1. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive

2. The Effects of Globalization on the Aluminum Extrusion Industry The Effects of Globalization on the Aluminum Extrusion Industry Bruno G. Rüttimann, Alcan Singen GmbH Bruno G. Rüttimann, Alcan Singen GmbH 8th International Aluminum Extrusion Technology Seminar ET‘04 May 18-21, 2004 Orlando, Florida Part 2: Implications Part 2: Implications

3. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Mergers & Acquisitions

4. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Trade Deregulation

5. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Increasing Competition

6. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Price Pressure

7. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Flow of Information

8. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Interlinked Markets

9. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive World-wide Strategies

10. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Reduced Growth Rates

11. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Overcapacity

12. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Un- employment

13. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive

16.  Summary Part 1: Theoretical Considerations  The Dimension of Globalization  The Emerging New Paradigm  The 10 Extrusion Postulates of Globalization  Restrictions and Strategic Options for Extruders  Summary Part 1: Theoretical Considerations  The Dimension of Globalization  The Emerging New Paradigm  The 10 Extrusion Postulates of Globalization  Restrictions and Strategic Options for Extruders CONTENT Part 2 (General Session): Implications..

17. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Deriving Typologies of Globalization Basic classification of business types Market structure Market structure Product characteristics Product characteristics Operating configuration Operating configuration Business classification Business classification Typeof globalization Typeof globalization Product characteristics Product characteristics

18. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Deriving Typologies of Globalization Basic classification of business types Product characteristics Product characteristics Market structure Market structure Product characteristics Product characteristics Operating configuration Operating configuration Business classification Business classification Typeof globalization Typeof globalization

19. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Deriving Typologies of Globalization Basic classification of business types Market structure Market structure Product characteristics Product characteristics Operating configuration Operating configuration Business classification Business classification Typeof globalization Typeof globalization Product characteristics Product characteristics PRODUCT CHARACTERISTICS non differentiated differentiated

20. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Deriving Typologies of Globalization Basic classification of business types Market structure Market structure Product characteristics Product characteristics Operating configuration Operating configuration Business classification Business classification Typeof globalization Typeof globalization Product characteristics Product characteristics PRODUCT CHARACTERISTICS non differentiated differentiated polypolistic oligopolistic MARKET STRUCTURE Commodity Speciality Standards Convenience

21. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Deriving Typologies of Globalization 2 main types polypolistic oligopolistic MARKET STRUCTURE PRODUCT CHARACTERISTICS non differentiated differentiated Type II Market structure Market structure Product characteristics Product characteristics Operating configuration Operating configuration Business classification Business classification Typeof globalization Typeof globalization Type I Type 1: material G. (physical) Type 2: immaterial G. (financial)

22. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Deriving Typologies of Globalization 2 main types Market structure Market structure Product characteristics Product characteristics Operating configuration Operating configuration Business classification Business classification Typeof globalization Typeof globalization polypolistic oligopolistic MARKET STRUCTURE PRODUCT CHARACTERISTICS non differentiated differentiated Type Ib Type Ia Type II Type Ic Type 1: material G. (physical) Type 2: immaterial G. (financial)

23. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Bauxitmining, alumina production, Primary smelter,casting, Rolling,extruding, diecasting,forging,...,,, Components,, finished products Usage Recycling Usage Scrap, waste Remelters, foundries, Scrap, waste Deriving Typologies of Globalization Aluminium industry structure and globalization type polypolistic oligopolistic MARKET STRUCTURE PRODUCT CHARACTERISTICS non differentiated differentiated Type Ib Type Ia Type II

24. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Bauxitmining, alumina production, Primary smelter,casting, Rolling,extruding, diecasting,forging,...,,, Components,, finished products Usage Recycling Usage Scrap, waste Remelters, foundries, Scrap, waste Deriving Typologies of Globalization Aluminium industry structure and globalization type polypolistic oligopolistic MARKET STRUCTURE PRODUCT CHARACTERISTICS non differentiated differentiated Type Ib Type Ia Type II

25. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive Bauxitmining, alumina production, Primary smelter,casting, Rolling,extruding, diecasting,forging,...,,, Components,, finished products Usage Recycling Usage Scrap, waste Remelters, foundries, Scrap, waste Deriving Typologies of Globalization Aluminium industry structure and globalization type polypolistic oligopolistic MARKET STRUCTURE PRODUCT CHARACTERISTICS non differentiated differentiated Type Ib Type Ia Type II

26. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive... a Big Change is Occurring European price evolution of rolled and extruded products ?

27. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Dimension of Globalization Global view of extrusion production in 2001 L. America 675 N. America 1770 West Europe 2400 E. EU 300 CIS 650 Japan 1020 China 1300 Asia 1197 Africa 450    

28. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Dimension of Globalization Global view of extrusion flows in 2001 L. America 675 N. America 1770 West Europe 2400 E. EU 300 CIS 650 Japan 1020 China 1300 Asia 1197 Africa 450 27 13 93 14 171 24 43 16 151 38 54 39 55 66 23

29. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Dimension of Globalization Geographical distribution of selected group plants GroupTOTALN-AmericaL-AmericaW-EuropeE-EuropeCISChinaJapanAsiaAfrica Alcan541 Alcoa45171114111 Bonnell77 Capral66 Corus541 Hydro4010223113 Indalex15 Kaiser77 Pechiney99 Sapa142111 YKK6141 Source DIAC

30. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Dimension of Globalization Geographical distribution of selected group plants GroupTOTALN-AmericaL-AmericaW-EuropeE-EuropeCISChinaJapanAsiaAfrica Alcan541 Alcoa45171114111 Bonnell77 Capral66 Corus541 Hydro4010223113 Indalex15 Kaiser77 Pechiney99 Sapa142111 YKK6141 Source DIAC

31. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Dimension of Globalization Geographical distribution of selected group plants GroupTOTALN-AmericaL-AmericaW-EuropeE-EuropeCISChinaJapanAsiaAfrica Alcan541 Alcoa45171114111 Bonnell77 Capral66 Corus541 Hydro4010223113 Indalex15 Kaiser77 Pechiney99 Sapa142111 YKK6141 Source DIAC

32. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Dimension of Globalization Geographical distribution of selected group plants GroupTOTALN-AmericaL-AmericaW-EuropeE-EuropeCISChinaJapanAsiaAfrica Alcan541 Alcoa45171114111 Bonnell77 Capral66 Corus541 Hydro4010223113 Indalex15 Kaiser77 Pechiney99 Sapa142111 YKK6141 Source DIAC

33. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Emerging New Paradigm Dynamics of paradigm change in fragmented markets Strategytogrow globally forK + Globalization Type 2 Take over in Z + Propensity for globalization (Type 1c) + Strategytogrow globally forZ + Globalization Type 1c Export (ZK) + Domestic demandK + - Domestic demandZ - - + - Shake out in K + + + + - -

34. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The Emerging New Paradigm Dynamics of paradigm change in fragmented markets Strategytogrow globally forK + Globalization Type 2 Take over in Z + Propensity for globalization (Type 1c) + Strategytogrow globally forZ + Globalization Type 1c Export (ZK) + Domestic demandK + -- Domestic demandZ - + - Shake out in K + + + + - -

35. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 1 Type 2 globalization will not change the fragmented market structure and its related market rationale. Postulate 1 Type 2 globalization will not change the fragmented market structure and its related market rationale. polypolistic oligopolistic MARKET STRUCTURE PRODUCT CHARACTERISTICS non differentiated differentiated Type Ib Type Ia Type II

36. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 2 Family-owned independent SME will continue to exist in concomitance of group integrated extruders. Postulate 2 Family-owned independent SME will continue to exist in concomitance of group integrated extruders.

37. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 3 The new opportunity of internet bidding can create the preconditions for a new world market price. Postulate 3 The new opportunity of internet bidding can create the preconditions for a new world market price.

38. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 4 Price difference in different economies will generate a propensity for type 1c globalization. Postulate 4 Price difference in different economies will generate a propensity for type 1c globalization. Volume Price F D I C H B G A E p A p K Price span of similar economies DemandZ OfferZ Z p Z Transaction cost c ZK Globalization propensity (p K -p Z -c ZK )

39. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 5 A new eclectic market type is potentially arising with a still fragmented market structure but type 1c world price characteristics. Postulate 5 A new eclectic market type is potentially arising with a still fragmented market structure but type 1c world price characteristics.

40. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 6 This type 1c is unstable, and has only transient character because of growing overseas demand and shrinking propensity. Postulate 6 This type 1c is unstable, and has only transient character because of growing overseas demand and shrinking propensity.

41. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 7 Price level in high-price economies will drop temporarily as long as price differences will exist. Postulate 7 Price level in high-price economies will drop temporarily as long as price differences will exist.  

42. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 8 Shake-out of less competitive extruders is foreseeable. Postulate 8 Shake-out of less competitive extruders is foreseeable.

43. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 9 Demand will increase due to lower price level and open the access to new applications. Postulate 9 Demand will increase due to lower price level and open the access to new applications.

44. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive How to Respond Restrictions and strategic options for extruders COMPANY TYPE Group Integrated SME Independent BASIC STRATEGY ORIENTATION DefendExport Type 2 Concentrate on service ( cost remains anissue) Idem Technology or solution driven Idem,but exploit specialization within the network X Take over / JV ineconomyZ

45. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive The 10 Extrusion Postulates of Globalization Postulate 10 Extruders situated in high-price economies will have to further concentrate their offer on service or technology based performance. Postulate 10 Extruders situated in high-price economies will have to further concentrate their offer on service or technology based performance.

46. ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive