George Stoe, who retired Aug. 1 as president and chief operating officer of Worthington Industries Inc., has seen an immense amount of change in the metals industry since he began his career in 1969 at Howmet Aluminum Corp., now part of Alcoa Inc., as an inside sales representative in Lancaster, Pa., a mill that had 180 million pounds of capacity and sold only in North America.
Over the past four decades, hes been witness to an industry that has been severely disjointed, beset by fierce competition and many other challenges. In the steel business, for example, bankruptcies and consolidation in the 1990s and 2000s and the recession forced companies to rationalize capacity, develop the discipline needed to weather downturns and alter their approach to customers.
In the past, there was always competition as to who had the upper hand. Mills reneged on contracts when business was good, and when it went the other way customers didnt live up to agreements. Now, producers have formed partnerships with customers and each (partner) understands that both have to be successful, Stoe said.
When Columbus, Ohio-based Worthington hired Stoe in 2003, his first assignment was to evaluate the cylinder business, which makes pressure vessels for commercial applications. Worthingtons leadership had a fair amount of concern about whether that business had peaked or whether there were further opportunities for growth, he said. Should we divest or take advantage of good results?
Fiscal 2003 ended with sales of $320 million and operating income of $52 million. I hadnt even moved (to Worthington) yet and thought this might be messy. But by 2007 sales went to $545 million and operating income to $113 million, and now we are closing in on $800 million in sales in that business, he said.
A great portion of those gains came through targeted acquisitions of other cylinder companies, and Stoe was soon asked to seek merger and acquisition opportunities for the steel processing and metal buildings units as well. He led the team that formed the joint venture that became Serviacero Worthington in Mexico, purchased Gibraltar Industries Inc.s steel processing assets and purchasedor formed joint ventures withdomestic and foreign cylinder manufacturing assets. In January, he also helped Worthington acquire Angus Industries Inc. We have owned it for six months and were off to a great start and confident in its future, Stoe said.
These successes are due, in large part, to Worthingtons transformation plan, begun in 2008. It started inside the steel business, Stoe said. We went to every facility and analyzed what we did and how we did it. We increased productivity and profitability. We used the same playbook in cylinders and are halfway through it, going plant by plant. Worthington also has launched the program at Angus, a manufacturer of operator cabs and operator stations for heavy mobile equipment used in the agriculture, construction and mining industries.
The transformation plan has led to positive developments companywide, according to Stoe. It allowed Worthington to form centers of excellence, which in turn attracted the best and brightest people, including junior military officers. They are very sophisticated and more mature than others coming right out of school. They are fully embedded and run transformations at each business, he said.
The profitable growth spurt that Stoe helped steer, both through streamlining (which included downsizing the metal framing business due to the recession) and acquisitions, is also a matter of personal accomplishmentbut that growth wont slow down with his retirement.
We are still looking for opportunities, including within the steel processing business. Prior to acquiring Gibraltar, there wasnt much appetite for steel processing (assets) and now we realize there is capacity to integrate (select assets) into what we do, Stoe said.
When Worthington modeled the possible outcomes of the Gibraltar purchase, we thought some customers would say, No, you cant have that much of our business, and we estimated we would lose 20 percent of Gibraltars customers, he said. We actually gained new customers, increased our capabilities and strengthened the whole business.
As painful as it was to shut down metal framing plants, the joint venture that Worthington formed with Misa Metals Inc. to join Dietrich Metal Framing and ClarkWestern Building Systems has succeeded. Its leaner, but its making money consistently.
Even as he retires, Stoe has a vision of the future of the metals processing and distribution industry. In order to remain globally competitive over the next 10 years, North American companies have to innovate and reinvest in the business. There are technological changes to stay up on and the best kind of equipment and techniques.
Another key is to spend time developing the next generation of leaders. So many executives are coming up toward retirement. Its important to have people coming up behind that they have mentored properly.
The metals industry represents an exciting place to have a career. Ive been in it 43 years, he said. You meet people experienced in every conceivable battle who have survived and prospered.
Stoe would advise a college graduate to hitch your wagon to a mentor who takes an interest in you. I was mentored. This (career) has been a rich and rewarding experience for me. Everything you go through teaches you something of value.
Worthingtons new president and chief operating officer, Mark A. Russell, believes in actively recruiting future leaders to the company. A member of Brigham Young Universitys Board of Regents, Russell gave a speech to a graduating class at the university. He told the class that its a global economy. If any of you are fluent in Japanese or Chinese, see me afterward because we are expanding in Asia, he said of Russells speech.
After the speech, a graduate named Andrew Gee told Russell he wanted to discuss career prospects and said he spoke both Japanese and Chinese. Mark hired him almost on the spot, Stoe said, noting that Gee just spent a year working with Misa Metals in Japan, Singapore and Vietnam while Misa sent one of its employees to Worthington for a year. Gees recruitment and training are emblematic of what were trying to do for the future, Stoe said. He has gained a lot of experience and may be a future leader in the company.