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Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World Environment Center - International Forum London, 22 October 2003 Jürg Gerber, Alcan

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Page 1: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

Alcan’s integrated supply chains and strategic partnerships with industrial customers

Corporate social responsibility by optimizing supply chains

World Environment Center - International ForumLondon, 22 October 2003Jürg Gerber, Alcan

Page 2: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

slide 2

WEC CSR Alcan supply chain London 22 Oct 03

1 Alcan activities, presence and the global picture

2 Alcan management system elements

3 Alcan EHS product stewardship and EU Directives

4 Alcan supply chain example: automotive

Structure

Page 3: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Rolled Products

Engineered Products

Packaging

Bauxite mining

Alumina refining

Aluminium smelting

Alcan - a global leader in aluminium, packaging and recycling

2002 revenues: US $ 12.5 billion

54‘000 employees

Active in 42 countries

Page 4: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Alcan’s Presence

Bauxite, Alumina and Specialty Chemicals Primary Metal Rolled Products Europe Rolled Products Americas and Asia Engineered Products Packaging Corporate/Other Offices

Page 5: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Aluminium life cycle - basis for sustainability

Page 6: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

The Alcan System allows to optimize material flows and maximize eco-efficiency as basis for sustainable development

Aluminium a global life cycle

Primary Metal - 26 mio tpy

Alumina Production - 50 mio tpy

Bauxite Mining -100 mio tpy (for metal production)

Main Producers- Australia- Guinea- Jamaica- Brazil- India- China- Venezuela- Russia- others

20022002

Page 7: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

77% of Hydropower for Primary Metal production is owned by Alcan

2002 Electricity Consumption for Primary Metal production

114.9 Mio GJ (31.93 Billion kWh)

• Alcan operates 16 aluminium smelters in 7 countries with a total capacity of 2.4 Mt per year

• Products: sheet ingot, extrusion billet, wire bar, rod, foundry and remelt ingots, ca 2.8Mio tons of products and parts

Alcan primary aluminium production - Energy source

Page 8: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

26%

32%

14%

19%

9%

Building

Transport

Engineering

Packaging

Others

Aluminium growth depends largely on the dynamics of growth of the different market sectors with different life times

Source EAA 2002Source EAA 2002

TOTAL 10.3 Mio t (Rolled, Extruded, Castings) - West and central Europe (excl CIS)

Aluminium use end markets Europe

Primary Metal4.6 Mio t

Recycled Metal3.6 Mio t

Net Imports2.1 Mio t

Page 9: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

slide 9

WEC CSR Alcan supply chain London 22 Oct 03

1 Alcan activities, presence and the global picture

2 Alcan management system elements

3 Alcan EHS product stewardship and EU Directives

4 Alcan supply chain example: automotive

Structure

Page 10: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

• Shareholder Experience / Expectations• Stakeholder Expectations / Engagement• Regulatory Requirements• Environment, Health & Safety Standards• Product Standards• Corporate Reporting Requirements• Awards e.g DJSI

All play a role in determining corporate performance and “license to operate”. There has been a tendency to address demands in a silo fashion 10

• Environmental disasters• Corporate governance crisis• Increasingly well-organized NGOs• Increased public awareness • Government activism• Globalization of markets• Information technology

Demands on companies have intensified over recent years due to rapid economic, social, political, and environmental changes:

Demands and expectations on companies

Page 11: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

A sustainable approach to business needs to be supported by integrated business systems that enhance the credibility of the enterprise through both and its performance and its products.

Alcan has implemented EHS FIRST, as an integrated EHS management system that is part of Alcan’s overall integrated business model to achieve our governing objective of maximizing value.

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Sustainability and integrated business model

Page 12: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Improving PerformanceStakeholder expectationsCommitment

Alcan’s sustainability framework integrates all activities

Page 13: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Without such a strategy at the community level our long-term license to operate will be in jeopardy - risking long-term corporate value.

By engaging our stakeholders, we increase our understanding of the economic, environmental and social dimensions of our business decisions, and develop strategies that create value for all those affected by our choices.

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Building Alcan’s relationships

Page 14: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

> ....

> Co-operate with customers to understand their needs and support their use of best EHS practices in the design and manufacture of safe and reliable products that take full advantage of our materials’ properties throughout their life cycles. Alcan is often known by its products

– Working with customers ensures safe product use

– Many products offer EHS advantages that contribute to Alcan’s prestige

> Demonstrate leadership in EHS to reflect the superior and life-enhancing characteristics of our products for the benefit of all society. Life Cycle Assessment assists Alcan to improve EHS performance and encourage use of our products with less impact on society

- Increased use of aluminium in automobiles reduces emissions of CO2

- Improved packaging technology decreases the risk of product contamination

> ....

Alcan’s EHS Policy - 2 out of our 9 principles

Page 15: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

• Global EHS Management System with key requirements, roles and responsibilities

• Line Management leadership• Incorporates best practices, ISO 14001 and OHSAS 18001• Critical component of our commitment to corporate sustainability• Helps safeguard our license to operate and grow• Provides one of cornerstones of value-based company• Reinforces stakeholder relations• Delivers tools for prevention, which is highest value alternative• Enables continual EHS improvement and value maximizationSpecific EHS FIRST programs have been developed in order to address the relevant EHS aspects of our production processes and products.

On the environmental side these programs require every Alcan site to maintain an inventory of all resources and all process inputs and outputs, including potential environmental releases. Under these programs, all sites must set objectives and targets for minimizing resource use and for preventing or reducing process releases. These data are also needed for our EHS product stewardship process and LCA calculations.

Alcan EHS FIRST overview

Page 16: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

1 Alcan activities, presence and the global picture

2 Alcan management system elements

3 Alcan EHS product stewardship and example EU Directives

4 Alcan supply chain example: automotive

Structure

Page 17: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Alcan EHS Assessments

Relevant input for Alcan sites

Input for AlcanBusiness Units

Input for Public Affairs

and Associations

Input for Public Relations

Product related case studies

Input to product related issues

Product related EHS aspects

Market related EHS information

EHS product stewardship - main deliveries

Page 18: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

> The customers, significance of use phase and recycling> Alcan’s EHS Policy and commitment to sustainable development> Environmental Management Systems

– ISO 14001: “The organisation shall establish and maintain a procedure to identify the environmental aspects • of its activities• ...and of its products or services”

> The authorities– Upcoming IPP (Integrated Product Policy) legislation of the EU– EU Directives on recycling, e. g. ELV ( End of life vehicles) Directive

Definition. Life cycle assessment (LCA)

LCA is a scientific tool for the evaluation of all the effects (both positive and negative) on the environment of a product or a service throughout its complete life cycle’from cradle to grave’. LCA thus looks at effects in the field of raw material extraction, fabrication, transportation, use, and recycling/disposal, as well as from energy and ancillary material supplies.

EHS product stewardship - main drivers

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WEC CSR Alcan supply chain London 22 Oct 03

> We have to find out as early as possible...

– where threats and opportunities for our products resulting from ecologically motivated customer decisions exist;

– where the authorities interfere with our markets by new regulations and standards;

– where risks of product liability exist;

> We have to co-ordinate efforts to meet the challenges

> We have to identify long-term market trends from EHS information on products

EHS product stewardship - challenges

Page 20: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Key factors which underline the need of the product dimension:

the overall quantity of products is increasing, the variety of products and services is increasing, innovation constantly creates new types of products, products are traded globally, products are becoming more complex, the product can be designed perfectly, but inappropriate use and disposal will cause significant environmental impacts, products now involve a greater variety of actors throughout their life-cycle.

Many open questions from our point of view e.g.:- how is IPP linked with other thematic strategies e.g. resource use, waste prevention and recycling etc- how to avoid ‘good and bad’ product lists etc, trend for product declarations- what about uniform national implementation plans- specific consequences for markets dealing with public procurement

EU - integrated product policy IPP

Page 21: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

slide 21

WEC CSR Alcan supply chain London 22 Oct 03

1 Alcan activities, presence and the global picture

2 Alcan management system elements

3 Alcan EHS product stewardship and EU Directives

4 Alcan supply chain example: automotive

Structure

Page 22: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Kingston Ontario (3) (4)

Dubuc, Quebec (2)

Detroit, Michigan (4)

Banbury, England (4)

Neuhausen, Switzerland (4)

Sierre, Switzerland (3)

Gottmadingen, Germany (1)

Rastatt, Germany (1)

Nachterstedt, Germany (3)

Dahenfeld, Germany (1)

Strojmetal, Czechia (2)

Markt Schwaben, Germany (2)

Tomos, Slovenia (2)

Singen, Germany (1) (4)

(1) Structures & Design (2) Engineered Shaped Products (3) Autobody Sheet (4) R&D and Technology

Alcan automotive locations

Page 23: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Primary Ingot

Sheet Products

Engineered Shapes

Structures & Design

Market growth and Market growth and value creation in four value creation in four key marketskey markets

Alcan automotive Business Units

Page 24: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Assets & Capabilities

Instrument Panel

Supports

Powertrain Components

Bumper Beams

Autobody Sheet

Crash Management Systems

Structural Elements

Supension Parts

Composite Products

Alcan automotive product portfolio

Page 25: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

> Environmental aspects

– Replace steel by aluminium (1 kg Al saves 20 kg CO2!)

– Contribute to improved design for weight saving and recycling

– Alternative materials (plastics, magnesium, honeycomb materials)

> Health and safety aspects

– Forgings for suspension system

– Bumpers and crash elements

> EHS issue management and legislation

– Lead restriction in casting alloys through ELV legislation

– Exemption list in ELV legislation for machining alloys

EHS product stewardship - Automotive main issues

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WEC CSR Alcan supply chain London 22 Oct 03

Jaguar XJ -- flagship vehicleFirst riv-bonded sheet monocoque

“World class - Best in class”Safety - Performance - Technology - Refinement

Example: Alcan and Jaguar

Page 27: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

WEC CSR Alcan supply chain London 22 Oct 03

1982 1984 1986 1988 1990 1992 1994 1996

Basic Technology &

Patents

Metro

Materials, Pretreatment and Lubricant development

Performance of Adhesives (Durability Testing)

Replicas and Concept Vehicles

Structural Performance and Data

Modelling and Design

Structural Modelling

Manufacturing TechnologyKey steps in technology development

Jag X350

1998 2000 2002

Ford AIVsJag XJ220

Milestones of aluminium vehicle technology (AVT) development

Page 28: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Aluminium Structure Technology

Understanding of Design Process

Materials Knowledge

Joint Design & Performance

Real Time Experience on Stamping & Die Design

A World-Class Supply Chain

Alcan’s contribution to Jaguar

Page 29: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

SmelterGB Canada

AluNorfHot Mill (1 or 2)

RemeltLatchford UK

SmelterElkem Norway

RemeltNorf

AluNorfCold Mill 4

(1680-2200 mm)

NachterstedtCold Mills

(<1680 mm)

NachterstedtGLA

NachterstedtCTL 3

UK Warehouse

NachterstedtShaped Blanks

C B Press-Shop

Jaguar

Assembly& Finishing

X350 aluminium sheet supply chain

Page 30: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

In addition to use of best environmental practices, a need for industry to work with stakeholders in addressing broader environmental concerns

Through strong product stewardship an opportunity to promote the lifecycle benefits of our products (aluminum in particular) through greater recycling and more efficient consumer products, such as light-weight vehicles

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Corporate commitment to environmental stewardship

Page 31: Alcan’s integrated supply chains and strategic partnerships with industrial customers Corporate social responsibility by optimizing supply chains World

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WEC CSR Alcan supply chain London 22 Oct 03

Aluminium is not consumed, it is used and re-used again and again

alu

Economic

SocialEn

viro

nmen

tal

Aluminium is a strong driver for sustainable development