the effects of globalization on the aluminum extrusion industry
DESCRIPTION
8th International Aluminum Extrusion Technology Seminar ET‘04 May 18-21, 2004 Orlando, Florida. The Effects of Globalization on the Aluminum Extrusion Industry. Part 2: Implications. Bruno G. Rüttimann, Alcan Singen GmbH. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/1.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
![Page 2: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/2.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Effects of Globalization on the Aluminum Extrusion Industry
Bruno G. Rüttimann, Alcan Singen GmbH
8th International Aluminum Extrusion Technology Seminar ET‘04 May 18-21, 2004 Orlando, Florida
Part 2: Implications
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Mergers & Acquisitions
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Trade Deregulation
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Increasing Competition
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Price Pressure
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Flow of Information
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Interlinked Markets
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
World-wide Strategies
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Reduced Growth Rates
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Overcapacity
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Un-employment
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
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
CONTENTPart 2 (General Session): Implications
.
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Deriving Typologies of GlobalizationBasic classification of business types
MarketstructureMarket
structureProductcharacteristicsProductcharacteristics
OperatingconfigurationOperatingconfiguration
BusinessclassificationBusinessclassification
Type of globalizationType of globalization
![Page 18: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/18.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Deriving Typologies of GlobalizationBasic classification of business types
MarketstructureMarket
structureProductcharacteristicsProductcharacteristics
OperatingconfigurationOperatingconfiguration
BusinessclassificationBusinessclassification
Type of globalizationType of globalization
![Page 19: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/19.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Deriving Typologies of GlobalizationBasic classification of business types
MarketstructureMarket
structureProductcharacteristicsProductcharacteristics
OperatingconfigurationOperatingconfiguration
BusinessclassificationBusinessclassification
Type of globalizationType of globalization
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d
d
iffer
entia
ted
![Page 20: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/20.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Deriving Typologies of GlobalizationBasic classification of business types
MarketstructureMarket
structureProductcharacteristicsProductcharacteristics
OperatingconfigurationOperatingconfiguration
BusinessclassificationBusinessclassification
Type of globalizationType of globalization
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d
d
iffer
entia
ted
polypolistic oligopolisticMARKET STRUCTURE
Commodity
Speciality
Standards
Convenience
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Deriving Typologies of Globalization2 main types
polypolistic oligopolisticMARKET STRUCTURE
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d
d
iffer
entia
ted
Type IIType II
MarketstructureMarket
structureProductcharacteristicsProductcharacteristics
OperatingconfigurationOperatingconfiguration
BusinessclassificationBusinessclassification
Type of globalizationType of globalization
Type IType I
Type 1: material G. (physical)
Type 2: immaterial G. (financial)
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Deriving Typologies of Globalization2 main types
MarketstructureMarket
structureProductcharacteristicsProductcharacteristics
OperatingconfigurationOperatingconfiguration
BusinessclassificationBusinessclassification
Type of globalizationType of globalization
polypolistic oligopolisticMARKET STRUCTURE
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d
d
iffer
entia
ted
Type IbType Ib
Type IaType Ia
Type IIType IIType IcType Ic
Type 1: material G. (physical)
Type 2: immaterial G. (financial)
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Bauxit mining,
alumina production
,
Primary smelter, casting,
Rolling, extruding,
die casting, forging ,...
, ,
,
Components, ,
finished productsU
sage
Recycling
Usa
ge
Scrap,waste
Remelters, foundries
, Scrap,waste
Deriving Typologies of GlobalizationAluminium industry structure and globalization type
polypolistic oligopolisticMARKET STRUCTURE
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d d
iffer
entia
ted
Type IbType Ib
Type IaType Ia
Type IIType II
![Page 24: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/24.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Bauxit mining,
alumina production
,
Primary smelter, casting,
Rolling, extruding,
die casting, forging ,...
, ,
,
Components, ,
finished productsU
sage
Recycling
Usa
ge
Scrap,waste
Remelters, foundries
, Scrap,waste
Deriving Typologies of GlobalizationAluminium industry structure and globalization type
polypolistic oligopolisticMARKET STRUCTURE
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d d
iffer
entia
ted
Type IbType Ib
Type IaType Ia
Type IIType II
![Page 25: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/25.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
Bauxit mining,
alumina production
,
Primary smelter, casting,
Rolling, extruding,
die casting, forging ,...
, ,
,
Components, ,
finished productsU
sage
Recycling
Usa
ge
Scrap,waste
Remelters, foundries
, Scrap,waste
Deriving Typologies of GlobalizationAluminium industry structure and globalization type
polypolistic oligopolisticMARKET STRUCTURE
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d d
iffer
entia
ted
Type IbType Ib
Type IaType Ia
Type IIType II Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
Rolling, extruding,
die casting, forging ,...
, ,
,
![Page 26: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/26.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
... a Big Change is OccurringEuropean price evolution of rolled and extruded products
0
1000
2000
3000
4000
5000
1980 1984 1988 1992 1996 2000
LME
DM
/Ton
5
6
7
8
9
10
DM
/kg
LMERollingExtrusion
Opening of Eastern EU
?
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Dimension of GlobalizationGlobal view of extrusion production in 2001
L. America675
N. America1770 West Europe
2400
E. EU300
CIS650
Japan1020
China1300
Asia1197Africa
450
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Dimension of GlobalizationGlobal view of extrusion flows in 2001
L. America675
N. America1770 West Europe
2400
E. EU300
CIS650
Japan1020
China1300
Asia1197Africa
450
27
13
93
14
171
2443
1615138
5439 55 66
23
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Dimension of GlobalizationGeographical distribution of selected group plants
Group TOTAL N-AmericaL-AmericaW-EuropeE-Europe CIS China Japan Asia Africa
Alcan 5 4 1Alcoa 45 17 11 14 1 1 1Bonnell 7 7Capral 6 6Corus 5 4 1Hydro 40 10 2 23 1 1 3Indalex 15 15Kaiser 7 7Pechiney 9 9Sapa 14 2 11 1YKK 6 1 4 1
Source DIAC
![Page 30: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/30.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Dimension of GlobalizationGeographical distribution of selected group plants
Group TOTAL N-AmericaL-AmericaW-EuropeE-Europe CIS China Japan Asia Africa
Alcan 5 4 1Alcoa 45 17 11 14 1 1 1Bonnell 7 7Capral 6 6Corus 5 4 1Hydro 40 10 2 23 1 1 3Indalex 15 15Kaiser 7 7Pechiney 9 9Sapa 14 2 11 1YKK 6 1 4 1
Source DIAC
![Page 31: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/31.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Dimension of GlobalizationGeographical distribution of selected group plants
Group TOTAL N-AmericaL-AmericaW-EuropeE-Europe CIS China Japan Asia Africa
Alcan 5 4 1Alcoa 45 17 11 14 1 1 1Bonnell 7 7Capral 6 6Corus 5 4 1Hydro 40 10 2 23 1 1 3Indalex 15 15Kaiser 7 7Pechiney 9 9Sapa 14 2 11 1YKK 6 1 4 1
Source DIAC
![Page 32: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/32.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Dimension of GlobalizationGeographical distribution of selected group plants
Group TOTAL N-AmericaL-AmericaW-EuropeE-Europe CIS China Japan Asia Africa
Alcan 5 4 1Alcoa 45 17 11 14 1 1 1Bonnell 7 7Capral 6 6Corus 5 4 1Hydro 40 10 2 23 1 1 3Indalex 15 15Kaiser 7 7Pechiney 9 9Sapa 14 2 11 1YKK 6 1 4 1
Source DIAC
![Page 33: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/33.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Emerging New ParadigmDynamics of paradigm change in fragmented markets
Strategy to growglobally for K
+
GlobalizationType 2
Take overin Z
+
Propensity for globalization(Type 1c)
+
Strategy to growglobally for Z
+
GlobalizationType 1c
Export (Z K)+
Domesticdemand K
+
-
Domesticdemand Z
-
-
+
-
Shake outin K
+
+
+
+
-
-
![Page 34: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/34.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The Emerging New ParadigmDynamics of paradigm change in fragmented markets
Strategy to growglobally for K
+
GlobalizationType 2
Take overin Z
+
Propensity for globalization(Type 1c)
+
Strategy to growglobally for Z
+
GlobalizationType 1c
Export (Z K)+
Domesticdemand K
+
- -
Domesticdemand Z
-
+
-
Shake outin K
+
+
+
+
-
-
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 1Type 2 globalization will not change the fragmented market structure and its related market rationale.
polypolistic oligopolisticMARKET STRUCTURE
PRO
DU
CT
CH
AR
AC
TER
ISTI
CS
non
diffe
rent
iate
d d
iffer
entia
ted
Type IbType Ib
Type IaType Ia
Type IIType II
MarketstructureMarketstructure
ProductcharacteristicsProductcharacteristics
OperatingconfigurationOperatingconfiguration
BusinesstypeBusinesstype
Type of globalizationType of globalization
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 2Family-owned independent SME will continue to exist in concomitance of group integrated extruders.
25.03.2004
1900 20001950
20overall aluminium consumption 25 Mt
10
5
Independent 56%
Integrated 44%
INDEPENDENTS VS INTEGRATEDS WORLD ALU USERELATIVE SHARE
Mt
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 3The new opportunity of internet bidding can create the preconditions for a new world market price.
Saturation in existing
end markets
Saturation in existing
end markets
World-wide communication
network
World-wide communication
network
Searching for optimization potential
Searching for optimization potential
Searching for geographical expansion
Searching for geographical expansion
Searching for diversification opportunities
Searching for diversification opportunities
M&AM&A
Opening of a global market
with new competitive environment
and new world market
price
Opening of a global market
with new competitive environment
and new world market
price
+PricePrice//margin pressure margin pressure PricePrice//margin pressure margin pressure
Change of competitive system
Change of competitive system
Shake-outShake-out
Concentration processConcentration processConcentration process
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 4Price difference in different economies will generate a propensity for type 1c globalization.
Volume
Price
FDI
CH
B GA
EpA
pK
Price spanof similareconomies
Demand ZOffer Z
ZpZ
Transactioncost cZK
Globalizationpropensity(pK-pZ-cZK)
0
10 0
20 0
30 0
40 0
50 0
V ZK
G
lobal
izat
ion v
olu
me
(kto
n)
0 0 ,5 1 1 ,5 2P ro pens ity (E u ro /kg)
00 ,10 ,20 ,30 ,40 ,50 ,60 ,70 ,80 ,91
Ela
stic
ity
P ro p e ns ity fun c tio n E la s tic ity fo r g lo ba liz a tio n
0p
L K
ZKZK
ZKpp
s
KZK eLV 0
ZK
ZK
ZK
ZK
ZK
pp
VV
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 5A new eclectic market type is potentially arising with a still fragmented market structure but type 1c world price characteristics.
polypolistic oligopolisticMARKET STRUCTURE
PROD
UCT
CHAR
ACTE
RIST
ICS
non
diffe
rent
iate
d
d
iffer
entia
ted
TypeType Ib Ib
TypeType Ia Ia
Type IIType IIType Type IcIc
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 6This type 1c is unstable, and has only transient character because of growing overseas demand and shrinking propensity.
Strategy to growglobally for K
+
GlobalizationType 2
Take overin Z
+
Propensity for globalization(Type 1c)
+
Strategy to growglobally for Z
+
GlobalizationType 1c
Export (Z K)+
Domesticdemand K
+
- -
Domesticdemand Z
-
+
-
Shake outin K
+
+
+
+
-
-
![Page 41: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/41.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 7Price level in high-price economies will drop temporarily as long as price differences will exist.
Volume
Price Demand K Offer K
pK
VK
initialequilibrium
Offer Z
pZ
VZ
price drop ofdomestic supplies
volumeincrease
pdom
VK‘
Offer K‘
finalequilibrium
shake out
remaining domesticsupplies Vdom
importsupplies VZK
0
1000
2000
3000
4000
5000
1980 1984 1988 1992 1996 2000
LME
DM
/Ton
5
6
7
8
9
10
DM
/kg
LME Rolling Extrusion
Opening of Eastern EU
![Page 42: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/42.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 8Shake-out of less competitive extruders is foreseeable.
Volume
Price Demand K Offer K
pK
VK
initialequilibrium
Offer Z
pZ
VZ
price drop ofdomestic supplies
volumeincrease
pdom
VK‘
Offer K‘
finalequilibrium
shake out
remaining domesticsupplies Vdom
importsupplies VZK
![Page 43: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/43.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 9Demand will increase due to lower price level and open the access to new applications.
Volume
Price Demand K Offer K
pK
VK
initialequilibrium
Offer Z
pZ
VZ
price drop ofdomestic supplies
volumeincrease
pdom
VK‘
Offer K‘
finalequilibrium
shake out
remaining domesticsupplies Vdom
importsupplies VZK
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
How to RespondRestrictions and strategic options for extruders
CO
MPA
NY
TYP
E G
roup
In
tegr
ated
SME
Inde
pend
ent
BASIC STRATEGY ORIENTATION Defend Export Type 2
Concentrateon service
(cost remains an issue)
Idem
Technology orsolution driven
Idem, but exploitspecialization
within the network
X
Take over / JVin economy Z
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
The 10 Extrusion Postulates of GlobalizationPostulate 10Extruders situated in high-price economies will have to further concentrate their offer on service or technology based performance.
![Page 46: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/46.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
![Page 47: The Effects of Globalization on the Aluminum Extrusion Industry](https://reader035.vdocument.in/reader035/viewer/2022081520/56816834550346895ddde888/html5/thumbnails/47.jpg)
ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive
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ET ‘04 May 18-21, 2004 Orlando, Florida B. Ruettimann, Alcan Automotive