Bluescope Steel - North America Coated and Building Products

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North America Coated and Building Products

In April 2004, BlueScope Steel purchased the former Butler Manufacturing Company, creating this new business segment. It is comprised of two businesses: the North American Buildings Group and the Vistawall Group. Butler's Directors announced the Company was for sale in October 2003. The acquisition by BlueScope Steel was completed on 27 April 2004 for A$277 million (net of cash acquired).

Acquisition of this business has helped fulfil our strategy to increase the proportion of downstream (high value-added) branded products we make and sell. Since acquisition, we have worked to integrate the two businesses into our Company. An integration team has been established in Dallas, Texas. We are also well advanced in introducing BlueScope Steel's policies and procedures and in integrating information technology, accounting and reporting, safety, environment and a range of other systems.

NORTH AMERICAN BUILDINGS GROUP

The North American Buildings Group manufactures and markets the renowned Butler® brand of pre-engineered buildings (PEBs). These buildings are sold and erected by a network of 1,100 Butler Builders, also a well-recognised brand in North America. Starting life in the early 1900s with the iconic Butler grain bin - still seen on many farms in the United States - Butler® is now the market-leading brand for non-residential PEBs in the United States, Canada and Mexico.

Today, Butler® buildings fulfil applications as diverse as warehouses and distribution centres, schools, churches, offices, restaurants and retail stores. Customers include major retailers, such as Wal-Mart, manufacturers, transport and logistics companies and government agencies.

A new management structure has been put in place for the Buildings Group, introducing a regional reporting and profit centre structure. Regional general managers, with accountability for regional performance, have been appointed.

In June 2004, the Company announced that the high cost manufacturing plant at Galesburg, Illinois, would close by mid calendar year 2005. Production at the plant - which currently produces specialty components - will be moved to another location in North America. These changes are designed to lay the foundations for a turn-around in the performance of the Buildings Group. After a prolonged downturn in the US non-residential construction market, Butler's Buildings Group had suffered three years of financial losses before being purchased by BlueScope Steel.

An improvement in non-residential construction activity in the United States occurred during the first half of calendar 2004, with Buildings Group despatches in May and June 2004 up strongly over the same period in 2003. Higher steel prices and a shortage of steel feedstock have presented challenges for the Buildings Group since acquisition. The latter was partially alleviated by sourcing steel products for the first time from North Star BlueScope Steel and New Zealand Steel.

The North American Buildings Group also includes the R-Steel business, which manufactures thermal panels (galvanised steel embedded in an expanded polystyrene insulation), and Butler Construction (BUCON), which works with major purchasers to design, plan and construct large-scale building projects, in conjunction with Butler Builders.

VISTAWALL GROUP

The Vistawall Group manufactures and markets extruded aluminium and glass architectural products, including storefronts, curtain walls, doors, windows and skylights. The Group's other brands include Naturalite, Skywall and Moduline. Its products are used in a range of non-residential building and construction applications, including shopping centres, hotels, motels, convention centres and office buildings.

Vistawall's products are sold both independently, and as part of a complete, turn-key Butler® building product offer. The Vistawall business remained profitable throughout the downturn in the US non-residential construction market. There was a marked improvement in business for Vistawall in 2004, with orders in May and June 2004 7 per cent higher than the same period in 2003.

AWARD WINNER // Architect Jay Warren, above, outside the Dallas Convention Center. The redevelopment of the Center, which utilised a Vistawall curtain wall system and entrances, won an architectural award for Mr Warren's firm, HKS Architects.

Enormous potential, new expertise and capabilities - North America is an exciting frontier for BlueScope Steel

TWO GIANTS // Utah's Rocky Mountains, above, provide a dramatic backdrop to this 93,000 square metre Butler® pre- engineered building - a Wal-Mart Distribution Center. PEBs of this size have been erected in just 28 working days.