JW Aluminum Co. set out on a
path of culture change in 2010, leading it away from a
manufacturing-centric approach to one that focuses on
integration and employee participation.
We set about to change the
culture, the marketing, the product and the customer
base, chief executive officer Lee McCarter said, noting
that in 2007-08 JW Aluminum was comprised of four separate
companies under one corporate umbrella. Management was
more interested in buying companies than integrating them into
a seamless whole.
JW Aluminum offers a range of
rolled aluminum products, including sheet, fin stock, container
material, cable wrap and foils in a variety of thicknesses. The
company is backed by owner Wellspring Capital Management LLC, a
middle-market private equity company that manages more than $3
billion of private equity capital.
Wellspring Capital acquired the
aluminum subsidiary of Walter Industries Inc., now JW Aluminum,
in late 2003 for $125 million. McCarter joined the company in
April 2009 following a successful career as chief financial
officer at a number of privately held companies, including
FleetPride Inc., Woodlands, Texas, a leading supplier of
heavy-duty truck and trailer parts, as well as Propex Inc., a
producer of technical textile solutions, and SI Corp., both in
McCarter and JW Aluminums
board began assembling a senior management team. Ron
Marchbanks, who had joined the company in August 2008, was
named president and chief operating officer in December 2009.
Marchbanks was a 30-year veteran of the aluminum industry,
having worked in a variety of operating positions for such
industry leaders as Noranda Aluminum Inc., Alumax Aluminum
Corp., Alcan Inc., Wabash Alloys LLC, Advanced Aluminum LLC and
OmniSource Corp./Superior Aluminum Alloys LLC.
Chief commercial officer Chester
Roush, another key member of the senior management team, came
on board in June 2009. He brought with him three decades of
experience in sales, planning and operations at Kaiser Aluminum
Corp., Reynolds Metal Co., Ormet Aluminum Corp. and Precision
Wesley Tomaszek, the fourth
member of the team, joined as chief financial officer in summer
2011. Tomaszeks resume included a quarter-century of
experience in global business finance and management with
subsidiaries of Tyco International Ltd. and Mallinckrodt
As JW Aluminum entered 2010, it
saw supply and demand in the aluminum flat-rolled sector fairly
well balanced. These markets had seen dramatic capacity
reduction through consolidation and closures through the
years, McCarter said, noting that the result of the
consolidations was a growing number of competitors owned by
private equity investors, such as JW Aluminum, or by foreign
companies. Those companies that survived the 2008-09 recession
were characterized by improved performance through lean demand
JW Aluminum adopted a lean
transformation strategy to reduce the span of managerial
control, improve safety and training on the factory floor,
emphasize environmental savings, such as increasing the amount
of scrap used, and upgrade the quality of the work force. The
company centralized back-office functions to try to eliminate
redundancies across the four plants.
Each day, we get a more
in-depth look at our lean transformation initiatives and
finding ways to improve value, McCarter said.
The company began implementing a
WIN strategy in early 2010, which involved bringing
every employee in the company together in a series of
cross-functional meetings to share its financial results and
show them how their actions could affect the bottom line. The
strategy is based on the open-book management
philosophy espoused by entrepreneurial gurus John Case and Jack
Stack, which emphasizes sharing financial information with all
employees, setting achievable goals and following up to ensure
those goals are met.
The initial meetings consisted
of 24 employees from every functional area of the company; JW
Aluminum held 35 WIN meetings before the initial set was
complete. Those initial three-day sessions were so
important to help employees understand financial
statements, McCarter said. There is nothing we hide
from any employee.
JW Aluminum used an earnings
before interest, taxes, depreciation and amortization (Ebitda)
matrix to explain to employees the role they play in the
companys profitability. Ebitda is a relatively simple way
for a company to show employees the impact that income and
expenses have on the bottom line. We put it to the
employees in literally those terms, and most got it
immediately, McCarter said. Companies often
dont give employees enough credit. They are a lot smarter
about what goes on in the workplace than most folks give them
The WIN meetings developed and
documented a set of clear objectives, and newly formed employee
teams were given ways to measure progress on the factory floor.
Most importantly, the company established a profit-sharing
program for all team members. With profit sharing, we all
get a bonus or we all dont, McCarter said.
Sometimes, employees can pay lip
service to cultural change, especially if they sense management
isnt willing to walk the walk. That was never the case at
JW Aluminum, McCarter said. Employees ran to embrace the
WIN strategy. They were looking for leadership. We feel that
this is a highly energized, dedicated employee base, and what
we brought to the picture was clarity.
Getting the employee teams at
four separate plants to come together was a key part of the
strategy. Before, you had mill operators from the
different plants saying this is how they do things in their
plant. Once we went through the training, we were all standing
shoulder to shoulder. We realized we all shared the same
challenges. Now we have come together all focused as one unit
rather than four plants, McCarter said.
Employee participation has
become so widespread that if one of the companys four
mills in Mount Holly, just north of Charleston; St. Louis;
Russellville, Ark.; and Williamsport, Pa. is having problems
with a particular issue, it frequently sends a team from one of
the other plants to help. Customers who visit JW Aluminum
plants are typically given tours by employees from the factory
floor rather than from marketing or corporate communications.
And employee suggestions are surging, including one from an
employee on the factory floor who suggested a way to re-use
wrapping bands that will save JW Aluminum $100,000 this
JW Aluminum also took a hard
look at volume, customer base and marketing. Its
all about the mix, Roush said. We stress value.
Its part of our strategy.
McCarter said that the
companys volume is up nearly 25 percent since 2009.
Thats significant when compared to the state of the
economy, he said, adding that Roushs focus on
markets and competition has been a major part of that growth.
Chester brought a market strategy to the table to
leverage our assets vs. the volume approach we had followed in
McCarter, who didnt come
from a flat-rolled aluminum management background, was
impressed by how JW Aluminum was small enough and flexible
enough to quickly adopt a marketing strategy in which the
customer was king. Some of our competitors are so large
theyre drowning in red tape, he said.
To turn smallness and
flexibility into a positive, JW Aluminum stressed a value-added
service in its relationship with companies. Between 2009 and
2011, the company improved on-time delivery by 30 percent.
What JW Aluminum didnt
have, Roush said, was a very good understanding of the
marketplace or of our competition. Sales staff fanned out
across the country to get a better understanding of customers
and who else in the marketplace was capable of serving those
In some cases early in the
process, JW Aluminum found that the volume strategy employed in
the past was actually costing it money. We came here not
focused on volume but making sure we had the right mix to get
the return on equity we wanted, Roush said, noting that
one long-time customer almost left because of the
companys honesty. We told one customer we simply
couldnt do the volume we were doing before. The customer
was very upset with us, but our decision forced them to look at
how they were doing business. They came back to us six months
later, and the relationship is stronger now than it was
Roush noted that the company has
reduced its work force by about 20 percent since 2009 to 800
people but has actually increased production during the same
period. We look rigorously at how to load those
facilities to maximize return.
With its new approach to
value-added services, JW Aluminum hasnt been shy about
raising prices or fees. In June 2011, the company increased the
conversion fee for aluminum sheet and foil products by 1 cent
to 5 cents per pound, depending on gauge. That spring, the
company applied an energy surcharge of 1 cent per pound.
Since value is part of our strategy, we feel that the
customer will understand when prices go up, Roush
JW Aluminums senior
management team acknowledged that volatility associated with
the flat-rolled aluminum sector is likely to remain a factor in
strategic planning, at least for the foreseeable future.
McCarter cited the freight risk of early 2011, when fuel prices
spiked and sent freight rates surging. Fuel charges must
be passed along to the market, he said. Producers
can no longer absorb the cost associated with commodity
Commodity and economic variables
that are beyond any companys control dictate that JW
Aluminum look at strategic planning for the long term. In a
recent speech, McCarter pledged to take control of the
future by developing and putting in place strategies
through 2015 to withstand volatility in the aluminum
A new Oracle software and
database system that was launched across the company in 2011,
coupled with its lean transformation efforts, have helped
reduce inventories companywide by nearly 30 percent in little
more than a year. Inventories had been a sore spot for the
company for years, and McCarter is particularly proud that
inventories have been cut in half since he arrived at JW
Aluminum less than three years ago.
Mount Holly-based JW Aluminum,
which describes itself as one of the best-kept
secrets in the flat-rolled aluminum market, wants to be
recognized as the leading aluminum rolled products
company in the world, McCarter said, a tall order in the
ultra-competitive world of flat-rolled aluminum, but one that
McCarter and his management team think is doable.
JW Aluminum will continue to
shift from a manufacturing-centric organization to a
market-centric approach. And that doesnt necessarily mean
the company will always sell aluminum products. Product lines
in the future might include stainless, extrusion or copper.
We may be selling some stainless if we feel we can do it
profitably, McCarter said. If we can sell popcorn
here and make money at it, well try it.
One thing that JW Aluminum will
emphasize as part of its WIN strategy going forward is a global
component. The company recently launched its Global 1 Source
Solutions program, which looks to augment the companys
domestic aluminum manufacturing capabilities with supply from
With the addition of
Global 1 Source Solutions to our portfolio of services, we are
truly a global supplier, not simply a domestic supplier,
Roush said, explaining that JW Aluminum will collaborate with
customers to identify product requirements and then fulfill
those requirements through a combination of the companys
four domestic mills and a network of offshore suppliers who
have joined a global partnership with JW Aluminum. These
established global partnerships have allowed us to expand our
already extensive product line and meet all of our
customers aluminum flat-rolled needs like never before.
This diversification will expand our footprint in the
transportation, consumer durables, packaging, and building and
Roush stressed that the company
will continue to provide support after a sale. We want
our customers to feel secure that they can rely on JW Aluminum
to deliver what they need, when they need it. We offer the
peace of mind that our four mills and our offshore partners
will come through for them.
For McCarter and the senior
management team, the cultural change at JW Aluminum is part of
a long-term process that might never be finished.
Were a long way from being perfect, he said.
You never can stop making it better. You never really
finish your journey.
McCarter is an optimist about
American industrys ability to compete in the 21st
Century. Citing Clint Eastwoods pitch in the recent Super
Bowl commercial for Chrysler Group LLC, he noted
its half-time in America in the approach weve
taken to the flat-rolled aluminum market. We do have a great
story to tell.