They had been chewing over the
idea for almost a decade.
The concept was simple-Alexin LLC
executives would construct an independent large-diameter billet
caster within a 240-mile radius of almost half of the country's
aluminum extrusion capacity. Located in the heart of the
Midwest, the remelt plant would capitalize on the wave of
consolidations that had permeated the aluminum billet industry
since the turn of the new millennium and draw in customers
looking to diversify their supply base away from the majors.
Pair that with a construction market poised to rise forever,
and startup billet caster Alexin LLC made an irrefutable
Irrefutable, that is, until Sept. 15,
Less than nine months after breaking
ground on its $58-million aluminum billet casting facility in
Bluffton, Ind., Lehman Brothers-and the global economy around
it-came crashing down, casting doubt on Alexin's meticulous
plans to emerge as a new entrant in the world of aluminum
billet. Alexin's expected customer base had all but evaporated
overnight, and the plant hadn't even begun commercial
"We were building and ramping up the
plant and 55 or 60 percent of the customer base didn't want
anything because they had contracts with other people for a
portion of their business, and they were only buying a portion
of their business. So there just wasn't a customer base," said
Tom Horter, Alexin's president and chief executive officer.
Faced with a fight-or-flight situation,
another fledgling company might have cut its losses and quietly
back-stepped out of the picture, but Horter and his team of
industry veterans had something else in mind.
"There was no choice. There was no
option. The game clock started and you can't just say 'We're
going to go back to the locker room for the first half',"
Horter said. Instead, "we had to rewrite the playbook. The
original playbook was enter a market, and the new playbook was
enter a market that doesn't exist anymore. Everything had to
Alexin-an acronym for Aluminum
Extrusion Ingot-threw its original business model out the
window and sat down to brainstorm "the prudent and creative
things" it could do to attract a battered and severely
diminished customer base. "We changed everything-how we were
organized, how we went to market, everything," Horter said.
Originally expected to serve primarily
what Horter calls the "Michianohio"-or
Michigan-Indiana-Ohio-region, Alexin was forced to look for
customers upward of 600 miles away to fill its order book.
Likewise, the company began to play up its ability to supply
larger-diameter billet than many competitors in an effort to
break into some of the less-traditional, large-scale extrusion
markets like railcars and truck trailers.
"We had to broaden our geographical
footprint and we really had to rely on our niche levers," said
Horter, a veteran of all the big-name industry players, from
now-defunct Cressona Aluminum Co., Alumax Inc. and Alcan Inc.
to heavyweights Alcoa Inc. and Norsk Hydro ASA.
But it was Alexin's small-business
approach that really helped it find its footing. "We designed
our plant to make a great performing product, so we did
creative things to get in doors," he said, citing special
service offerings and marketing campaigns that only a Main
Street operation could employ.
"There were a few customers that I
traveled to with a small bundle of billet in my pickup truck
and gave it to them and said, 'Here's a sample, run it.' In
each case, those customers became regulars," Horter said. "One
of the more positive things we've learned is you can out-hustle
and out-create any bad situation. We faced the worse extrusion
environment in the industry's history as a new player and
succeeded. We just did it with prudence and hustle."
It paid off. By the end of 2009, the
plant was running at its full 210-million-pound-per-year
operating rate, just in time to capture the near-record spot
billet premiums of some 11.5 cents per pound in mid-2010. And
prices could go higher still, Horter said, if a U.S.
International Trade Commission and Commerce Department trade
investigation tacks duties on aluminum extrusion imports from
China, giving the domestic extrusion market-and its billet
suppliers-a welcome boost. By his math, even if the Chinese
extruders only cut their export rate by half, the domestic
industry will still need at least an additional 20 million
pounds of billet per month.
With a rosier picture in store for the
billet industry, Alexin is eyeing opportunities to expand, but
only where they make clear sense. "Our growth will be
additional plants when prudent," Horter said.
"We've got a cake recipe that works, but
the market is still in the early summer of a redefining year.
When you're faced with this much turmoil, you just want to do
the prudent thing," Horter said. "Everybody walked out of their
bunker at the beginning of this year and started assessing the
damage. All we've done so far is organize the cleanup."