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NORTH AMERICA

Hot Rolled Products

Coated and Building Products


Another very strong financial year, with further consolidation and growth, stronger customer relationships, and major gains in safety. Lance Hockridge - President of BlueScope Steel North America

Prefabricated steel trusses await dispatch at our Butler Buildings facility in Laurinburg, NC, USA.

Our North America operations include: Butler Buildings, a pre-engineered building business, North Star BlueScope Steel, a steel mini-mill, Castrip LLC, developing a new strip casting technology, and Steel Americas and Europe, our export arm. Business President Lance Hockridge outlines a year of solid progress.

Q. Could you discuss the progress of our North American businesses?

A. Overall we've made enormous strides in improving our North American operations. In 2006/07, we focussed on customer relationships in both our downstream and upstream businesses and we saw the benefits of a disciplined approach in areas such as safety, financial and operational expertise.

At the downstream end, our Butler Buildings business had a great year, with a strengthening in customer relationships, improved operations, and better product mix. EBIT was $37 million, up by $28 million on the previous year. This was due to greater plant efficiencies and improved margins and pricing.

North America Hot Rolled Products Revenue and EBIT graphs

Revenue was $788 million, down six per cent on last year - a result of the unfavourable exchange rate between the Australian and US dollars.

Product quality and output was vastly improved and there's a new sense of vitality among our Butler employees. During the year, a group of Butler Builders® visited a number of BlueScope Steel facilities in Australia and New Zealand. This trip furthered the understanding of BlueScope Steel's values and reinforced the fact that the Butler Builder® network is part of the BlueScope Steel family.

Our Vistawall business showed a similar level of re-invigoration with sales volumes increasing by 50 per cent during the year.

The new product launch of Moduline doors was a success and we increased R&D spending to drive new product development. The introduction of BlueScope Steel management systems led to large gains in productivity.

At the upstream end, our North Star BlueScope Steel joint venture in Ohio had a good year, setting many daily, weekly and monthly production records. Our half of sales revenue increased by one per cent to $722 million, while EBIT was $156 million - down eight per cent, due to the stronger Australian dollar and higher costs of electricity and alloys. We are excited by the business winning its fifth consecutive Jacobson Survey of customer satisfaction. It was again voted the best of over 30 steel mills in quality, service and delivery performance.

North America Coated and Building Products Revenue and EBIT graphs

The North Star BlueScope Steel mini-mill has continued to outperform its original capacity, and during the year, we invested US$40 million in a new baghouse, which is a dust and emission filtering facility. Its installation affected the full-year performance of the operation, but has resulted in a dramatic improvement in the quality of working conditions, and in environmental performance. The place now has a better atmosphere and these efforts have been well received by our employees.

Our Steel Americas and Europe Business also had a strong year. This is a small group of employees involved in selling our steel to export customers, and you could say they are unsung heroes. During the year, they sold over 1.5 million tonnes of our product to customers in Europe, America and the Middle East, including our four millionth tonne to California Steel.

This business maintained very high quality relationships with hundreds of customers, both large and small and these relationships provide BlueScope Steel with a real strategic advantage.

Finally, Castrip LLC, our joint venture company pioneering continuous strip casting, is making encouraging progress, particularly in improving product quality. BlueScope Steel continues to provide a high level of support in both the US and at our Port Kembla Research Laboratories.

One of our joint venture partners, Nucor, uses the Castrip® process at its Indiana plant, and has a second mill under construction in Arkansas. This process is potentially revolutionary. It promises lower energy use, smaller scale, and less capital costs. It's an exciting project but we are being patient. These things take time.

We have focussed on customer relationships in both our downstream and upstream businesses. We are seeing the benefits of a disciplined approach in areas such as safety, finance and operations and are ready to meet the challenge of growth.


Ralph Ward of Scott Builders, a Canadian Butler BuilderŪ, which constructed the ATCO Gas facility here in Red Deer, Alberta, Canada. The building meets both the USA 'LEED' and Canadian 'CBID' sustainability specifications, which cover the environmental effect of materials, construction, ongoing energy use and occupant health.

Ralph Ward of Scott Builders, a Canadian Butler Builder®, which constructed the ATCO Gas facility here in Red Deer, Alberta, Canada. The building meets both the USA 'LEED' and Canadian 'CBID' sustainability specifications, which cover the environmental effect of materials, construction, ongoing energy use and occupant health.

Q. What was the highlight of the year for BlueScope Steel North America?

A. I think our safety journey in North America has been a real achievement. The extent of our progress has been nothing short of remarkable and the feedback we've been getting from our Butler employees, as well as from people in our recently sold Vistawall business, has been very positive. In fact, the greatest lasting legacy of BlueScope Steel's ownership of Vistawall has been the building of a very strong safety culture.

Q. Could you discuss the sale of the Vistawall business?

A. On June 28, we announced the sale of Vistawall for US$190 million. The business was part of Butler Manufacturing Company, which BlueScope Steel acquired in April 2004 for US$206 million, so this was an excellent result. The Vistawall people put enormous efforts into the business during the past three years and the value of their work has now been realised. It is important to mention that Vistawall was not our core business. It is an aluminium and glass business that specialises in storefronts, curtainwalls, skylights, translucent roofs, and other such systems. The buyer, Oldcastle Glass, is a more natural owner with a business style and values similar to ours. Vistawall's employees are pleased with this outcome, and are excited by the prospect of further growth.

Q. What are the challenges for our North America businesses in the coming year?

A. To continue our safety journey, to maximise the return on our investments, and to grow our businesses. We've built a solid platform. A lot of the hard work has been done, and we now have to deliver on the challenge of growth. We must also keep building our reputation as a good employer, and as a good company to do business with.

Right: Butler Buildings employee Mike Clayburg inside the 11,600 square metre US Coast Guard aircraft maintenance hangar at Mobile, AL. The US Coast Guard is one of many government agencies to utilise Butler Building expertise.

Below: Butler Builder® David Hardy inside the vast athletic training facility at the West Point Military Academy, NY, USA. The facility, built by Butler Heavy Structures and David J Hardy Construction, features a clear span of over 60 metres.

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