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Hydro adjusts to slower building market

Although activity in the building industry in Europe remains relatively stable, in the midst of the global economic crisis, Hydro has made adjustments in its aluminium building systems operations that will result in annualized cost savings of more than EUR 5 million.

Until now, the most significant portion of the cost savings has been generated from the process to integrate the Spain-based Alumafel Group with the rest of Hydro’s aluminium building systems unit in Portugal and Spain. The savings are in line with the estimates Hydro made prior to the July 2008 acquisition.

As part of the integration process, Hydro has reduced the manning of its Iberian unit. This reduction was anticipated at the time of the acquisition, when bringing together companies with overlapping roles and responsibilities.

Hydro has furthermore accelerated the speed of the integration process for the Iberian unit, due to the substantial slowing of the building market in Spain. The process should be completed by July 2009, one full year ahead of schedule.

"Having had a real building boom in recent years, Spain is experiencing a deeper fall than Europe's other main markets. This encouraged us to speed up the restructuring," says Lars Hauk Ringvold, who is responsible for Hydro's aluminium building systems organization.

Continuous adjustments

The adjustments in its unit in Portugal and Spain represent the natural starting point for the cost savings that the building systems organization has achieved until now. They are not the only ones that have been carried out, however, and Ringvold says more will come.

Hydro's proactive and continuous adjustments in production, based on demand in its markets, have accounted for some of the savings, including reduced manning. But additional savings have resulted from the implementation of more efficient asset and knowledge sharing solutions, in line with company strategy.

"Similar to the Alumafel integration, we have been identifying the synergies in our aluminium building systems brands, so that we can share and combine these in a more global and local way of operating. This is where our customers are telling us to go," says Ringvold.

"We know this is going to be a challenging year. Our goal is to continue to stay ahead as we navigate this economic storm, and come out stronger when it ends."

The largest integrated aluminium company in Europe, Hydro is one of the preferred suppliers of aluminium building systems worldwide. Its brands – Alumafel, Domal, Technal and Wicona – cover the range of system products, from windows and doors for single-home residential solutions to the erection of façades on major structures such as new airports or high-rise buildings.

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