In reflecting on his 40-year career with ONeal Industries, Inc. (ONI) of Birmingham, Alabama, Holman Head thought about all the changes that metal service centers faced and his response to them. Considering four decades of profound change in nearly all facets of how a successful business operates and his many roles in managing that change Head said, I feel like Forrest Gump, the fictional lead in an American movie of the same name about facing and successfully managing lifes twists and turns.
Like Forrest, I too have been in the right place at the right time in many aspects of my life. He embraced hard work and integrity to become successful in many different roles, and I think for the most part, I did too, said Head. And much of Heads life and career followed Forrest Gumps most memorable quote, Like Momma said, life is like a box of chocolates. You never know what youre gonna get, as Head tackled and conquered myriad positions in his years with ONI before he retired on September 30, 2020 as president and chief operating officer.
Those virtues of hard work, integrity and the ability to embrace and master change have been mainstays in the evolution of ONI, which was founded by Kirkman ONeal in 1921. Centennial plans for 2021 are under way. Today, led by the third generation of the ONeal family Craft ONeal serves as chairman and chief executive officer ONI is the United States largest family-owned network of metals service centers and component and tube manufacturing businesses. The firm employs 2,500 people working in more than 70 locations and creating revenue in 2019 of about US$2.4 billion.
The business that is todays ONI began operation in Birmingham when Kirkland ONeal started a steel fabricating business that would later be called ONeal Steel. The firm quickly became known for its dependability and performance, which became hallmarks of its nearly 100 years. Kirkman ONeal in a 1926 interview with The Birmingham News said, We turn out each piece of work and each contract the very best that can be done, and we are determined that it shall be satisfactory. By the 1930s, ONeal Steel was the largest metal service center in the Southern United States.
During World War II, the firm was the nations largest producer of general-purpose bombs, employing more than 1,300 men and women, who also fabricated other materials for the war effort. The next few years saw the second generation of the ONeal family enter the business as Emmet ONeal, Kirkmans son and former chairman of ONeal Steel, joined the company in 1946, setting the company on a strategy of geographic growth, and in 1952, the company opened the first satellite district in Jackson, Mississippi. That first satellite location was followed by significant expansion, by both corporate expansion and acquisitions, with the addition of numerous facilities throughout the South, Midwest and Southwest USA.
Holman Head started his career with ONeal Steel in 1980, two years after he graduated from Washington and Lee University in Lexington, Virginia. His decision to attend the prestigious university was heavily influenced by his mother. I have frequently done things in my life that were what other people wanted or expected. Many got me out of my comfort zone, but all of them have helped me grow. One of those was going to Washington and Lee. Even though I was disappointed that it was a male-only school at the time, it gave me the focus to concentrate on my studies and not be distracted by girls who we would see only on the weekends from all-girls schools in the region, he quipped.
The skills taught by liberal arts colleges and universities have served Head well. One of the advantages of a liberal arts education is developing both as an individual and acquiring critical thinking skills. It was a period of tremendous personal growth that has served me well during the course of my career, Head reflected. Armed with his Bachelor of Arts degree in economics, Head moved to Birmingham, long known as the Pittsburgh of the South, to work in outside sales for Vulcan Materials Corporation, selling aggregate and crushed stone.
Old pricing methods
Head joined ONeal Steel in 1980 in inside sales. In that position building off his outside sales experience, Head quickly realized that pricing was not very sophisticated at both the supplier and customer levels. Back then, steel companies published pricing books, and they were simply based on adding all costs and putting a profit margin on top. No one questioned the price. It wasnt until after rampant inflation gripped the United States in the very early 1980s followed by a deep recession was the true cost of steel products questioned. The growth of low-cost mini mills in the United States made inefficient costs more apparent, he said.
The year 1982 was a major turning point in the US metals industry as companies used a laser focus to identify and reduce costs. A two-year move within ONeal Steel to its district office in Memphis, Tennessee, outside sales really taught me how to listen to and communicate with many different kinds of people. I also learned how to communicate with people in a group and recognize that while everyone was hearing the same thing at the same time, not all people were understanding at the same time. Sometimes the timing of the message is even more important than the content, he explained.
Period of rapid change
When Head returned to Birmingham in 1984 to work in marketing, ONeal Steel was rapidly changing. The company began using telemarketing, implemented Electronic Data Interchange and initiated business development efforts. Product marketing and purchasing groups were more closely aligned to further expedite response to the customer.
But in thinking about the tremendous change in how companies conduct business since the early 1980s, Head quickly points to the evolution and integration of information technology as the most impactful trend that changed both the face of ONeal Steel and the entire service center sector. When I started, ONeal Steel had a huge mainframe computer with a room full of tape drives. There were no word processors or personal computers, and fax machines were barely making a mark. As technology advanced, those who understood its power and could invest reaped great benefits from increased productivity, improved asset management and better competitive knowledge.
Information technology also increased transparency throughout the supply chain, which eliminated waste and forced extreme discipline on operating cost. In 1980, we quoted on the phone using price pages. Today, a significant percentage of ONeal Steels line items go through the ecommerce site PRONTO. That same system notifies the customers when they are the next delivery stop. ONI is utilizing big data to drive improvements. Were able to measure and analyze things in ways weve never been able to do in the past, Head explained. And then, linking his retirement decision to the continuing and quickening advances in technology, he quipped, Ive realized over the last couple of years that changes in information -- and all -- technologies are faster than I can stay abreast. The younger generations who grew up with laptops are better able to see around the corner than those of us who grew up with slide rules.
Evolving and leading-edge technology helped ONeal Steel expand organically in the 1980s and 1990s in the Southeast and then into the Midwest and Southwest USA. But company leadership within ONeal Steel saw opportunities for strategic acquisitions to expand its products and services for metals consumers. In 1997, the company acquired Metalwest, ONeal Steels first stand-alone subsidiary, followed the next year by the development of a weldment operation in Monterrey, Mexico, now known as ONeal de México, the first business outside the United States.
In 2004, ONeal Steel closed on Aerodyne Alloys, the first acquisition into high-value nickel, cobalt and titanium bar products, and the following year Leeco Steel was added to further broaden ONeal Steels range of products, services and geographic reach with specialized grades of high-strength steel and alloy plate serving customers throughout North America. Late in 2005, TW Metals (TW), the largest acquisition in the companys history, expanded the geographic reach worldwide to Europe and Asia. Additional acquisitions followed with several more global specialty metals companies in 2006 through 2008, including what is now known as United Performance Metals (UPM).
After growing into many separate and unique companies, in 2008 the shareholders formed the parent company, ONI, to better manage the growth of the business and to provide some corporate support functions for the subsidiary companies, such as mergers and acquisitions, financial reporting, legal, corporate compliance and tax services. However, each ONI company continues to manage its own core functions such as sales, operations and purchasing. Under the ONI umbrella, subsequent acquisitions included Stainless Tubular Products through its TW affiliate in 2008, and Plus Ten Stainless through the UPM affiliate, in 2008.
As the company grew, so did Heads responsibilities, advancing through vice president of purchasing and product development, senior vice president of the southern region, and then president and chief executive officer of ONeal Steel. As his role and view grew, he saw value for his company and for its customers through the creation of ONeal Manufacturing Services, which offers multi-stage processing capabilities, providing OEMs a reliable resource for large-scale and labor-intensive jobs that require specialized facilities and a high degree of manufacturing expertise and efficiency.
We created ONeal Manufacturing Services as a way to capture work for OEMs that they had previously outsourced. We had the capital to invest in highly specialized equipment and were able to generate enough business to operate three shifts a day seven days a week, whereby the OEMs may only need to run their machines for one shift a week. The OEMs avoided the cost of the specialized machinery, and we were able to efficiently provide them with value-added services. In addition, we had businesses with similar equipment and were able to shift the volume between businesses when needed, Head explained.
Craft ONeal, chairman and chief executive officer of ONI and grandson of company founder Kirkman, pointed to the creation of ONeal Manufacturing Services as Heads single greatest contribution to the company. A growing number of customers had come to rely on ONeal Steel to provide all of their value-added processing including fabricated metal components and welded assemblies. Growing that business while maintaining focus on distribution and early stage processing with the resources was becoming extremely difficult. Holman recognized under those conditions that neither distribution nor manufacturing could reach its full potential, thus he and his team created ONeal Manufacturing Services as a new entity. This allowed ONeal Steel to return to being a highly successful full-line metals distributor and processor and ONeal Manufacturing to become the leading supplier of fabricated metal components and welded assemblies.
Additional acquisitions have included Vulcanium Metals in 2013, which includes a stocking facility in Belfast, Northern Ireland, which along with Aerodyne Alloy and Plus Ten are part of ONIs UPM affiliate as a global distributor of high-performance specialty metals. In 2018, additional purchases were both the British firm of Locate Supplies Ltd, made by the ONI affiliate TW Metals and G&L Tube of Cookeville, Tennessee, whose products are used by top-level OEM and Tier 1 customers for heating elements, vehicle fuel systems, HVAC and other heat- and corrosion-resistant applications.
ONIs steady stream of acquisitions was part of a broad metals industry trend that intensified during the past decade in which many firms looked to enter new markets with new or expanded product ranges and frequently in different geographic regions. In data provided by Headwall Partners LLC, Greenwich, Connecticut, there was a steady increase in the number of metals industry mergers and acquisitions between 2015 and 2018. Many metals industry executives anticipate further growth through mergers and acquisitions following the recent slow-down in transactions resulting from the global Covid-19 pandemic.
Another factor supporting consolidation in the distribution side of the metals industry has been fueled by the steady decline over 40 years in producers owning distributors. Head recalled that in the 1980s, many mills owned service centers. Our customers wanted to buy stock material and process it all the way through a finished product. Today, I dont believe any domestic mills are truly in the distribution business, and they do see value in the service centers, which are in their top two customer segments. Producers want to focus on making the material and not distributing it. Our OEM customers want to assemble parts, focusing on engineering and design. The gap between the two creates a great market for service centers. Economic conditions impact integration over time. However, with consolidation in the producing mill industry and consolidation of OEMs, this is less impactful today.
Bob Weidner, president of the Metal Service Center Institute, agrees with Heads assessment of the key forces that have shaped todays service center structure. Macro forces over the past several decades have dramatically changed producers and service centers, including industry consolidation, changing demographics, increased use of technology, globalization and government oversight. Also, there has been a significant adverse impact on service center shipments since Chinas admittance into the World Trade Organization. Successful companies, however, have been able to innovate their processes, products and services as theyve been doing for over a century. Business leaders like Holman always find a path forward for their team, their shareholders, their customers and the communities in which they do business.
More to be done
But as much as the industry has advanced through consolidation and innovation, there is more to be done in Heads view. Despite tremendous consolidation over the last 40 years, the service center industry is still highly fragmented. It is increasingly difficult to get an adequate return on invested capital. There has always been a debate as to the value the service center provides in the metals supply chain. In the 1980s, the story was cost of possession. Then came value-added processing. I believe the trend of improvements in information technology will continue with the impact of big data and artificial intelligence. The trend in less vertical integration will continue. The service centers that win in the future are those that can provide value to both our customers and suppliers. That value will come from continually harnessing changing technologies. Though technology provides for less interpersonal interaction, I do believe that people find a way to do business with people they want to do business with. Those relationships help sell and communicate the value provided.
Heads personality, which Craft ONeal described as a balance of a strong business acumen and jovial, fun loving spirit, transferred well in his service with professional organizations and community groups. He served as chairman of the board of directors for the Metal Service Center Institute, the role which Head described as improving the profitability of its members without affecting competition. After listing the benefits of trade association memberships, his tone shifted when discussing the challenges. Increasing diversity in the metals industry is something that members can do something about. The industry is still largely White and male, and its easy to say that other folks are not interested in our businesses. But have we really been proactive with diversifying our workforces, and can we help each other within the industry to become more diverse? This is a great opportunity to learn the business from each others perspective.
In describing Heads leadership of the trade organization he manages, Weidner, the president of the Metal Service Center Institute, said that Heads service to the association was marked in decades, not in years, culminating in his role as chair. Among the many attributes he has which make him an effective leader, the one that stands out is empathy. His ability to sense how someone is feeling helps draw out the best in others.
Personal future plans
Heads empathy has served both ONI and him well. ONI is an active corporate citizen in the communities in which it operates, and Heads skills and personality made a good fit for volunteer leadership positions. He currently serves on the board of directors of the United Way of Central Alabama, which supports organizations that improve the regional quality of life, and is the past board chairman of the Birmingham chapter of the Juvenile Diabetes Research Foundation
In retirement, Head plans to do exactly what he wants and not what others expect him to do. Yes, he is planning to enjoy some of the traditional retirement activities such as working on his impressive golf game, traveling, taking classes at the University of Alabama at Birmingham and becoming a better guitarist. The genteel southerner also plans to spend more time with his wife Margaret, granddaughter of ONIs founder Kirkman ONeal, and their daughter Olivia. But Heads empathy is also helping him make plans to somehow, someway address two significant societal issues in todays America improving economic opportunity and social equality. For 35 years, I drove through a distressed neighborhood on my way to work and felt that peoples lives would be improved with economic opportunities made possible through more education and training. I know I am going to do what I want to do and can do with a passion and where I can make a difference, he said.
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