The formation of a domestic knowledge base within a globalized sector: Heavy research on light metal by Asbjörn Karlsen, NTNU

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1 The formation of a domestic knowledge base within a globalized sector: Heavy research on light metal by Asbjörn Karlsen, NTNU How have national institutions of aluminium Research and Development (R&D) evolved? What are the characteristics of the domestic knowledge base on aluminium? Based on secondary sources and 23 interviews of researchers, managers and other key informants in industry, universities and research institutes.

2 The character of Norwegian Al-sector The domestic aluminum industry: ca.7000 employees and 30 companies. It is concentrated on primary production. Hydro Aluminum (HAL), Elkem Aluminium and Søral have five smelters located relatively close to hydro power plants in the Norwegian periphery. There exists downstream productions too. The industrial companies have localized their downstream activities in three different ways: - Close to primary production as a local extention of the value chain. - In a local cluster of SME at Toten /Raufoss employees, 17 manufacturing firms, half of them directed towards automotive industry. Enjoying supportive infrastructure and networking. - Abroad, particularly at the European continent, but also in North America and China. HAL has concentrated on extrusion since the 1980s but have rolling capacity in Germany since the acquisition of VAW in This market orientation is the dominating way to organize the value chain. HAL is constructing the world largest smelter in Qatar providing access to cheap energy (gas) and growing Asian markets (China and India).

3 Historical background FDI in Norway since the start of the twentieth century attracted by easy access to cheap hydro power and low political risk. Foreign-Norwegian joint ventures and technology transfer. Contributed to local learning and a gradual accumulation of knowledge in domestic industry after WW2 Pragmatic nationalization during the 1970s.

4 In-house R&D Top management of ÅSV geared for R&D. Decentralized R&D units in proximity to production, specialized in primary production, metallurgy/alloys, and mechanics/construction respectively. Became virtual organizations serving clients internationally. Merger of the companies ÅSV and HAL integration, specialization and consolidation. Other companies marginal R&D units, more integrated in daily operations. Elkem aluminium partly rely on their foreign partner Alcoa.

5 Knowledge institutions NTNU - SINTEF University successively built up competence starting with primary production and extending in direction of different down-stream activities. Affiliated research institute SINTEF applied research for industry. (mediator between university and industry). The Institute for Energy Technology IFE provide competence on modeling.

6 Integrative mechanisms For three decades R&D capabilities improved progressively. Public research expanded since 1970s 1990s user driven projects (Networks between industry managers and politicians/policy makers were activated.) persons engaged in aluminium R&D in early 1990s Open and international directed. Knowledge flow between industry, university, R&D institutes. Mobility of personnel important in this regard. PhD-candidates recruited by industry. Industrial capacity to absorb external R&D. Trust and common identity. Industrial-political networks facilitated. The collaborating partners regard themselves as a cluster. This is positive as far as there has been an economic and academic success. Reinforced the path.

7 Diffuse tendencies since the turn of the millennium shifts in R&D profile Late 1990s user driven programs were no longer politically legitimate. Dramatic cut in R&D on primary production for several years. Still much R&D on downstream activities also supporting HALs international engagements. Internationalization of HAL The acquisition of the German VAW in 2002 which have their own R&D capabilities and networks. R&D resources allocated decentralized in the company. R&D managed within the framework of the single companies instead of engaging research institutes and universities. May lead to a situation of negative lock-in / introvert system.

8 Distinctive knowledge base R&D was conducted in proximity to production practice and directed towards incremental innovation. In the light of limited further processing of aluminium domestically corresponding R&D is relatively significant. Norwegian based research are supporting HAL s international engagements.

9 Conclusion In wake of nationalizing of large companies R&D capabilities in industry and knowledge institutions co-evolved. Reinforced the path, but the development was dependent on shifting corporate strategies and national research policy and is therefore fragile. R&D profile deepened and broadened in the direction downstream activities. A quest for further studies on internationalization of R&D networks and comparative research between nations.