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Business strategy

In 2016, ArcelorMittal launched our global Action 2020 plan. This plan contains a strategic roadmap for ArcelorMittal’s main business segments, and seeks to deliver real financial and efficiency improvements in the business by 2020.
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Action 2020

In 2016, ArcelorMittal launched our global Action 2020 plan. This plan contains a strategic roadmap for ArcelorMittal’s main business segments, and seeks to deliver real financial and efficiency improvements in the business by 2020. The Action 2020 plan targets a return to >$85/t EBITDA absent of any recovery in steel spreads and raw material pricing from their current level. Globally, the Action 2020 plan targets a structural EBITDA improvement of approximately $3 billion. Upon full achievement of the plan, ArcelorMittal would expect to deliver free cash flow in excess of $2 billion annually. This strategy, globally, allows us to increase EBITDA in order to invest in the continued sustainability of our business units around the world.

In 2016, ArcelorMittal USA made tremendous progress on achieving our Action 2020 aspirations. For us, Action 2020 centered on a strategy of concurrently investing in our facilities while at the same time deciding to cease operations at some of our redundant assets. We entered the year knowing our business could not be sustainable without ensuring we have cost-competitive assets operating at higher levels of productivity and yield with no loss of volume or profitable market share.

To effectively implement Action 2020, we remain focused on the following:

World class assets

In an ever-competitive industry, it is first and foremost important to ensure every facility is operating in the most efficient and cost-productive manner possible. In 2016, we spent the year undergoing important strategic restructuring in our operations, setting our business on course for a stronger future. We cut costs significantly across the business, idled non-essential operations, including the No. 1 aluminizing line, No. 5 galvanizing line and 84” hot strip mill at Indiana Harbor, and divested multiple long carbon facilities. Simultaneously, we invested in our core assets. The restoration work at Indiana Harbor’s 80” hot strip mill continues, and the No. 3 caster investments are complete and production is ramping up.

The structural improvements we have made to our USA footprint directly support our global Action 2020 initiative launched in early 2016. The work completed last year is quickly showing signs of positive impact and realized financial improvement.

Emphasizing cross-functional, cooperation focused teams

Every individual working in the ArcelorMittal ecosystem in the United States is important to the long-term sustainability of our business. In 2016, we successfully completed phase one of a substantial transfer of millions of tons of production across several facilities, to better align products with individual site capabilities and customer demand. This was truly a cross-functional effort. Teams ranging from commercial, planning, strategy, operations, quality, logistics and communications contributed to this effort and ensured no disruption to our customers. The initial stages of Action 2020 have begun to develop a cross-functional team environment that will serve ArcelorMittal USA well going forward.

Creating high value-added products for our customers

ArcelorMittal’s United States business has long prided itself on the strength of our customer relationships. We recognize, though, that customers continually look for deeper collaboration and the creation of value-added products and solutions from their suppliers. ArcelorMittal is the largest producer of advanced high-strength steels in the world, and each year invests more than $200 million globally in research and development to drive innovation in product solutions. Value-added products include fully finished hot roll and cold roll, galvanized and other coated steels. Producing grades of steel no other steelmaker can produce will help insulate our U.S. business from the threat of imports over time, as well as improve our competitive advantage.

Our performance in 2016 in the United States, in fact, is ahead of schedule, resulting in increased investment needed to capture market growth opportunities in 2017 and the coming years.

Meaningfully improving delivery performance

Our primary focus in 2017 is specifically related to our delivery performance. We recognize it is important to look differently at delivery than we have in the past. We must meet the expectations of our customers and ensure we are being strong partners in their business objectives. To that end, we launched a delivery performance team to evaluate our delivery improvement through every level of the value chain.

Maintaining a pipeline of talented employees to deliver world class productivity

To drive continuous improvement and asset optimization, ArcelorMittal must also employ the best operators, technicians, craftspeople and engineers to keep our facilities running at optimum productivity. In our 10 sustainable development outcomes, we emphasize in outcome 9 the importance of a pipeline of talented scientists and engineers for tomorrow. ArcelorMittal works hard to develop a more efficient workforce as we lose employees to retirement. While technology advances allow steel mills to operate with fewer employees, those advances also make it imperative for ArcelorMittal to attract and retain the best talent.