Annual Report 2014 - North America

North America

Combined sales: € 555 million
Capital expenditures (PP&E): € 26 million
Total assets: € 303 million
Employees: 1 600

Economic environment 2014

The economy took a slow start in the beginning of 2014 due to the long and harsh winter in the eastern half of the continent. The weather affected consumer spending and construction activity during the first months, as well as investments in the agricultural sector. The rebound started in the second quarter, and over the aggregate of the year, North America’s economy improved compared to 2013. The US recorded GDP growth of about 2.5%, reflecting both an upswing in consumer and construction spending, as well as increased industrial activity in comparison with the previous year. Automotive demand, in particular, was strong throughout 2014. The North American steel sector continued to compete with imports,  an increasing trend as a result of the strengthening US dollar after the second half of 2014.

The improved demand from automotive markets, and solid supply from our North American steel ropes activities, could not compensate for the declining demand for Bekaert’s products in other North American industrial, construction and agriculture markets in 2014. The agricultural markets never recovered from the harsh winter, and the demand for cable armoring products remained at 2013’s low level.

Our activity performance

Bekaert’s activities recorded higher volumes in 2014 in comparison with a weak 2013. The segment, however, continued to underperform, in terms of profitability, due to underutilized production capacity and price pressure from import flows. In November 2014, we were hit by a fire which caused structural damage to parts of the Rome (Georgia, US) production plant, specializing in bead wire for the tire industry and in rubber reinforcement products for hydraulic rubber hose markets.

Bekaert's capital expenditure (PP&E) in North-America amounted to € 26 million and related mainly to ropes, tire cord and bead wire activities.

In 2014, we invested in tire cord and bead wire manufacturing capacity at our Rogers (Arkansas, US) and Rome (Georgia, US) plants respectively. Holding a leading position in steel cord markets for tire reinforcement, these investments will increase the capacity and technical capability that Bekaert can ensure from local production sources to the tire manufacturers in the US.

Bekaert also invested in its other manufacturing sites in both the US and in Canada. Major investments were made in the Van Buren (Arkansas, US) plant which produces a wide range of industrial steel wire products, and, through the asset deal, in the ropes plant in Belton (Texas, US).

Through its affiliate Wire Rope Industries, Bekaert started manufacturing steel ropes in the US in March 2014. The company established a production facility in Belton (Texas, US) and will leverage its technological and manufacturing competences in steel ropes for the oil and gas sector under the operational management of Bekaert’s Canadian Wire Rope Industries organization.

Fire at the Bekaert Rome (Georgia, US) plant
On 19 November, a fire caused structural damage to part of the Bekaert manufacturing plant in Rome, Georgia. All employees were evacuated on time and no one was injured. The bead wire lines and the adjacent draw area were damaged due to the fire and collapse of the roof. Bekaert immediately took actions to ensure that customers could rely on continuity of supply, either through product stocks available or through alternative sourcing. Bekaert Rome has been able to rapidly restore part of its operations, including all hose wire production activities. 

The damaged parts of the site are being rebuilt and re-equipped to restore bead wire production activities over the course of 2015. Bekaert also remains fully committed to the investment plans aimed at increasing the bead wire capacity of the Rome plant.
Bekaert has phased out its steel wire manufacturing activities in Surrey, Canada, and stopped all production there at the end of the first quarter of 2014.