimed.
It was news from the
Persian Gulf that prompted the FAZ to
take a closer look at Salzgitter’s booming
Tubes Division. Two important pipeline
projects are about to get under way in
the United Arab Emirates, both of which
will make use of premium-quality 48 inch
(1219 mm) OD pipes supplied by Tubes
Division company EUROPIPE. The company’s
large-diameter pipes are in great
demand. What’s more, from the Group’s
perspective, these orders totaling in excess
of 200,000 tons are a fine example of an
efficient value chain, given that they were
booked and processed by Salzgitter’s own
Trading organization.
The two orders also underscore the success
that has resulted from the decision to
intensify marketing activities in this oil-
The new Number One in Europe
Headed by MRW, Salzgitter’s Tubes Division continues its international growth course
A
new family member has joined
the Tubes Division with the arrival
of Salzgitter Mannesmann
Precision GmbH (SMP). In future,
the Division’s precision tubes activities
will be amalgamated under the umbrella
of this unit based in Mülheim an
der Ruhr, which will function as an intermediate
holding company. The Mannesmann
Robur business in the Netherlands
is not being integrated, but will instead
retain its independence as a successful
secondary brand in the precision tubes
segment, majoring on heat exchanger
tubes.
Salzgitter AG’s acquisition of French
specialist manufacturer and former Vallourec
Group member Vallourec Précision
Étirage (VPE) had previously been
approved by the EU antitrust authorities.
Besides VPE and Mannesmann Präzisrohr
GmbH, another old acquaintance joins
the new Precision Tubes Group: The
Zeithain seamless tubes plant in Saxony,
previously owned by Vallourec & Mannesmann
Tubes, has also been taken over
and under its new name Mannesmannrohr
Sachsen GmbH will safeguard supplies
of hot rolled tubes (loops) to the preci-
and gas-rich region of the Arabian Peninsula.
Trading subsidiary Salzgitter Mannesmann
International overcame fierce competition
to win the orders for the two pipelines
which will link booming Abu Dhabi
with the neighboring Emirate of Fujairah.
The 250 km pipeline to be built by local
energy giant Dolphin Energy will transport
natural gas coming ashore from Qatar at
the Taweelah terminal to Fujairah to fuel a
new gas-fired power station. EUROPIPE
will supply the entire quantity of pipes required
amounting to some 120,000 tons.
Another 97,000 tons (almost 160 km) of
pipes will help to build the oil pipeline
commissioned by state oil company IPIC
which will run parallel with the gas line
across a huge tract of the desert sands of
the United Arab Emirates. This pipeline
will also serve the Emirate of Fujairah,
transporting oil produced in Habshan over
a distance of 360 km to a new shipping ter-
sion tubes plants in future. It is also being
merged with its neighbor Mannesmannring
Sachsen GmbH. MHP and VPE were
already heavyweights in their own right,
but in the European theater this new alliance
now ranks as the undisputed market
leader in seamless and welded drawn precision
steel tubes. As a combined undertaking
with annual sales approaching 500
million euros and a workforce of around
2,700 employees, it can lay claim to a
good quarter of the relevant market in the
EU. In future, however, SMP will also play
an important role outside of Europe.
At MHP and VPE the automotive industry
and its suppliers feature strongly
on the customer lists. The mechanical
engineering and power generation industries
also rank as key business partners
of the two sister companies. The
steel tubes plant in Zeithain, with a 400strong
workforce, is now trading under
the name Mannesmannrohr Sachsen
GmbH, and will play a central role in
the future of Europe’s precision tubes
market leader. Major investments running
into millions will ramp up annual
capacity from 170,000 tons to over
200,000 tons.
minal on the Gulf of Oman, where it will
be loaded on board supertankers. The
project has a politically sensitive background,
in that the pipeline bypasses the
Straits of Hormuz, a narrow passage which
in times of crisis threatens to quickly become
a serious supply bottleneck.
The pipes for this oil pipeline will be
manufactured in the second half of 2008.
Meanwhile, production of the large-diameter
pipes for the gas line has already commenced
at the EUROPIPE works in Mülheim
an der Ruhr and Dunkirk (France).
These orders, which will help to safeguard
capacity utilization through to February
2009, are not the only ones with such a farreaching
effect. Others, such as the spectacular
record order for the Baltic Pipeline
will extend until the year 2010.
As the FAZ succinctly put it, “The tubes
business is a success story for the Salzgitter
steel Group.”
SMP
grows in Mexico
The Precision Tubes Group
headed by Salzgitter Mannesmann
Precision GmbH, part of the
Tubes Division of Salzgitter AG,
is consolidating its position in the
North American (NAFTA) market,
where the outlook for growth
is excellent. With the acquisition of
Mexican company Bresmex Tuberia
S.A. de C.V., SMP now has its
own production facility in the region.
In future, the company will
trade as Salzgitter Mannesmann
Precisión S.A. de C.V. With a workforce
of some 100 employees, the
plant manufactures welded drawn
precision steel tubes in the metropolis
of Guadalajara. High-quality
shock absorber tubes for the automobile
industry feature among its
principal products.
20 stil stil 21

salzgitter
We couldn’t wait for Prince Charming”
“ Interview with Executive Board member Dr. Heinz Jörg Fuhrmann
Salzgitter AG has established a new division
following its acquisition of
Klöckner-Werke AG. In February
2008 we talked to Dr. Heinz Jörg
Fuhrmann, Deputy Chairman of the
Executive Board with a dual remit covering Finance
and the Technology Division, about diversification
and sustainable management.
stil Sustainability is one of those in-words that
many people seize upon. What do you associate
with the term?
dr. heinz jörg fuhrmann To me it means not
changing one’s values as if they were a shirt,
nor, for that matter, the opinions and the
goals that are based on those values. That applies
both privately and professionally.
stil What role does sustainability play in the
corporate development of Salzgitter AG?
fuhrmann A very decisive role … Preussag
Stahl AG and the company that preceded it
were already managed in the same way by our
predecessors in terms of business policy and
investment, albeit with significantly less freedom
of movement. The key elements of sustainable
corporate development as we understand
it are: Attractive products, modern and
well-maintained plant and facilities, loyalty to
the workforce and sound finances. These factors
don’t change.
They stand for dependability, inwardly and
outwardly. And they create an environment
in which the changes that we have made –
proactively, but never under duress – can be
accepted and can succeed.
stil Since September 2001 Salzgitter stock has
been included in the MDax and has recently
been considered as a candidate for the DAX.
What are the reasons behind this positive view?
fuhrmann Whether at a personal, individual
level or on a grand scale, there is no better
starting point than to be vastly underestimated.
If you then put on a far above average performance
that exceeds expectations, you have
the advantage of surprise. Of course, the steel
boom in recent years has helped us. Our competitors
all had the same wind behind them,
but the fact is that for years now we have outsailed
most of them in terms of both results
and the development in our share price.
stil The development in the price of Salzgitter
stock is something of a Cinderella story. What
were the factors behind this development? How
were new investors induced to take an interest
in the company?
fuhrmann We couldn’t wait for Prince Charm-
ing to appear. We had to shake off our wallflower
image for ourselves. On the other
hand, from 1999 onwards we have had progressively
more support from analysts and
fund managers who liked our take on business
policy – conservative and by no means
loud, but off the beaten track in terms of
strategy – and whom we number among our
friends to this day. My colleagues and I have
never promised results that we couldn’t deliver.
That works – that is sustainable.
stil For all that, we can’t help but ask what
happened recently, with the share price falling
by around a third …
fuhrmann … You’re right to ask, and it
gives me the opportunity first of all to point
out that this drop in price has absolutely
nothing to do either with Salzgitter’s results
or with our communication. The fact is that
a lot of institutional investors, mainly abroad,
have had to compensate for losses elsewhere
– we’re talking here about the subprime crisis
– by taking profits on positions that have
done very well, Salzgitter among them! What’s
more, long-term developments are far more
meaningful than short-term fluctuations.
stil The Salzgitter is a mid-sized steel and technology
group that is highly profitable. How does
the company protect itself against the influence
of shareholders who may be less than welcome?
fuhrmann Well, of course anyone can buy
shares and take a stake in Salzgitter AG. On
the other hand, it is equally legitimate for us
to appreciate shareholders who share our convictions
and are willing to stay with us over
the years. The very important 25.2 percent
stake held by the State of Lower Saxony together
with the 10 percent of the stock that
we hold ourselves adds up to a position that is
unlikely to be upset by “unwelcome suitors”.
stil State involvement is frowned on in Anglo-
American circles because it raises the specter of
restrictions on entrepreneurial freedom. How do
you counter this attitude?
fuhrmann Quite simply by pointing to our
competitive performance that clearly has not
suffered because of State involvement, and
also to the attitude that Anglo-Saxon governments
are just as likely to adopt in the face of
the impending takeover of a major company
by, let us say, not entirely welcome foreign investors!
It would be good to see a little more
self-confidence in this country – maybe we
should take a leaf out of France’s book.
stil With the acquisition of Klöckner-Werke
AG, Salzgitter laid the foundation for the new
Technology Division. What is the strategy behind
this?
fuhrmann Growth through diversification
into sectors of industry that are specifically
not subject to the rolled steel and tubes cycle.
This will give our Group stability, above all if
the steel boom should come to an end. Besides,
one should never be so doctrinaire as to
turn down opportunities that present themselves
just because they might call for a little
persuasion, internally as well as externally.
Mannesmannröhren-Werke was a prime
example, and Klöckner will be another.
stil How do you assess the potential for growth
and development in the field of beverage filling
and packaging machines?
fuhrmann Rising standards of living in general
and specifically the increasing call for hygiene
will ensure continuing strong demand,
in developing regions in particular. In our latitudes,
the consumer goods sector is powered
by continuous product innovation. We have
entered an industry that marches to a different
tune than steel and tubes, but is none the
less exciting. Here too, we look forward to
playing an active role in shaping the future.
stil Finally, one last question for the latest and
also the longest-serving Executive Board member
of the new Salzgitter AG: What have been
the most important features in the way the
Group has changed over recent years?
fuhrmann The most striking change has
taken place internally, but of course it has also
had some highly favorable effects on our external
image. When I joined Preussag Stahl
AG in 1995, and a year later when I was appointed
to the Executive Board, there was a
strict hierarchy in the way the business was
managed. Every decision of any relevance had
to be referred to the Boardroom. The relationship
between the directors was – to be diplomatic
– not quite ideal. Today, the Group is
largely decentralized and the atmosphere of
cooperation on the Executive Board – compared
with other companies – is very, very
good. Of course, in our present configuration
we have yet to be put to the test – in the face
of genuinely hard times, whether economically
or in terms of business policy – but I am
optimistic that we will pass with flying colors.
This pattern of transparent and cooperative
relations is being carried over to our employees,
and this is something that will benefit
all concerned.
Dr. Heinz Jörg Fuhrmann
Executive Board Member
Finance & Technology of Salzgitter AG
22 stil stil 23
PHOTO: ERIC SHAMBROOM

technology technology
Growth and diversification in technology
Klöckner-Werke: Salzgitter AG has now increased its stake to 86 percent of capital stock.
The acquisition forms the core of the new “Technology” Division
It all began in the summer of
2006 with a programmatic, but
by no means specific comment
by Dr. Wolfgang Leese, Chairman
of the Executive Board of
Salzgitter AG. To quote from an article
in the Financial Times Deutschland,
“In addition to manufacturing steel and
tubes, the Salzgitter Group intends to
develop a new division to reduce its dependence
on the cyclical steel business.”
Meanwhile the intention has become a
reality: The long-established Klöckner-
Werke AG is now part of the Salzgitter
Group where – together with its subsidiaries
– it now forms the core of the new
“Technology” Division.
Having fulfilled the requisite conditions
and in particular received the necessary
approval by the EU Commission,
effective July 5, 2007, Salzgitter AG ac-
In 1923 the companies amassed by
Peter Klöckner since 1886 in the
coal, steel-making and processing
industries were amalgamated to form
KLÖCKNER-WERKE AG. In the 1960‘s
the Group broadened the scope of its activities
to include plastics processing and
mechanical engineering. Soon after, in
1965, Klöckner Pentaplast began producing
rigid plastic films.
quired a further 78 percent of the shares
in Klöckner-Werke AG, lifting its previous
5 percent stake to 83 percent of capital
stock (STIL reported). This stake
has meanwhile been further increased
to around 86 percent. “As a well-financed
majority shareholder with extensive
industrial experience, Salzgitter
AG will in future play an active role
in shaping the strategic and operational
development of the Klöckner-Werke
Group,” explained Dr. Heinz Jörg Fuhrmann,
Salzgitter Executive Board Member
with responsibility for Finance and
Technology. Effective from the same
date, the Klöckner-Werke Group companies
have been integrated into the
financial accounts of Salzgitter AG.
Klöckner-Werke AG is now the nucleus
of a new “Technology” Division established
alongside Salzgitter’s existing Steel,
Some 14 years later a film manufacturing
plant was established by Klöckner
Pentaplast of America. In 1979 the
Group entered the beverage machine industry
with the acquisition of Holstein
and Kappert. This was followed by an increasing
involvement in filling and packaging
technology, as well as automobile
components.
The disposal of the steel production
business in 1994 was followed by a deliberate
process of concentration. By 1999,
the European businesses supplying the
automotive industry and other non-core
activities had been sold as Klöckner-
Werke parted company with units which
entailed high levels of investment and
risk, but offered a comparatively low return
on capital. This was paralleled by a
substantial expansion of the high-yielding
films business in Europe and America.
The range of filling and packaging
technology products and services was
also broadened through acquisitions.
Tubes, Trading and Services Divisions.
Klöckner-Werke AG is itself an industrial
holding company whose subsidiaries
operate on an international basis
with a total of 27 production plants
and 25 sales and service locations. Its
business activities are centered on KHS
AG, Dortmund, which ranks among the
world market leaders in beverage filling
and packaging systems. This business
area accounts for around 86 percent of
Klöckner-Werke Group sales. The company
is also active in the fields of plastics
processing machinery manufacture and
food processing technology.
Klöckner-Werke AG is a quoted company
whose shares are listed on seven
German stock exchanges and in Xetra
trading. The Management Board is
composed of Roland Flach (Chairman),
Maternus Gemmel and Valentin Reisgen.
Klöckner-Werke AG – the history
A stock corporation since 1923 with the emphasis now on filling and packaging technology
KHS is one of the
world market leaders
in filling systems
Against the background of the progressive
globalization of the individual
business areas and their need for growth,
a further step in the concentration process
was taken in 2001. In October that
year the films business comprised by the
Klöckner-Pentaplast Group was sold for
a price of 925 million euros. The proceeds
of the sale were earmarked in particular
for investment in other equity interests.
The Group’s industrial activities today
comprise the companies of the Filling
and Packaging Technology division and
the units that make up the Other Industrial
Holdings division.
Since July 2007 Klöckner-Werke AG
has been a member of the Salzgitter AG
Steel and Technology Group based in
Salzgitter, which holds around 85.6 percent
of Klöckner-Werke AG voting rights.
Cheers! A filling plant for PET bottles in operation
Even large containers
can be filled as well
KHS AG: A global player in
packaging
As one of the world market leaders, KHS has numerous facilities
abroad, in addition to eight plants in Germany
KHS AG, Dortmund – an international
manufacturer of filling and
packaging systems for the beverage,
food, and non-food industries –
was established in 1993 with the merger
of Holstein & Kappert AG of Dortmund,
founded in 1868, and Seitz-Werke GmbH,
which was established in 1887 and later
became SEN AG, Bad Kreuznach. The
company is a wholly-owned subsidiary of
Klöckner-Werke AG.
In addition to its overseas production plants
in the USA, Mexico, Brazil, India and China,
KHS AG is also maintaining several plants in
Germany. Dortmund is home to the competence
center for cleaning and pasteurization
technology, as well as labeling and inspection
systems. Bad Kreuznach ranks as the center of
competence for beverage technology, combining
the following aspects: Filtration, beverage
blending technology, high-gravity brewing systems,
flash pasteurization and degassing systems,
as well as rinsing, filling and sealing systems
for bottles and cans. The kegging technology
competence center is located in Kriftel. At
its plants in Kleve and Bad Arolsen, KHS
manufactures packing systems with an emphasis
on the most advanced, leading edge final
packaging. In Worms the focus is on palletizing
systems and solutions for both packing
and unpacking. Aseptic cold filling tops
the bill in Hamburg, while KHS in Niederzissen
offers a comprehensive range of inspection
systems for the industry. With a workforce
of more than 5,000 employees worldwide,
the KHS Group today generates sales
approaching one billion euros. KHS is a
world market leader and preferred supplier to
the packaging industry with a focus on beverage
applications and complete plants.
24 stil stil 25

PHOTOS: KHS
Waukesha
Zinacantepec
Sarasota
Ahmedabad
Shantou
Bad Arolsen
Niederzissen Kriftel
Bad Kreuznach
Represented
worldwide
KHS operates 14
production plants
worldwide including
8 in Germany, 2 in
the USA and 1 each
São Paulo
Worms
in Mexico, Brazil,
India and China
KHS Büros
KHS production plants
KHS Agenturen
KHS agents KHS offices
KHS Produktionsstätten
KHS betreibt 14 Produktionsstätten weltweit, 8 in Deutschland, 2 in den USA
und je 1 in Mexiko, Brasilien, Indien und China
A filling plant: General view –
and a keen eye for detail (right)
© KHS AG 2007 15
Fruit juice and beer
top the list
Kleve
Dortmund
Hamburg
Other Klöckner-Werke AG companies
The Group’s machines are equally at home in the footwear and confectionery industries
Klöckner Desma
Elastomertechnik GmbH
Desma Elastomertechnik, based in Friedingen, has ranked as
one of the world’s leading manufacturers of rubber / silicon
injection molding machines for 40 years now. In addition to
conventional vertical and horizontal machines with a clamping force
of between 250 kN and 40,000 kN, the company also produces rotary,
pump stator and C-frame machines as well as presses. Outstanding
developments in recent years include the highly innovative
BENCHMARK clamping system for vertical machines, the patented
FIFO A injection unit as well as cold runners with a hydraulic needle
shut-off system (FlowControl), ITM and the DESFLEX system to
minimize waste. When it comes to complete systems, DESMA is the
world market leader with its own high-performance mold making
facility. The company’s extensive range of technical plant and equipment
provides the ideal basis for efficient process development, as
well as customer-specific training. Desma Elastomertechnik employs
a workforce of over 300 members of staff.
Klöckner Desma
Schuhmaschinen GmbH
Klöckner Desma Schuhmaschinen GmbH, based in Achim,
manufactures special machines for the footwear industry.
Products range from injection molding machines, molds, robots
and automation systems through to complete factory planning.
The company also makes special machines for other technical applications.
With a workforce of 176, the company expects to generate
sales of around 37 million euros in 2007. In 2003 a subsidiary was established
in China where 28 members of staff are currently active.
Klöckner Hänsel
Processing GmbH
Klöckner Hänsel Processing GmbH, Hanover, is a supplier of
plant and systems to the confectionery industry. From
individual machines through to complete production plants,
the company can fulfill virtually every requirement for the manufac-ture
of confectionery. The roots of Klöckner Hänsel Processing
stretch back to the historic Otto Hänsel company founded in Dresden-Freital
in 1911. The works have been located in Hanover since
1948, with the present factory and office premises on Lister Damm
doing duty since 1952. For over 90 years, KHP has been supplying
processing equipment and packaging machinery for the confectionery
industry and is one of the few companies that can point to
such long experience in this field. KHP operates worldwide in cooperation
with its numerous agencies in almost every country on
earth. Over the past 20 years, KHP has specialized in increasingly
greater depth in processing systems and is now the leading supplier
of process equipment for the confectionery industry. New and ever
more efficient machines and processes are constantly being developed
for the manufacture of confectionery products. The company’s
applications center known as the CandyLab carries out development
work for both KHP and its customers and experiments
with completely new products. Here, engineers develop concepts
and customer-specific solutions for high-quality and highly efficient
plants and systems.
RSE Grundbesitz- und
Beteiligungs-AG
RSE AG is a real estate company that invests in commercial
properties in Germany. The majority shareholder in RSE AG
is Salzgitter AG which holds a 99.56 percent of the stock.
New addition to the Technology Division
Acquisition of SIG-Beverages adds PET technology to the Klöckner/KHS portfolio
With the acquisition of SIG-Beverages and the ensuing integration
of PET blow molding technology, Salzgitter AG has injected
decisive new strength into the Technology Division. The vendor
is the Swiss SIG Group.
When Salzgitter first acquired Klöckner-Werke AG and entered
the market for special-purpose beverage filling and packaging
systems, the company clearly stated that “Salzgitter AG intends to
play an active role in shaping the future strategic and operational
development of Klöckner-Werke.”
The first significant step has now been taken with the purchase
of SIG-Beverages. In the dynamically growing market for plastic
bottle technology, the newcomer to the Technology Division will
in future enable Klöckner-Werke subsidiary KHS to offer complete
system installations from a single source. KHS already has a long
history in this market, and by closing this gap in its product portfolio,
the company can now substantially enhance the service it offers.
SIG-Beverages employs some 480 staff, based mainly in Germany,
and recorded sales of around 150 million euros in 2007.
KHS AG ranks among the world market leaders in beverage filling
technology. However, in the field of PET blow molding technology,
in the past suitable equipment had to be sourced from external
suppliers. This acquisition puts in place another of the requirements
to enable KHS to supply every element of its filling systems
from a single source.
26 stil stil 27

PHOTOS: PETEr LEnkE
steel steel
Salzgitter Steel Strategy 2012 “We are increasing
On the offensive with high-quality products
Wide-ranging investment program in steel
Salzgitter AG intends to further expand
its position as a niche supplier
with competitive advantages
in cost structures, product quality,
productivity and flexibility as well as
closeness to customers.
With these aims mind, the company
has meanwhile formulated its “Salzgitter
Steel Strategy 2012” – an investment program
tailored to generate decisive internal
growth. In the meantime, parts of the
program have already been implemented.
“With this ambitious investment program
we are pursuing our overriding
corporate objective, namely to preserve
the independence of our enterprise
through profitability and growth,” reports
Hans Fischer, the Executive Board
member at SZAG with responsibility for
Steel. These investments will enable the
Group to substantially step up the pace
of its high-quality steel products offensive,
while creating up to 500 new jobs in
the process.
The entire program is valued at around
1,7 billion euros and comprises four
projects to be implemented by the companies
Peiner Träger, Salzgitter Flachstahl
and Ilsenburger Grobblech, as well
as the manufacture of HSD steels using
strip casting technology.
A second electrofurnace will be built
in Peine to produce crude steel, increasing
the production capacity at the plant
to around two million tons of crude steel
per year. This will result in an expansion
of the precision metallurgy facility.
Here, the customer specified properties are
achieved through alloying and other process
stages at the ladle furnaces and vacuum
plants. The continuous casting line in
Peine will be fitted out for the production
of slabs and the two mill trains will also be
modified. The capacity of the heavy section
mill will be increased and the universal
medium section mill, known as
UMIT, will be adapted to produce special
sections for applications such as forklift
trucks. In addition, substantial investments
will also be committed to logistics
The capacity of the hot strip mill will be
expanded over the coming years
in order to cope with the increased
volume of materials (for example,
scrap, input stock and finished products).
The package of measures is ex-
pected to be completed by 2010.
In Salzgitter the production of pig iron
will be optimized. In addition, a fourth
continuous casting line will be built to
produce thick slabs up to 350 mm. The
precision metallurgy facility will be expanded,
and the capacity of the hot
wide strip mill will be increased to
4.5 million tons. Meanwhile, Ilsenburg
will benefit from several smaller
investments in the plate mill.
A decisive step towards a new form
of rolled steel production will be taken
with the introduction of Belt Strip
Technology (BeST). A pilot plant is
to be built in Peine for continuous
strip casting which will put the experience
gained by the Salzgitter Mannesmann
Forschung research unit in cooperation
with the Clausthal University
of Technology into practice in an industrial
context. The process involves
pouring liquid steel horizontally direct
from the ladle to form a thin strip.
The strip is then rolled directly to produce
finished hot strip, which can then
be processed into cold-rolled strip as
required. The decisive advantages of
the process include the omission of entire
production stages and the ability
to produce innovative grades of steel,
among them HSD (High Strength and
Ductility) steels. As their name implies,
these high-manganese steels developed
in cooperation with Corus are distinguished
by high strength coupled with
high ductility. HSD steels have been
developed for numerous applications
which typically combine complex geometric
shapes with a need for great
strength. The new plant is targeted to
produce the first HSD steels by the end
of 2009.
Salzgitter AG has already implemented
one extensive program of investment
in plant and processes during
the period from 2000 to 2006. Among
the important elements of this program
were the development of surface
treatment with the construction of a
new strip coating plant and a second
hot-dip galvanizing plant, an initial
modernization of the hot wide strip
mill, the recommissioning of blast furnace
C, a third continuous casting line,
a beam blank plant in Peine and an intensive
cooling plant and a cold leveler
in Ilsenburg.
Currently, the power station in
Salzgitter is undergoing complete
modernization and a continuous pickling
line and hot strip cut-to-length
line are under construction, among
other projects.
The Group’s own power station in Salzgitter is currently being modernized The existing electrofurnace in Peine will be joined by a second unit
integration
within the Group”
With its “Salzgitter Steel 2012” strategy,
the Steel Division of Salzgitter AG aims to
take a decisive step forward in terms of
growth. stil international talked to
Hans Fischer, Executive Board member
Steel, about the most important changes.
stil By 2012, the Steel Division
of Salzgitter AG aims to take a
decisive step forward in terms
of growth. Which are the most
significant individual projects?
hans fischer The overall
“Salzgitter Steel 2012” project
is divided into the four subprojects
PTG 2010, SZFG
2012, ILG 2010 and HSD Steels/Thin Strip
Casting. With the construction of a second
electrofurnace, crude steel capacity at Peiner
Träger GmbH (PTG) will increase to around
two million tons per year. In addition to
input stock for beam production, the works
will then also turn out slabs for customers
such as Group member HSP Hoesch Spundwand
und Profil GmbH, enabling us to
reduce the quantity of slabs bought in for
sheet pile production.
stil What are the strategic objectives behind
these investments?
fischer This strategy is another step on the
road towards differentiating the Salzgitter Steel
Group from its competitors. We are broadening
our product variety and pursuing our strategic
decision to manufacture higher quality
steels. At the same time, by introducing new
technical facilities, we are increasing our flexibility
and enhancing production capacity. The
Salzgitter Group regards itself as a niche player.
Our strategy is not one of dominance, we
prefer to concentrate on close customer loyalties,
proximity to the markets and flexibility.
stil How do we differ from the competition?
fischer These investments will increase the
already high level of integration within the
Group as the individual companies become
even more closely harmonized with one
another. Our research unit Salzgitter Mannesmann
Forschung has a decisive role to play in
this context. This unit combines the Group’s
research and development competence, and
dovetails closely with the manufacturing companies.
Solutions are developed in a process of
tight-knit cooperation, which involves Technical
Consulting as well as our customers and
university partners.
28 stil stil 29

salzgitter salzgitter
“we are enhancing
customer loyalization”
interview with managing Director
Prof. Dr. Matthias Niemeyer
stil How does the expansion
of the pilot plant at the
Salzgitter location fit into the
Group strategy?
prof. dr. matthias niemeyer
we had some catching up to
do with regard to large-scale
equipment and facilities in
the r&D area. with this
recent investment of some 11 million euros,
we will considerably enhance customer loyalization,
and thereby also strengthen our
position as a niche player in the steel branch.
stil What are the positive effects of the expansion
for customers within the Group and outside?
niemeyer we are now able to cover and
represent all of the key steps of steel manufacturing
and further processing, including
hot metal processes, alloying, rolling, forming
and coating. we are able to develop processes
faster and more efficiently, and provide
our customers with the information
thereby gained in a timely manner.
stil How is Salzgitter Mannesmann Forschung
positioning itself in the worldwide steel
research landscape with these investments?
niemeyer we hold a leading position in
application oriented research and development.
The fact that we have bundled the
research and development activities within
the group in the areas of materials, surface
and application technologies under a single
roof, represents an advantage over competitors.
we are very well networked and integrated
with customers and the group’s own
production facilities, and, as an independent
research outfit, we are able to respond rapidly
and flexibly. our work is also advanced
and assisted by cooperation activities with
the universities of aachen, Braunschweig,
Hanover and Clausthal, as well as the mpi
for iron research in Düsseldorf.
stil What significance does R&D hold for the
further development of the Group?
niemeyer we are not only called on to adjust
to the markets of the future in a timely manner,
but also to play an active role in shaping
and designing these markets. in the case of
fundamental issues and tasks, it is important
to bundle resources across various locations
and companies, and thereby achieve goals at
a faster pace.
Consequently, an even greater emphasis
will be placed on the aspect of process and
product development in future.
During the presentation (from right to left): Prof. Niemeyer, Rainer Thieme,
Dr. Leese, Prof. Peil, Prof. Ameling
“research and development
are an essential foundation”
presentation of the new pilot plant in salzgitter
in commissioning the new pilot plant,
salzgitter ag is strengthening its position
as a premium provider of steel.
“research and development are an essential
foundation for our overall strategy
of operating as a successful niche player,”
explained Dr. wolfgang leese, Chairman
of the salzgitter ag executive Board
on the occasion of a presentation delivered
this November to some 130 customers and
partners.
The new pilot plant forms a core area of
salzgitter mannesmann forschung gmbH
(szmf), a 100 percent subsidiary that acts
as the group’s central research and development
department.
around 11 million euros have been invested
in a number of large-scale equipment
items and buildings at the salzgitter
location. “we now hold a leading position
throughout europe in application oriented
steel research and development,” as szmf
managing director prof. Dr. matthias Niemeyer
emphasized.
The pilot plant will ensure that new
steels are developed at a rapid pace, and
processes optimized at the same time.
These capabilities form the foundation
for achieving shorter product introduction
cycles and robust series processes at
customers.
The investments in the new pilot plant
are embedded in the “salzgitter stahl
2012” strategy. “The three main objectives
are achieving decisive production gains of
plants and processes,” explains Hans
fischer, executive Board member steel,
“the increased production of customized,
special products and niche products, as
well as the enhanced flexibility of facilities
and plants.”
prof. Dr. Karl-Heinz spitzer of the university
of Clausthal outlined the key significance
of partnerships between universities
and industry in research and development,
as well as in the areas of education,
training and personnel development.
Johannes Nonn, managing Director of
salzgitter flachstahl gmbH, also emphasized
the resulting customer benefits: “The
new pilot plant will enable the faster and
targeted development and production of
new product families, such as hot forged
steels.”
pHoTos: peTer leNKe
New large-scale equipment for research
all-new forming press, test rolling mill, hot dip galvanizing simulator, annealing simulator
1. New formiNg press
The new Dieffenbacher impress hydraulic
press delivers a pressure force of 1,000 tons
and features analytic capabilities. The press
is used for material characterization, as
well as for component testing and customer
projects.
special emphasis was placed on high
pressure force, analytical capabilities and
on the speed profile. This high-speed tryout
forming press with its hydraulic cylinder-accumulator
drive meets all of these
key requirements. Thanks to its capability
of running at a controlled speed from 1
to 500 mm/s, existing customer presses can
be simulated. Consequently, the forming
Technology Department is able to replicate
customers‘ “press units” at the salzgitter
location in the course of joint projects.
The press also meets the current trend towards
press hardening in the automotive
industry. The steel sheet is heated in a new,
portable furnace and transferred directly
to the tool at a temperature of 950 °C. The
panels are formed to components at the
highest possible press speed and are subsequently
cooled inside the tool. This process
delivers mechanical strengths up to
1,600 mpa.
2. TesT rolliNg mill
The new plant allows the representation of
the entire process chain, from hot-rolled
strip to hot-dip galvanized cold-rolled
strip and yields a precise image of processes
within the material.
The plant supports various configurations
for cold-rolling, post cold-rolling or
skin passing of very soft steels, as well as
ultimate strength steels. The overall forming
grades correspond with the tandem
mill of salzgitter flachstahl gmbH and are
even surpassed in some instances. The
cold-rolled or skin-passed test objects are
inspected and processed further under
laboratory conditions. The mill is capable
of rolling high-tensile steels with elongation
limits of 1,500 mpa, high cold-rolling
grades and under variable strip tension.
Clients benefit from production plantoriented
material and process development,
as well as from the processing of
small batches at live cold-rolling conditions,
added value in terms of cost and
time savings, in addition to the advantages
of processing new steel grades under test
conditions.
The cold-rolling section in the 4-high
roughing mill is equipped with rolls with a
diameter of 150/360 millimeters, while
rolls with a diameter of 360 mm are available
for skin passing in 2-high operation.
3. HoT-Dip galvaNiziNg simulaTor
This simulator is a vital aspect in the expansion
of the surface Technology Department
of salzgitter mannesmann forschung
gmbH (szmf), and supports the reproduction
of production processes in hot-dip
galvanization plants, the testing of new
process chains, and the development of new
products.
High-quality hot-dip galvanized steel
sheet is a material in great demand. Two
large-scale plants at the salzgitter location
turn out products for the automotive industry,
the building and construction sector,
as well as serving the household appliances
industry.
The galvasim hot-dip galvanization
simulator by vatron supports the optimization
and the analysis of active production
processes.
This equipment represents a further
milestone in terms of the optimization of
processes that encompass material pro-
duction, coating processes and the customization
of product properties. a special
focus is set on the impact of alloy elements
on steel surfaces. especially the new,
higher-tensile steel grades contain higher
concentrations of alloy elements. The simulator
now allows the experts at salzgitter
to precisely examine the effect of such elements
on the galvanization process and
determine steps to be taken to minimize
such effects. furthermore, the unit supports
the development and testing of innovative
zinc-alloy coating materials with
tailored functionality and enhanced corrosion
protection.
4. aNNealiNg simulaTor
This unit is used to map and represent
materials and material development
throughout the process chain of steel
production. it enables the precise
reproduction of hot-dip galvanization
processes at laboratory scale and delivers
reliable data and information on the
properties of annealed, cold-rolled and
hot-rolled strip products in the preliminary
phases prior to delivery.
The simulator supports the annealing
of very soft steels as well as high-tensile
steels. The annealing temperatures and
process parameters correspond with those
of the hot-dip galvanization plants of
salzgitter flachstahl gmbH.
Clients also benefit from production
plant-oriented process development,
accelerated integration of new steel grades
into hot-dip galvanization processes, as
well as the optimization of grades for
surface finishing, and added value thanks
to great cost efficiency and time savings.
The unit is capable of processing test
objects with a maximum diameter of
450 mm x 250 mm x 3.00 mm.
1 2 3 4
30 stil stil 31

GO – the Salzgitter AG Generation Offensive 2025
The project is geared to responding to the consequnces of demographic change in a timely manner
Demographic development
and the resulting consequences
for present and future
societies have meanwhile
become a central focus of discussion,
not just in Germany. In addition
to the knock-on effects on social security
systems, it is above all employment
issues that dominate the current socio-political
debate. Companies are increasingly
having to accommodate the
fact that tomorrow’s world of work, and
that of the day after, will be populated
by fewer workers. What’s more,
the work to be accomplished must be
managed by a workforce of a higher average
age and of a very different composition.
The staged increase in the retirement
age and the abolition of partial
early retirement at the end of 2009 will
exacerbate the situation still further.
In order to respond without delay to
the consequences of demographic change
and thereby maintain and enhance the
Group’s ability to compete and innovate
in the long term, back in March
2005 Salzgitter AG launched Project GO
– the Salzgitter AG Generation Offensive
2025.
stil Why has Salzgitter AG decided to initiate
Project GO – the Generation Offensive 2025?
peter-jürgen schneider As part of the
demographic change in society that we have
all heard about, in the coming years the proportion
of older employees among the workforce
as a whole is going to increase substantially.
Legislative action such as the end of
partial early retirement and the increase in
the pensionable retirement age will emphasize
the trend still further.
stil GO is very broad-based. What is the
thinking behind this approach?
schneider Demographic change will impact
the entire structure of society. The number
of school and subsequently university students
will decline, with corresponding effects
on the labor market. So we can’t just concern
ourselves with older employees, we also have
to change the way we recruit the next gen-
Project: GO
The Salzgitter AG Generation Offensive 2025
Corporate culture and
leadership
Work organization,
working hours and pay
Project GO is designed as a collective
learning and development process. In the
past 2 years, employees from all Group
divisions have developed 90 programs
focusing on such diverse aspects as
corporate culture and leadership,
personnel marketing and recruiting,
human resources development and
eration. And there is no point in
delaying preventive action until it
is too late.
stil When will we begin to experience
the first effects of demographic
change?
schneider We are already doing
so. The numbers of children are in
sharp decline, while the proportion
of older people in our society is
growing strongly. And this in turn is
reflected in the workforce.
stil So is GO also a way of safeguarding the
future of the Salzgitter Group?
schneider With GO we aim to offer our
employees the prospect of fulfilling, value-creating
work through to the age of retirement.
At the same time we also intend to safeguard
the company’s ability to compete and innovate
under changing demographic conditions.
Human resources development
and qualification
Health/fitness and
ergonomics
qualification, work organization,
working hours and pay, health /
fitness and ergonomics and integration
management. In the coming years these
programs will gradually be rolled out
at individual Group companies, if
indeed they have not been implemented
already.
“The first steps are already being taken!”
Interview with Peter-Jürgen Schneider Executive Board member at Salzgitter AG with
responsibility for Human Resources
Peter-Jürgen
Schneider
Personnel marketing and
recruitment
Integration
management
stil Are the first specific steps already
being taken?
schneider Yes, by restructuring
company pensions we have gone
some way towards facilitating early
retirement. Our in-house fitness
centers offer the opportunity to
keep fit and take preventive measures
against poor health, and with
a broad-based human resources
development system, efforts are currently
being made at SZFG to substantially
raise the level of qualifications among wage
earners, as well as salaried staff. And there
are a whole lot of other examples I could
name.
GO – the Generation Offensive 2025
will form the basis of our human resources
activities at Salzgitter AG in the years to
come.
“Isn’t it good?” Two girls at the Steel Campus show off their rose made out of steel
Inspiring the next generation with
a love of technology
Salzgitter AG addresses school pupils and students with a diversified outreach
Demographic changes (see left)
are making it progressively more
difficult for German industry to
recruit adequately qualified junior
staff. Now more than ever, it takes commitment
and imagination to inspire school
pupils and students with enthusiasm for a
technical career.
Experts are forecasting that by 2020 the
number of pupils in schools will have fallen
by 18.6 percent, accompanied by shifts
in school types, whereby schools focusing
on practical training will be the losers. Over
the same period, the traditional candidate
base for industrial training courses and apprenticeships
will decline by a third.
Already the problems in attracting young
people to take up engineering- and sciencebased
careers are not to be overlooked, due
mainly to their choice of subject at university.
In the coming years, the number of engineers
entering retirement in Germany will exceed
the number of graduates emerging from universities.
In not a few cases, the choice of career at
various entry levels is marred by irrational
preferences and inadequate information and
dictated by the structural availability of train-
ing places. The universities report vacancies
in sectors that offer prime employment prospects,
such as electrical engineering, for example,
while in other fields the numbers of
students is growing out of all reasonable
proportion to the expected demand for employees
with such qualifications.
Choosing the right career path enables
candidates to avoid failures and frustration, it
conserves the financial resources of both individuals
and society, and it helps to preserve
the economic efficiency on which our ability
to finance the welfare state ultimately depends.
The need to improve career orientation
must therefore be a matter of concern
shared by all social groups.
And that of course includes Salzgitter AG.
The Group attaches great importance to safeguarding
the next generation of employees.
For some years now, Salzgitter AG has used a
whole raft of approaches to appeal to the relevant
target groups.
To reach out to school pupils, school
partnerships, school activities and practical
work experience are all designed to interest
even the youngest in a technical career.
All these measures are backed up by special
events such as the Steel Campus staged
xxxxxxxxxx
at the “Ideen-Expo”, the Ideas Fair in Hanover
which attracted over 60,000 school pupils
in the autumn of 2007. Under the guidance
of trainees from Salzgitter AG, both girls and
boys got better acquainted with steel as a material
through the medium of play.
In June 2007, in a joint venture by Salzgitter
AG and the phaeno “science theme park”
in Wolfsburg, 70 groups drawn from Years
10 to 13 gained a lasting impression of what
metal working is all about.
In order to address students, Salzgitter
AG maintains close contacts with numerous
universities in Germany through joint research
projects, sponsored professorships,
study grants, etc. The 15 or so annual graduate
careers fairs also play an important part.
In 2007 for example, events were held at the
RWTH Aachen University and the Technical
University Brunswick.
In addition, Salzgitter AG also offers integrated
degree programs, sponsors students
studying abroad and awards various study
prizes. “All of these approaches are aimed at
safeguarding our next generation of em-
ployees as well as making a contribution to society
as a whole,” explained Peter-Jürgen Schneider,
Personnel Director at Salzgitter AG.
32 stil stil 33
PHOTO: UDO BOJAHR

trading trading
A fruit seller in a
busy Beijing street
S a l z g i t t e r i n t e r n a t i o n a l
“Demand in India is
set to increase”
Interview with Heinz Groschke, Executive
Board Member Trading at Salzgitter AG, about
the markets in Asia and the USA
stil What significance does Asia
have for Salzgitter Mannesmann
International?
heinz groschke The Asian markets
play a very significant role
for the Salzgitter Mannesmann
International group. For one thing,
we buy steel in Asia for the international
markets, particularly in
China, India and Malaysia. Moreover, we play
a part in developing business between different
Asian countries, as reflected in the cooperation
between our branches in China and Singapore.
Singapore is, for example, a base from which we
purchase steel products not only for sale on the
European markets but mainly for customers
in Malaysia, Indonesia, Vietnam,Thailand and
the Philippines.
stil Which of the Asian countries are likely to
become increasingly important?
groschke The demand for steel, in India especially,
will increase in the coming years. Vietnam,
too, is developing outstandingly well. Naturally,
countries such as Korea and Japan are extremely
important in general terms, but not quite so
significant for our business at present.
stil Will the upswing in the region continue at the
pace we have become accustomed to – or do you
see any risks?
groschke I am convinced that the upswing will
continue, particularly in China, which has a
steel industry of its own. Steel products will
also continue to be exported, and I am confident
that we will have a stake in this export
business. Development in India has only just
begun, and it is highly likely that the pace will
increase.
stil What opportunities for development do you
see for the American steel and tubes market?
groschke We are currently witnessing an
exceptionally dynamic, but also healthy
development in the markets in general. This
also applies to the steel market, of course, even
if some significant sectors such as for example
the automobile industry are currently
suffering from structural weaknesses. The oil
and gas industry is particularly prominent
in the USA, where efforts are being made to
reduce the country’s dependence on imports.
As a result there is a lot of exploration going
on, which means that pipelines will be needed
for transportation and distribution. From my
perspective, this segment of the market is likely
to develop strongly in the next few years.
34 stil stil 35

Peter Meyer must have a stomach
of steel by now. Over the past
20 years the delicacies that have
come his way have ranged from
scorpions to pigs’ ears, duck brains, tripe,
and even dog (“I only found out afterwards
what it was”). But the high point,
if one can call it that, was undoubtedly
a feast of snake. “The meat tasted good,”
Meyer recalls, “but then I had to toast my
opposite number with a glass of snake’s
blood …. .” Which shows the lengths
some people go to in order to close a deal.
Now aged 54, Peter Meyer has worked
for the Group in Asia since 1988. As Managing
Director of Salzgitter Mannesmann
International (HK) Limited based in Beijing,
he heads a team of 24 staff with offices
in Canton, Shanghai, Hong Kong
and Taipei. Business has been highly satisfactory
for some years now. In 2006,
Meyer’s team – in cooperation with the
rest of the Salzgitter Mannesmann International
Group companies – turned over
around 600,000 tons of steel for the international
market. The total for 2007 is
likely to be 800,000 tons. Such figures illustrate
both the current strong demand
worldwide, as well as the headlong development
in China’s burgeoning economy,
The Market in Asia A junk pictured
The massive upswing in the Far East continues to be headed by China. In terms of steel,
within a matter of a few years the country has developed from a net
importer to an exporter. Salzgitter Mannesmann International’s Beijing-based subsidiary
is also chalking up strong figures. We paid a visit.
which grew by 11.1 percent in 2006 alone.
We drove in from Beijing airport to
the office on the 8th floor of the modern
Sunflower Tower on Maizidian Street.
The city is surprisingly western in appearance.
Endless traffic jams (1,000 new
cars are registered every day in Beijing),
countless construction sites (ready for the
Olympic Games in August), noise, heat
and smog. Peter Meyer smiles a little sadly
as we drive: “When I came here for the
first time 20 years ago, it was an adventure.
There were very few western hotels,
no street lighting, all the signs were
strictly in Chinese – and when we went to
the zoo people stroked my little daughters’
red and brown hair to see if it was
real …”
Business, too, has changed dramatically
in the intervening years. China has developed
from a net importer to an exporter
of steel. Peter Meyer explains: “Up
to 2004, imports still accounted for more
than half of our business. A year later,
steel coming into China made up only
about a quarter of our trading volume.
The reasons are obvious – as the fourth
largest country on earth, China can satisfy
its own needs.” Back in 1988 China
was producing around 70 million tons
The Asia team with Peter Meyer (10th from left) on the Great Wall. The map on the right
shows Salzgitter Mannesmann International’s offices in Asia
of steel. By 2006, output had risen to 429
million tons, and the upward trend continues.
Faced with this situation, Meyer and his
team had to completely rethink their
operation: “Familiar customers we had
dealt with over many years just melted
away – so we struck up new contacts with
the steel makers’ sales departments.” It is
all the more remarkable that this dramatic
about-turn that climaxed in 2004 was
accomplished without a slump in business.
Imports were largely replaced by exports.
Time to call it a day. Peter Meyer shares
a table with longstanding colleagues Liu
Yan Haua and Victor Huang in the German
beer cellar across the street from the
office. They speak in English, as do all the
office staff. The waitress brings Bavarian
beer, roast pork and sausage. The place is
crowded, with far more Chinese raising a
glass than “long noses”, as Europeans and
Americans are known here. In the morning
Meyer is flying off to visit a steel producer
in Xiangtan, but for now he has a
moment to relax.
What do you need to bear in mind in order
to do business in China? Meyer, who
acquired his skills in the early 70’s at the
Salzgitter Stahl trading company in
Düsseldorf, before spending three years
working for the Group in London, doesn’t
need to think twice: “Someone once said to
me here in China, ‘Even if you cannot understand
one another, it is important to
maintain the correct facial expression.’ By
which he meant that when you are trying
to get a deal off the ground, it is important
in the first place to observe the correct formalities.
You have to be friendly, smile a lot
– and as far as possible don’t turn down
anything your host puts in front of you.”
Even if that includes scorpions …
Meyer continues, “The Chinese tend to
be skeptical and as a matter of principle it
is extremely important to earn their trust.
Once you have done so, you can look forward
to a long-term relationship.”
Negotiations are hard. “On principle,
Chinese producers try to gain the upper
hand.” A seasoned and savvy dealmaker,
Meyer is not to be outwitted, and he relies
on another characteristic of the Chinese,
namely their sense of fairness: “It is generally
enough for me just to remark that
we both have to be happy with the terms
of the deal.”
To this day, it is not unusual for Chinese
partners to deliberately conduct negotiations
at several levels of hierarchy. As
Peter Meyer explains, “When we are
buying steel, we have to make sure we
don’t start off at too high a price, so we
are able to give a little ground at every
level – right up to the boss who makes the
final decision. If we only accommodate
one of the negotiators on price, the whole
deal may come to nothing. Keeping face is
everything in China.”
The following morning at the steelworks
in southern Chinese city of
Xiangtan, Peter Meyer and his colleague
Laurence Chen sit down to negotiate
against the unrivaled
skyline of Hong Kong
prices for the months ahead. The plant,
which has been heavily modernized in recent
years and employs a workforce of
20,000, is one of the main suppliers to
the Salzgitter Mannesmann International
Group, producing sheet which is regularly
bought in for stockholders in Europe.
Before flying on to the Hong Kong office,
Meyer pays a quick call elsewhere in
the plant. Two Chinese employees of the
international certification specialist Bureau
Veritas are inspecting the quality of
a load of sheet destined for Indonesia.
“We are supplying 4,000 tons in total,”
Meyer continues. “The material will be
used in Indonesia to manufacture pipes
that in turn are needed to build a pipeline
in India.”
The trading activities of Salzgitter Mannesmann
Handel in China are centered
on four areas. Most important of all is the
business with Salzgitter Mannesmann In-
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PHOTOS: CArSTEN WUrr
ternational in Düsseldorf. “We receive
five or six inquiries every day from Germany,”
says Meyer. One such request was
for quotations for a potential order for
Mexico. “Within two days we managed to
speak to every suitable supplier and obtain
their offers.”
Other inquiries arrive regularly from the
sister company in Singapore with which
the offices in China cooperate closely and
which is responsible for, among others,
the markets of Vietnam, Thailand, Indonesia,
Malaysia and the Philippines. As Peter
Meyer explains, “This trade within the
Asian region is our second most important
source of business. The third most important
region is currently North America/
Canada, where we have been developing a
significant volume of business in 2007.”
The fourth important area of business
involves the importation of technical
equipment. “There are traditional
reasons behind this, given that the Salzgitter
Group was once also engaged in plant
manufacturing.” The Beijing office has just
arranged the delivery of eight tunnel excavators
built by German manufacturer
Terex for the Chinese railways. The project
was valued at around five million euros
and came under the heading of development
aid, financed via the Kreditanstalt für
Wiederaufbau.
How broad a range of products does
Meyer’s team in China cover? “We are
strong on exports of plate, and we also
handle hot rolled sheet and strip, cold strip
and surface-coated products. In the field of
tubes we are free to source anything which
Inspired by the nest of a bird - the Olympic
Stadium in Beijing (top left). Peter Meyer
with his colleagues at the Hong Kong office
(top). A poster at the steelworks in Xiangtan
serves as a reminder that
China is still a communist country (left).
Eleven years after the hand-over to
China, Hong Kong (above) remains a hub
of the financial world
is not available from the Group’s own producers
for the international markets –
from spiral-welded line pipes to seamless
and longitudinally welded tubes and pipes
for oil and gas transportation. And we find
Chinese producers are also competitive on
merchant bar.”
It’s evening by the time Peter Meyer arrives
in Hong Kong. After a brief visit to
the office for a meeting with the three
members of staff, it’s time to call it a day
and stop off at a typical Asian noodle
shop. This time there are no scorpions or
snakes. Meyer has a bowl of soup followed
by chicken and rice. “I like Asian food,” he
remarks. But when asked what he misses
most about Germany, he replies without
hesitation, “the delicious cheese and all the
wonderful sausages.”
A visit to Houston
Salzgitter Mannesmann International USA: The Texan metropolis has become the center
from which the Group serves the American market
Salzgitter Mannesmann International USA: When
the company was founded in Houston six years
ago with just a handful of staff, the prestige behind
the name outweighed the business. Meanwhile
things have changed immensely. In a matter of a
few years the company has become so far integrated into the
international trading network that it is directly or indirectly
involved in around 25 percent (!) of total Trading Group
sales – a remarkable success story. And a good reason to pay
a call at 1770 St. James Place, a modern business district not
far removed from downtown Houston. Here the company
leases half a floor in a rather unspectacular office block. Our
first appointment is with Claus Gundlach, 52, the head of
Salzgitter Mannesmann International, Houston. He learned
his trade at Klöckner in Germany and has lived in the USA
for over 25 years. Gundlach explains the main reasons for
this success story ‘made in Houston’. The business in the USA
is underpinned by integration within a global organization
and by a team that now comprises 24 members drawn from
nine different nations. “These are all highly qualified people
without whom we would get nowhere around here.” The
deals done from St. James Place mainly involve flat rolled
products with the recent addition of tubes as well. Sales in
2006 amounted to over 500 million dollars; sights are set on
the magic billion mark. In the NAFTA free trade zone, the
Houston-based company with offices in Chicago and Tupelo
operates in close cooperation with colleagues at companies
in the other member’s countries, Canada and Mexico. In
addition to the business of selling, other functions essential to
the trading operation are also fulfilled in Houston. The Traffic
department, for example, ensures that goods ordered not
only reach their port of destination, but on request are also
delivered by barge, truck or rail to the customer’s doorstep.
However, it is not just logistics that are important. No less
than five staff members hack their way through the document
jungle on behalf of customers, ensuring with meticulous care
that, for example, every customs regulation is complied with.
As logistics manager Lucila M. Guibu explains, “This job
is much more complex in the USA than in Germany. Even
accidental errors can have dramatic consequences.”
Finance and controlling is of equally great importance in
the US market, and this department works closely with the
head office in Düsseldorf, as well as providing administrative
and accounting support for a sister company in Mexico.
No wonder a growing number of customers have come to
appreciate the level of service. Says Gundlach: “We believe
in any case that the days of normal trading, just moving
goods from A to B, are long since past.” His magic formula is ➢
Claus Gundlach
(in the middle)
and his team
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Mexico City
Vancouver
Houston
International sales
organization
Company
Office
Agency
Chicago
Tupelo
Montreal
Toronto
São Paulo
“marketing trading”. For years the company has brought its
US customers together with manufacturers in every part of the
world – something that is still by no means standard practice
in an industry which did its best to avoid this scenario in the
past. Gundlach again: “We have a totally different take on this
at the Salzgitter Mannesmann Handel Group. For one thing
we stand by our margins. We have to work consistently hard
for them. And by bringing customers and suppliers together,
orders can be discussed in far more precise detail. The result
is an entirely new and open atmosphere, which all sides
appreciate. This three-cornered relationship contributes hugely
to customer loyalty. For years, this way of working has ranked
as one of the basic principles of the whole international Group
and a foundation for our success.”
Trading is very much a people business. In the first year
after the company was founded in Houston, a large number of
customers and suppliers chose to follow the traders they had
come to trust. They formed the basis on which the company’s
success is built. But the growth that followed required other
qualities as well: Flexibility and imagination, a sound financial
base, and of course an effective global network to support
both purchasing and exports from the USA, to other NAFTA
destinations and elsewhere. Claus Gundlach thinks back for
example to the years 2001 to 2003, when only very limited
quantities of steel could be imported into the USA. “We
imported insofar as we were able, but in a very short time
we developed a market within the USA and with the other
NAFTA countries.” It was a case of seeing new opportunities
and seizing them, a habit which is engrained in the Houston
team to this day. Gundlach again: “If you once rest on your
laurel, that’s when you start losing it.” The American way of
thinking fits in well with the company ethos. “Americans are
very innovative; there is a constant flow of attractive new
openings for our products. What‘s more, they give everyone
a chance to succeed.” Is trading a desk job? Absolutely not, in
fact a good part of the year is taken up by traveling – around
the world. In the course of which purchasing is an important
aspect. After all, customers want what customers always want:
The right material at the right time and at an attractive price.
Thanks to the global network of the international Trading
Group, these requirements can be fulfilled. In cooperation
with colleagues in Düsseldorf, new suppliers are brought
onboard and old relationships consolidated. Steelworks from
russia to Brazil and from Thailand to China and the Ukraine
have long since been part of the network. “Our customers are
not the only ones to benefit from this international network
and the open, friendly way in which we work together at the
Trading Group. The Salzgitter AG manufacturing units also
Beijing Seoul
Shanghai
Guangzhou Taipei
Hong Kong
Hanoi
Tubes for the US company are discharged at the port of Houston …
…ready for pre-processing just a few kilometers away: Here
threads are being cut into the ends.
40 stil stil 41
Singapore
Jakarta
Stephen Munsell at the
Salzgitter tubes storage depot
profit from these active customer relationships. The Group
plants have strong order books at the moment,” says Gundlach,
“and for flat rolled products, for example, Europe is without
doubt the more important market. Nevertheless for highquality
products we and Salzgitter Mannesmann International
are ready and willing to establish a beachhead for Flachstahl
GmbH in the USA. There is a strong demand for the beams
produced by Peiner Träger GmbH as well as for high-quality
plate, especially the high-end tube grades from Ilsenburger
Grobblech GmbH.”
The proportion of Salzgitter products sold has risen
substantially since spring 2005. This is due, among other
reasons, to the fact that the US company at this time took over
distribution of Mannesmann Fuchs rohr tube products in the
USA, an important business for the Group. Sales of special
tubes used primarily in the USA as casings for oil and gas field
exploration will reach around 40,000 tons this year. This figure
will rise still further in 2007 with the sale of higher quality
products, as soon as the scheduled investment in a 24“ line and
a heat treatment plant in Hamm has been completed. In the
tubes business as well, it is clear that the company in Houston
has long since abandoned outdated trading practices. Pipe in
particular is generally sold as “pre-treated”. In other words
it is bought in with plain – unthreaded – ends and put into
store. Then, when customers place their orders, the pipes are
supplied ex stock with threads pre-cut. Various subcontractors
such as the firm of Grant Prideco close to the port of Houston
cut the threads and fit a coupling ready for connection to
the next length of tube. Stephen Munsell, Senior Manager
at Salzgitter Mannesmann International explains: “This is
a service which our customers appreciate.” Interpersonal
relationships at the company follow the relaxed American
pattern. respect is mutual, and there is always time for a
joke between all levels of hierarchy. The pending workload
is discussed at regular Monday meetings. “These meetings
last an hour at most,” says Gundlach, “and by then everyone
knows what’s happening; in all departments.” Efficiency and
openness – the principle is evidently effective. Gundlach again:
“Comparable firms in the US generally operate with twice the
number of staff we have.” Two or three times a year the staff
gets together after work for a happy hour to which customers
are also invited. One evening at “McCormick & Schmicks” just
round the corner; Michael Schäfer, chief buyer at Delta Steel, is
there along with Jochen Seeba, his opposite number at ranger
Steel – both are ranked among the leading steel wholesalers in
the USA. The conversation over beer and plenty of appetizers
ranges from last weekend’s barbecue to new business. No
doubt about it, the success story continues …
PHOTOS: CArSTEN WUrr

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