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The Management Board of voestalpine AG

Ladies and Gentlemen: (handwriting)

It is summer in Europe, a hot summer—but only as far as the temperature is concerned. If it weren’t for the Italian drama—whether it will ultimately be a comedy or a tragedy is still undecided—and the birth of the youngest Windsor in the line of succession to the British throne, one could be justified in thinking that Europe has fallen into a kind of collective summer hibernation, despite the election campaign in Germany.

The absolute hotspot in Europe, however, in the truest sense of the word, is probably Brussels. You will remember that in the fall of the past year, we received the announcement from Brussels that the EU has set the goal of raising industrial value added from the current figure of 16% to 20% of the EU gross domestic product (GDP) by the year 2020. The relevant report, which was published on October 10, 2012, raised hopes—due in part to the title alone “Industrial revolution brings industry back to Europe”—that the EU had in fact understood the seriousness of the situation and had, for the first time, committed itself to a solid and offensive industrial policy. However, apart from referring to six priorities for action, the report contained only numerous declarations of intent and “shoulds” instead of tangible, concrete measures. As far as the most crucial point is concerned, namely the restoration of global competitiveness with regard to costs as the fundamental requirement for success of the entire undertaking, the bottom line was solely the following sobering statement: “As the cost structure in industry changes, cost competitiveness will continue to be the key factor of industrial location and cannot be ignored by policy makers.” Ultimately, this means nothing other than that the Commission does not consider itself to be responsible for actively participating in the creation of those framework conditions that will enable industry based in Europe to position itself successfully in the face of ever tougher global competition.

This is what the actual conduct we have seen from Brussels since last October looks like: instead of abandoning climate goals that are, in part, technically completely unrealistic, they are escalating the situation by way of “back loading,” an artificial restriction of free CO2 certificates for energy-intensive industries. Emissions regulations for vehicles will also be made more stringent. At the same time, there are no apparent initiatives at the pan-European level to get the problem, which is most urgent for many industrial enterprises, under control—the increasingly prohibitive energy costs. This is the reality of European industrial policies; everything else reflects a common German proverb—paper is patient, in other words, indifferent to what is written on it, or put a little less politely—hot air during a hot summer. Therefore, it will not really surprise anyone if the 20% GDP goal that has been set for industry by 2020 suffers the same fate as the “Lisbon Strategy” from a good dozen years ago. Just to refresh our memory—according to the strategy decided upon at the summit meeting of the European Council in Lisbon in the spring of 2000, Europe wanted to be the “the most competitive and dynamic knowledge-based economy in the world” by 2010. Many people don’t even remember that there ever was such a goal.

What is there to say as a final remark? Europe needs an atmosphere of renewal instead of bureaucracy, leadership instead of provincialism, and economic realism instead of esoteric daydreams. Until this happens, we have no other choice but to increasingly look outside of Europe to create the future of the voestalpine Group—not least in order to improve the competitive position of our Group’s European locations despite all of the political uncertainties and obstacles.

Linz, August 7, 2013

The Management Board






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