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Elkem's silicon division is the largest supplier of silicon metal and ferrosilicon in the world. With the slowdown in the global economy that started in 2000, the corporation decided to improve the efficiency of its supply chain network and evaluate its product portfolio. To help the division manage this process, we developed a strategic-planning model. This mathematical-programming model addresses decisions pertaining to future plant structure, including possible closures, new plant acquisitions, and investments in production equipment. The silicon division has used the model and its scenario analysis capabilities extensively to obtain important benefits. The company agreed to a restructuring process, which included reopening a closed furnace and investing $17 million in equipment conversion. Overall, as a result of the restructuring plan, Elkem expects a significant and sustained improvement in yearly revenue for the silicon division.
Key word: facilities/equipment planning: capacity expansion, design, location; industries: mining/metals.
History: This paper was refereed.
Elkem is one of the world's major producers of silicon, ferrosilicon, aluminum, and carbon products, which are incorporated in many everyday goods. Elkem's silicon division is the largest supplier of silicon metal in the world, with a global market share of roughly 20 percent. Its main products are silicon metal, ferrosilicon products, and microsilica. The chemical industry uses silicon metal to produce silicones, the electronics industry uses it to manufacture semiconductors, and the aluminum industry uses it as an alloying element. Foundries use special ferrosilicon products as alloys in such industries as automotive manufacturing and cast-iron pipe manufacturing. The steel industry also uses standard ferrosilicon to produce carbon steel and stainless steel. Microsilica, a byproduct from the production plants, is used mostly as an additive in concrete, fiber cement, and refractory materials.
The slowdown of the global economy that started in 2000 has had far-reaching effects on all industries. It triggered a general decline in western industrial production in 2001 and a drop in the prices for silicon and ferrosilicon products. Elkem's silicon division experienced a severe weakening in its end markets in 2001 and 2002. The downward trend for ferrosilicon was amplified by the crisis in the steel industry in the United States in 2001 and the removal of antidumping laws for ferrosilicon in both the United States and the European Union, which...