No drop in sale of steel to small and mid-sized enterprises - excellent results of "Arcelor distribucija" in 2009

In spite of the financial crisis that seriously hit metal-processing industry and the prognoses that steel consumption in 2009 will be reduced by 33%, Belgrade-based "Arcelor distribucija" did not register drop in demand this year, and some of its results are even better than in 2008.

According to Predrag Miloš, the CEO of "Arcelor distribucija" in Serbia, this success is the result of strong support of "ArcelorMittal", the world's largest steel manufacturer and global leader in trade in steel.

Speaking about the strategy of group "ArcelorMittal", which is focused on sale of steel to small and mid-sized enterprises, he points out that that has proved to be an excellent move because these companies have maintained continuity in production at the time of the crisis.

- "Arcelor distribucija" has applied that strategy to Serbian market. We have turned to small and mid-sized enterprises, which are the manufacturers that have reduced their operations, but they have not endangered the continuity of operations. The policy that insists on cooperation with such buyers is a good move because only small number of partners experience financial problems, which we are trying to resolve together. During the first three months, consumption of steel in Serbia dropped by 30 to 35%, and our operations remained the same as in 2008. "ArcelorMittal", which has production units in 50 locations, has made it possible for us to simply and quickly respond to the requests of our buyers – said the interlocutor of "eKapija".

He points out that one of the reasons for higher demand for their products is, definitely, discontinuation of production in company "U.S. Steel".

- Company "U.S. Steel" used to satisfy local needs for steel products. However, there is not going to be enough products this year, so that certain share of products will have to be imported – says Miloš and adds that, in spite of the completion of privatization and fulfilled contracting obligations by both US corporation and the Government of Serbia, the state still "saves" "U.S. Steel" with the duty of 8.5%, which creates a problem to the metal complex of Serbia.

According to our interlocutor, metal-processing industry in Serbia is in bad condition although it has great chances for development. Predrag Miloš says that the greatest advantages are - know-how, geographic position, cheaper manpower, as well as duty-free trade with Russia and Belarus.

The opinion of Predrag Miloš is that the announced large infrastructural works in Serbia are, definitely, in favor of metal-processing companies. However, since it is pretty late with payments, the state has not proved to be a good investor.

Investments

"Arcelor distribucija" opened a modern trade-storage complex at about 2,000 square meters in Novi Sad last year, while the realization of the plan for opening of distrubutive centers all around Serbia has been postponed.

- We still stick to the initial plan, and that is the opening of series of retail facilities, but we have postponed realization of these investments. The results we achieve in the market and extension of the list of buyers are, definitely, good signals, so that we expect that the realization of the announced projects will commence in 2010. We would like to have the buyers who continuously consume our goods, and we will make the products easily and quickly available to them.

The fact that Vojvodina is the largest consumer of steel in Serbia was one of the reasons why "Arcelor" has decided to invest in Novi Sad.

Besides, as "eKapija" already wrote earlier, that group planned to develop distributive network in Belgrade, central and south Serbia within the next three or four years. Further development of warehouses, that is, distribution system, is in the pipeline, and every warehouse should have both retail and wholesale function.

Region

Predrag Miloš and Nenad Krunić from "Arcelor distribucija" in Serbia are also responsible for the establishment of sister companies in Croatia, Bosnia and Herzegovina and Montenegro.

According to Predrag Miloš, the potentials of these markets are significant. The company in Croatia is already in operation, while the companies in other two countries will be opened soon. The forge in Skopje is also a part of "ArcelorMittal".

Romanian newspaper agency "Mediafaks" announced that the headquarters of the new company's center for coordination in Southeast Europe was in Romanian city of Galaci where the group's branch office was situated as well.

"ArcelorMittal" Galaci will become the center of the department for Southeast Europe, the parts of which will be "ArcelorMittal" Skopje and Turkish trade office.

The Deputy President of company, Thierry Le Gall, will be the Executive Director of the new branch office, while the current Director of the combine in Galaci, Augustin Kočuparampil, will take over the managerial position in "ArcelorMittal" Ostrava.