September 15, 2008
A Powerhouse Made of Steel
By Carmody, LauraMarie
From its inception in 1993 through the opening of the first mill in 1996 and on to today, Steel Dynamics Incorporated, SDI for short, has enjoyed a meteoric rise within the American steel industry. In only twelve short years of operation, the company has become the nation's fifth largest producer of carbon steel products. It is also among the most profitable American steel companies in terms of profit margins and operating profit per ton.This information becomes more impressive when Keith Busse, chairman and CEO of the corporation, reveals that he and fellow founders Mark Millett and Richard Teets, Jr. created SDI amidst considerable industry skepticism.
"Many industry leaders thought the creation of Steel Dynamics Incorporated was a daunting task that would not be realized," Busse recalls. "After all, we were creating a brand new steel company, a start-up organization, without any pre-existing financial credentials."
Despite skeptics within the industry, the leaders of SDI moved ahead. Not only did the corporation survive, it thrived.
"In just a dozen years, SDI evolved from a proposed venture that stood no chance (according to others) to an $8 billion+ revenue organization," says Busse. "It is a pretty astonishing story. We're so busy, though, that it's tough to step back and be amazed."
What's the secret to SDI's rapid rise in an industry that has seen numerous steel producers sell, consolidate or declare bankruptcy in recent years? The answer lies in a series of strategic decisions that delivered additional depth and breadth to this strong organization.
The original business venture created a new, state-of-the-art flat-rolled steel facility in Butler, Indiana. According to Busse, the location was geographically desirable, with excellent transportation arteries, access to railroads, abundant energy, and close proximity to both customers and raw materials.
The initial goal for the mill was to double capacity from roughly 1.2 to 2.5 million tons, which is something the company has achieved over time. In addition, SDI focused on adding finishing to raw steel production.
"Our initial efforts revolved around the flat rolled steel segment of the market, which is the largest portion of the steel market," explains Busse. "Our success was greater than anyone anticipated."
While flat-rolled steel remains a core component of SDI, expansion and key acquisitions have further strengthened this corporation and exponentially broadened its horizons.
A few years into its existence, SDI branched into a new market with the development of a mill in Columbia City. This brand new, high-tech mill enabled the corporation to compete in the growing steel shapes marketplace. As with the flat-rolled segment, SDI has already doubled its capability in this arena. Along the way, the company also purchased a plant near Indianapolis and began producing rounds. Two additional mills were purchased in Virginia's to aid the production of shapes.
By 2003, SDI had acquired 100 percent ownership in New Millennium Building Systems, an Indiana-based fabrication business that produces steel joists, girders and decking for non-residential construction projects. New Millennium operates five plants and is one of the largest fabricators in the United States.
In 2006, SDI added merchant bar steel to its product mix with the acquisition of Roanoke Electric Steel Corporation. This division produces angles, flat bars, structural channels and rounds. SDI estimates that production capacity will reach 6.7 million tons per year by 2009, with sales of nearly 7.7 million tons.
Just last year SDI announced the acquisition of OmniSource Corporation, one of the country's largest ferrous scrap metal producers. In June of this year, the organization purchased Recycle South, one of the largest regional scrap metal recycling companies in the southern United States.
"Backward vertically integrating into recycling serves as another platform for SDI's growth," explains Busse. "Scrap metal is a finite resource that is constantly being generated and consumed. There is a lot of pressure these days because of increased demand and competition for limited resources, which is tied principally to a weak dollar coupled with a weak economy. We take America's discards and recycle them, which affords us resources and good margins."
SDI is also integrating into minerals, using the wealth of knowledge generated from its Iron Dynamics division.
"Materials can be mined from Minnesota using expertise that originated in Butler at Iron Dynamics," explains Busse. "This is an important project that anchors our growth, because it enables us to get our arms around the resources we need."
While SDI continues to make positive strides within its industry, Busse is quick to point out that it's not just the technologies that make this corporation such a burgeoning enterprise. It's the people and the environment in which they work that make the difference.
"The engine that drives our success is our culture," Busse reports. "We have a family environment producing superior results. Thousands of people are deeply invested in the company, and the company is dedicated to both the people and the communities in which they live."
SDI's commitment to its workforce is not only reflected in incentive plans and profit-sharing programs, but also through extensive support of its employees' communities.
"Our company has grown far beyond anything we ever dreamed," explains Busse. "With that comes community responsibility. We are always stepping up to support the community. It's about giving back."
Busse's personal dedication, especially to northeast Indiana, includes participation on a number of boards. His continued contributions in business have even been recognized by the University of Saint Francis, which recently dedicated The Keith Busse School of Business and Entrepreneurial Leadership in honor of this successful graduate.
Reflecting on the past twelve years, Busse says he is proud of what SDI has done for the steel industry. Looking forward, he sees the corporation as a key participant in a vibrant industry.
"SDI is part of an awakened American steel industry," he says. "We are positioned to do well. The company has an excellent balance sheet and capacity for growth. We are also focused on becoming a greater presence in all arenas. Our growth trajectory is strong."
Steel Dynamics Inc.
Address: 6714 Pointe Inverness Way, Suite 200 Fort Wayne, Indiana 46804
Phone: (260) 459-3553
Chairman & CEO: Keith Busse
Executive Vice President COO: Richard Teets, Jr.
Executive Vice President COO: Mark Millett
Number Employees: 6,800
Web site: www.steeldynamics.com
E-mail: [email protected]
Years in Business: 12
Products and Services: Flat-rolled steel, structural steel, engineered bars, merchant bars, specialty shapes and building systems
Copyright Michiana Business Publications, Inc. Aug 2008
(c) 2008 Business People. Provided by ProQuest LLC. All rights Reserved.