Antonio Marcegaglia, 47, graduated with top grades in business economics from Milan's Luigi Bocconi University in 1987, subsequently obtaining a master's degree in the United States. Then he joined the family business, Mantua-based Marcegaglia Group, becoming managing director of the company.
Mr. Marcegaglia, could you define Marcegaglia's core business? What are the reference markets for your company?
Marcegaglia Group comprises 50 companies and 52 plants spread across Italy and the rest of the world. Our activities are varied, but they are mainly focused on steel processing. We process hot rolled, pickled, galvanized and cold rolled coils, heavy plates, drawn bars, welded pipes, etc. The stainless steel sector is also very important. In short, our product range is very wide and this makes Marcegaglia a unique entity in the global steel industry, with approximately 15,000 active customers and 7,500 employees. Our operational and financial results are significant: in 2010 the group's sale volumes amounted to 5.8 million metric tons - we aim to achieve 7.8 million metric tons in 2013 - with an aggregate turnover of €5 billion. Concerning our sources for steel supplies, we look to different steelmakers, not only in Italy but also in the most important international markets, including China.
How would you describe Marcegaglia's commercial strategy?
Our vision is driven by two keywords: diversification and flexibility. Steel markets change, evolve, and we have realized this especially in the last two to three years. In this context, it is of crucial importance to set up a network for supply, production and distribution activities. The network itself has to be diversified as much as possible, in order to react promptly to market changes. This is and will always be our approach.
What are Marcegaglia's investment plans? Do you intend to focus on new markets?
We have already invested conspicuous sums in the last few years, mainly in the deepest period of the financial crisis. In 2007-2008 we announced new expenditures totaling about €1 billion, aimed at the expansion of our Italian activities and targeting the implementation of several projects around the world, in Brazil, Russia, China, US and UK. Investing despite the unfavorable economical environment was a hard challenge for the group, but we are now reaping the fruit of our efforts. By 2013, when all projects will be fully developed, about 20 percent of our business will be located outside the Italian border. At present, we sell about 50 percent of our products in the local Italian market, while 40 percent is sold in EU markets and 10 percent in non-EU markets. Our steel products are mainly used in the construction, automotive, white goods and steel furniture industries.
How do you rate Marcegaglia's 2010 financial results, taking into account the impact of the recent crisis? Would you say that the worst is over?
Last year our sales volume recorded an increase of 20 percent compared to 2009, though it was still four percent lower than in 2008. The earnings figure is more encouraging, as the company has already recovered to pre-crisis levels, due to a 50 percent growth year on year in 2010. I would say Marcegaglia Group displayed a strong ability to react to the crisis, and this allowed us to regain the position lost during 2009 because of the global recession.
The international market for raw materials, such as coal and iron ore, has been characterized by increased volatility. How does this affect steel companies ?
The international raw materials market has certainly been in tension for the last few years, and this situation will continue in the future as well. In my opinion, there is a lack of balance between supply and demand in the coal and iron ore markets, and as a result every change in supply and demand tends to cause significant swings in the price trend. Consequently, we witness high volatility in the prices of these important raw materials, but we have to get used to it because this situation will be normal in the steel business in the future. In this context, it will be crucial for steelmakers to increase their levels of information about market fluctuations, in order to be able to ‘read' the trends of prices and demand and to regulate their activities accordingly.
In the last few years, especially after the global crisis, some countries have adopted protectionist measures. How do you consider this phenomenon? How should the European Union react to this new situation?
There is no doubt that the increase in protectionism is a matter of concern for the EU countries. There are regions in the world with higher protectionism levels than in Europe. Brazil, Russia and India, for instance, come to mind. I think that the EU trading institutions should have a less ideological and more pragmatic policy, with the aim of achieving a balance between EU and non-EU legislation with regard to environmental protection issues. In fact, at present European steel companies suffer from lower competitiveness simply because of stricter environment rules compared to other regions of the world. We definitely need a politically stronger EU to tackle such disadvantages.
What is your view of steel industry overcapacity in developed countries?
This is quite a complicated problem and one which is difficult to solve. However, I believe that the negative effects of overcapacity are mainly felt regionally. Furthermore, in the last few years, steelmakers have become more flexible in regulating their output levels. In other words, overcapacity does not now necessarily lead to price decreases, since the mills have learned to cut production in line with changes in market demand. Thus, the key issue is now capacity utilization, as opposed to maximum designed output capacity.