Improving performance by reducing costs

In an industry facing increasing energy and raw material costs, finding ways to effectively increase productivity and take cost out of operations is key to commercial success. The cyclical nature of the metals industry means that low-volume, high-cost producers have to generate sufficient cash or create a strong enough borrowing position during market peaks to survive the market troughs. Continuing consolidation supports the sector’s ability to influence the price of raw material input costs while companies can also seek to obtain synergies and economies of scale through the operation of vertically integrated raw materials sources (i.e. coal/iron mines). Non-raw material costs including the cost of manufacturing can benefit from economies of scale in operations, while the opportunity to reduce labour costs by investing in plants in low-cost countries is one factor encouraging moves to emerging market locations combined with the prospect of superior growth in China and the wider region.

How PwC can help you

Metals organisations engage our Performance Improvement (PI) consultants to help design, manage and execute lasting cost reduction programmes. Our Operational Effectiveness experts - many directly from industry - draw on skills in operations, people, technology, finance and risk management to advise and implement these metals cost reduction programmes - locally and globally.