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Abstract:
Long seen as ailing, the steel industry is being shaped by new trends which are making it a profitable and attractive business through consolidation, globalisation, cheaper technologies and research and development (R&D). The slow growth in mature markets is being counterbalanced by a strong demand for steel in emerging countries. The main players of the steel industry are also changing; some are becoming global and are ahead in the race for consolidation. LN Mittal, an Indian entrepreneur, envisioned these changes and is now head of the world leader in the steel industry, Mittal Steel. He created this global and multi-cultural steel company through a methodical and successful acquisition strategy, consolidation management and integration process. The second largest group, the European Arcelor followed a different path. Arcelor was created by the merger of three national European champions and differs from Mittal Steel by its capital structure, management style and governance. The case discusses: (1) the characteristics of the steel industry, long seen as unattractive and unprofitable; (2) the prospects for growth in mature and emerging markets with product differentiation and R&D; (3) the logic of consolidation and globalisation in the steel industry; (4) the know-how that Mittal Steel developed in turning sick plants into profitable plants and in integrating acquisitions worldwide to create true synergies; and (5) the business models of Arcelor and Mittal given the changing landscape of the steel industry.
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