Materials Suppliers Continue Global Push Asia remains a powerful lure for most

Eric Carlson, a marketing manager at DuPont Automotive who spent years in China, says that being successful there is like crossing a wide and busy street in Beijing.

"Imagine thousands of bicycles per minute passing in front of you; there's never a break, and you want to get to the other side. No one will stop for you to cross, so you have to take the first step on your own. Start on a determined course, where the bike riders can see where you're going and can anticipate your direction, and they'll start flowing around you. But whatever you do, don't change direction too quickly or abruptly - you'll most likely cause street carnage and hurt yourself. So, patiently and deliberately indicate your direction and keep moving until you finally reach your goal. Act too impulsively, and you'll get flattened," he says.

This certainly seems to be the route most major materials producers are taking in their globalization efforts. Despite all the uncertainties, they continue to plow slowly ahead.

After announcing a plan two years ago to form a joint venture with rival BASF to manufacture and sell nylon "intermediate" chemicals in Asia, the companies finally made it official on April 1. They have selected Dong-Fang, Hainan, in the People's Republic of China as the manufacturing site for their $900 million venture.

"We remain totally committed to this joint venture, although it has taken longer to reach this point than we anticipated," says Eduard J. Van Wely, DuPont senior vice president responsible for the company's worldwide nylon business and the Asia Pacific region. "It is a key element, along with our adipic acid plant and Zytel polymer unit in Singapore, in solidifying DuPont Nylon's position as a major intermediates, polymer, and fiber producer in Asia Pacific."

Construction of the manufacturing facility in DongFang is scheduled to begin early in 1999. The two companies say the venture will enable them to combine their latest processing technologies to get the lowest-cost chemical components for resins that later will be turned into proprietary engineering polymers they then will sell separately. DuPont also is involved in numerous other Asian ventures.

Most other major plastics and chemical companies also are continuing globalization efforts, making major investments in new facilities to assure the lowest-cost, highest-quality resins and feedstocks. DSM Engineering Plastics, for instance, joined the Nanjing Chemical Industry Group in a 60/40 joint venture to expand the existing caprolactam (a building block for nylon 6) plant in Nanjing. The expanded capacity is slated to come on stream in the year 2000. DSM also has formed joint ventures in Japan and Korea during the past year.

Dow Chemical Co. also is continuing to globalize, building a low-cost feedstock base and a wide portfolio of materials that sometimes compete for similar applications - such as polypropylene and acrylonitrile butadiene styrene (ABS) - so it can offer its customers a "material-neutral" perspective on a worldwide basis. A top Dow official admits emerging markets can get scary sometimes, but he's undaunted. "We know how to play that game, we understand high risk. It's like playing the stock market. You don't get into the stock market for only six months."

The steel industry is globalizing, too, sometimes involuntarily. General Motors Corp. recently caused a stir by inviting 40 steelmakers from around the world to bid for its steel business - worth $5 billion annually - on a global, rather than regional basis. GM also is reportedly seeking longer, three-year contracts.

GM's motivation is simple: it wants lower prices, and now it can whipsaw 40 suppliers instead of only a dozen or so in regions such as North America. It is holding out the carrot of huge, long-term contracts for those companies that can limbo low enough.This has enormous potential implications be cause GM is the steel industry's single biggest customer. The global strategy could enable many foreign steel companies - particularly Asian steel producers looking to export excess capacity from the recession-battered region - to gain a foothold at GM's North American Operations that they don't currently enjoy. The stronger dollar also is making the U.S. market more attractive to Japanese steel producers, helping offset potential transportation costs.

Japan-based Kawasaki Steel Corp. and Nippon Steel Corp. reportedly have been invited to bid on GM business, as have Pohang Iron & Steel Co. Ltd. from South Korea and Broken Hill Proprietary Co. Ltd. of Australia.

These moves likely will speed up consolidation throughout the steel industry in North America and overseas. The mega-merger of German steel and industrial groups Thyssen AG and Fried. Krupp AG Hoesch-Krupp is creating one of Europe's largest steel and industrial groups, with more than $33 billion in annual sales and 180,000 employees.

USX Corp. reportedly is seeking a partner for a joint bid to take over Hanbo Steel Co., a financially troubled South Korean steel producer, a move that would give it access to Asian markets. Korean giant Pohang Iron & Steel Co., which already has a U.S. joint venture with USX, apparently has been approached by USX about jointly acquiring Hanbo.

And fast-growing Ispat International of the Netherlands announces plans to acquire Chicago-based Inland Steel Co. to become the world's eighth largest steel producer. The purchase represents a major step into North America for Ispat, which already has mills in Canada, Mexico and Trinidad. Analysts suspect the acquisition could touch off a wave of consolidation throughout the U.S. steel industry.

Even Lakshmi N. Mittal, Ispat International's chairman, confirms the Inland deal could only be the first. "I've said consolidation has to begin in the United States, and we will be there," Mr. Mittal says. When asked if Ispat will acquire another U.S. steelmaker in the future, he says "Why not?" o

- with Tom Murphy

Scientific Proof: Some Windshields Save Gas

Automotive glass producers continue to improve their technology. Officials at glass-producer PPG Industries are pleased to learn that engineers at the National Renewable Energy Laboratory (NREL) in Golden, CO, conclude that solar-reflective windshields do indeed reduce heat buildup in a vehicle and ultimately save gas by lowering the strain on air conditioning systems.

PPG makes a windshield called Sungate that uses a transparent metal/metal oxide reflective coating laminated between the glass plies that reflects solar energy.

"Reducing solar transmissivity to the level achieved by the PPG Sungate windshield means that smaller air conditioning systems can be used in a car the size of a Plymouth Breeze, resulting in a potential fuel savings," says Rob Farrington, NREL's senior engineer and project manager for the Vehicle Auxiliary Load Reduction Program.

Reducing the size of the A/C system based on solar control from a reflective windshield translates into a 1.7% or 0.5 mpg improvement on a Plymouth Breeze, Mr. Farrington says. He adds that reducing the power requirements of auxiliary loads by as little as 400 Watts can improve fuel economy for a 40-mpg (5.9L/100 km) car by 2.3 mpg (0.3L/100 km). o

Birmingham Steel Targets Automakers with New Mill

Birmingham Steel Corp. unveils its new $215 million melt shop in Memphis, TN and says it's targeting automakers with its new special bar quality (SBQ) products. The Memphis melt shop will be capable of providing 1 million tons of high-quality SBQ billets annually for conversion into products at the company's Cleveland, OH, bar, rod and wire mill operations.

Using the latest technology, the Memphis melt shop will provide Birmingham with start-to-finish control - from raw materials to finished product - over the entire line of SBQ bar, rod and wire products rolled in Cleveland. Currently the SBQ product line consists of high quality bar, rod and wire which is turned into end products such as engine bolts, seat belt bolts, electric motor shafts, springs, cable wire and other applications.

Targeting automakers is a key link in Birmingham's SBQ strategy. The company says it's putting the tools into place to expand its ties with Detroit's Big Three and transplant automak-ers. An important requirement, especially for Japanese producers, is that suppliers maintain total control of their manufacturing cycle from beginning to end, Birmingham says. So in order to attain that total process control, the steelmaker now is manufacturing its own high-quality billets. The Cleveland SBQ facility has been purchasing all but a small portion of its billet requirements from outside sources.

"Once Memphis is at full production capacity, we will be one of the lowest-cost, highest-quality producers of SBQ products in the steel industry," says Birmingham Chairman Robert A. Garvey.

Bright Products Association Formed With chrome trim on the rise, 10 companies involved with supplying chrome wheels, bumpers and trim have joined to form the Automotive Bright Products Assn. (ABPA). "This association complements all facets of our industry from manufacturers to platers to suppliers, and we feel that by working together we will be able to increase business for everyone," says J. Patrick Billinge, ABPA executive committee spokesman. The association plans to attend several industry trade shows and events in 1998-'99, including the SAE Bright Trim Conference, North American International Auto Show and the SAE International Congress.

Collins & Aikman Plans Auto Center Collins and Aikman Products Co. plans a new automotive center in Troy, MI. The building will bring together the majority of Collins & Aikman's sales/marketing, program management and engineering/design personnel for each of its five automotive business units: automotive fabrics, carpet and acoustics, plastics, floor mats, and convertible systems. "This facility will serve as our technical sales and service center with some space designated for benchmarking and prototype development," says Thomas E. Hannah, Collins & Aikman's CEO.

Superior Grows with Aluminum Wheels The continued popularity of aluminum wheels is fattening the bottom line of Superior Industries International Inc., whose net income was up 11% in '98's first quarter. Noting that Superior's unit wheel shipments rose for the quarter despite relatively flat vehicle production in North America, a spokesman attributes the company's strong performance to further expansion of its position in the OEM aluminum road-wheel market and continuing improved performance of its chrome-plating operations.