Metallurgy definitely did not top the list of Mark Millett’s career aspirations as a young man growing up in the southwest of England. “I wanted to become a mechanical engineer,” the president and chief executive officer of Fort Wayne, Indiana-based Steel Dynamics Inc (SDI), recalled recently. “But I hated math.”
It comes as no surprise then that when it came time to set off for college, Millett followed the path of least resistance and pursued "Plan B." Several years and the requisite number of credits later - and with little more than a newly minted degree in metallurgy, a subject he majored in “by default” - Millett headed straight to America.
“I grew up exploring,” he said, shedding some light on the decision to jet off to foreign shores soon after graduating from Surrey University. “We were always camping, hiking, kayaking.”
Looking for adventure, Millett found that and a whole lot more since departing England and ultimately settling in Fort Wayne, with stops in Aspen, Colorado, Darlington, South Carolina, and Charlotte, North Carolina, along the way.
“I came over in 1981 and spent the winter in Aspen as a ski bum,” he recalled his early days in the United States. “I washed dishes and skied. It was fun. I remember breaking my last $20 bill waiting on the snow.”
Today, almost four decades since trading in his skis to join then mini-mill upstart Nucor Corp, Millett has proven markedly adept at not only applying his metallurgical expertise to real-world environments but to managing a measured and deliberate approach over the past five-plus years to growing the company that he co-founded with fellow Nucor alumni Keith Busse and Richard “Dick” Teets some 25 years ago.
Busse, who served as SDI’s top executive since it was founded in 1993, handed the reins of the company to Millett in January 2012 in a transition that Russ Rinn, executive vice president of the company’s OmniSource Metals Recycling Operations, describes as “absolutely seamless. It was really a great testimony to both of them,” Rinn adds.
“The transition between Keith and I was close to miraculous because it could have been a disaster,” Millett acknowledged. “And the board was conscious of this. Keith was driven, probably the most driven person on the planet. And I think the general fear was he could never transition.”
After interviewing for and prior to accepting the top slot, Millett met with Busse for an old-fashioned heart-to-heart. “I sat with Keith and said to him ‘I don’t know whether I’m going to be appointed or not but don’t even consider me - and I’ll be happy - unless you give the leadership team the freedom to lead the company forward. It just won’t work if you’re looking over my shoulder all the time.”
“When I retire, you are the boss,” Busse told his would-be successor. “You’re in charge.”
“I trusted Keith and he was true to his word,” Millett said. “I give Keith a lot of credit for that.”
Hail, hail to thee
Graduates of “Iverson U”, the informal and unofficial institute of higher learning named after F Kenneth Iverson, Nucor’s legendary former CEO, SDI’s co-founders helped write steelmaking history at the company’s Crawfordsville, Indiana plant.
All three played pivotal roles in the commercialization of the revolutionary Continuous Strip Production (CSP) process there and since then have been steadfast in their commitment to preserving and passing on the culture that pervaded, underpinned and propelled the ascent of the Charlotte, North Carolina electric-furnace-based steelmaker.
“I guess I didn’t know how lucky I was,” Millett reflected on his early days at Nucor’s Darlington plant. “For me, it was purely a job where I could make some money. I didn’t realize at the time that that plant was essentially a test bed of technology for Nucor.
“Virtually every piece of new technology developed for use with or in the electric furnace - the direct current (DC) furnace, Consteel, a whole bunch of things - came through Darlington,” Millett noted. “As a kid, I got to play. Being exposed to that pioneering spirit and technical kind of interest was terrific.
“At the same time, being in the shadow of Ken Iverson and seeing, watching, and absorbing the way he inspired and motivated people was incredible,” he added. “Iverson was an absolute leader. The innovation, technical education, and managerial leadership were phenomenal.”
Although reasons behind the decision to depart Nucor and form SDI vary from co-founder to co-founder, Millett said the choice, for him, was “very easy. I was always looking for the next challenge,” he comments. “And I wasn’t sure of future opportunities at Nucor.”
SDI was established in 1993 with Busse, who retired some 18 years later from his post as CEO, leading the charge through the company’s formative years. “Keith was obviously the leader, kind of the principal architect,” Millett reflects. “Dick was the epitome of an engineer. You can’t get any better. And me... I was just jack-of-all trades I guess.”
“It’s a great team,” Millett added. “We would challenge each other.”
Compare and contrast
When pressed to describe the differences in his versus Busse’s leadership style, Millett is quick to point to the quantum changes in the size, complexity and day-to-day operational dynamics of SDI over the past decade or so.
“Keith and my styles are very different and it’s not that one style is better than the other,” Millett is careful to note. “His was much better for the early part of the life-cycle of the company.
“Keith tended to be a lot more intuitive and reactionary. He just had an incredible sense about business,” Millett elaborated. “I tend to be a little more structured and intentional.”
To illustrate his point, Millett referred to a “great book” (Power Ambition Glory) he was reading “about the rise and fall of different civilizations. In it, they talk about Rome and Caesar, who obviously built the Roman Empire,” he said. “And that’s definitely Keith. He is our Caesar.
“But Caesar was followed by Augustus,” Millett drew a comparison. “He tended to bring a little structure to the Empire.”
A New York Times bestseller, the full title of the 320-page book (in paperback) is Power Ambition Glory: The Stunning Parallels Between Great Leaders of the Ancient World and Today... and the Lessons You Can Learn. In a section titled “The Roman Republic, the Ultimate Multinational,” authors Steve Forbes, of Forbes Media fame, and classics professor John Prevas subtitle the chapter on Caesar’s successor “Augustus: Stability and Moderation.”
It may not be an exact analogy, but the parallels between ancient Rome and 21st century Fort Wayne, Indiana, are not far-fetched.
“Keith has great instincts. He is relentless. He doesn’t allow people to become complacent,” Chis Graham, vice-president, steel fabrication operations, downstream manufacturing, comments. “His approach was perfect for an upstart company. He instilled a toughness in the team that carries us to this day.”
“Like Keith, Mark has great vision. He’s added valuable structure and discipline to our approach,” Graham adds. “Mark has created a roadmap for the future that will keep the next generation focused on what makes us best-in-class. Both Keith and Mark were the right leaders at the right times.”
Maintaining stability across an enterprise that has grown from a single, flat-rolled mill in Butler, Indiana to a veritable industrial powerhouse sporting a total annual flat-rolled steel shipping capacity of 12.4 million short tons per year – counting the agreement announced only weeks ago to acquire Companhia Siderurgica Nacional LLC (Heartland), from CSN Steel SLU – is no small chore.
Today, with facilities located throughout Mexico and the US, SDI is one of the country’s largest steel producers and metal recyclers. Besides serving the hot-rolled, cold-rolled, coated sheet, structural beams and shapes, rail, engineered special bar quality (SBQ), cold-finished, merchant bar, specialty sections and steel joists and deck markets, the company produces pig iron and processes and sells ferrous and non-ferrous scrap. Last year, SDI charted revenues of $9.5 billion, with net income pegged at $813 million. Cash on hand in March of this year totaled one billion dollars.
“The complexity of the company today is a lot different than it was a decade ago,” Millett said. “We went through a pretty large growth spurt about 10 years ago when we bought OmniSource. We grew from a few locations to 85 locations and almost doubled the number of reports. So, it [the company] needs a little structure.”
SDI acquired OmniSource, the US' second largest ferrous and non-ferrous scrap processor, in a transaction valued at slightly more than $1 billion in 2007. Last year, 63% of the wholly owned subsidiary’s ferrous scrap shipments were earmarked for delivery to the company’s six steel mills.
Seven years later – and just shy of three years into Millett’s tenure as CEO – SDI added what is now known as the Flat Roll Columbus (Mississippi) Division. The $1.6-billion transaction marks the steelmaker’s largest acquisition to date and has proven a pivotal junction in SDI’s evolution in more ways than one.
“Right around the mid- to late-2016 timeframe, you started to see a change in our stock valuation relative to our peers,” Theresa Wagler, executive vice president and chief financial officer, observes. “The team gained a considerable amount of credibility with the execution of the Columbus acquisition, and the step function improvement in our through-cycle cash earnings capability.
“And with that, I believe our investors view us differently today,” she said. “Now, there are a lot of different aspects to that premise, but Mark is a key component. It means a great deal to people when you say something and you actually do it.”
Culture is sacrosanct
For all its importance as a performance metric, the pursuit of “prudent growth” comes in second to what SDI’s CEO views as his most critical mission.
“People ask: ‘What is the most important thing you do?’” Millett reflected. “For me, our success has been driven in large part by our culture. The challenge is to sustain that culture as you grow bigger. Sustaining our culture is sacrosanct.”
Over the years, much has been written about the ownership culture pioneered by Iverson at Nucor and fully embraced, evident and thriving today at SDI. Ironically, some argue, the very success and subsequent super-sizing of the nation’s top-tier, one-time, “mini” steelmakers have weighed against the preservation of that culture.
“It goes beyond good incentives,” Millett cited one of the hallmarks of the culture he is fiercely dedicated to sustaining. “It may sound trite, but it’s maintaining that family feeling. You have an employee that deep down feels like an owner. And once you have that,” Millett says, “you have passion and everything that goes with it.
It’s hard work,” he added. “You’ve got to show them you love them.”
Geared for ‘prudent’ growth
Ask SDI’s CEO what he expects the company to look like in five years and he is quick to answer: “More profitable, bigger, but hopefully not massive. We’re not emotional. We’re not interested in growing to get bigger.
“We need to sustain our culture, we need to sustain our track record – higher highs, higher lows – and grow to create shareholder value. And have fun,” Millett emphasized. “You’ve got to have fun!”
SDI’s search for the right fit in an acquisition, such as the pending purchase of Heartland, is highly selective, focused to deliver key strategic goals, and has evolved over the years. “It [adding Heartland] levers our core strengths and at the same time fulfills our initiatives to further increase value-added product and market diversification,” Millett commented in mid-May when the purchase was announced.
“As we assess transactional growth, we have one metric that we actually look at, which is maybe a little different than most people” Millett suggested. “Everyone looks at return on capital and return on this and that. But I also look at Ebitda per employee or profit per employee,” he noted.
“Going back to culture being fundamental, if you worry that the bigger you get, the greater the probability and risk there is of losing that culture, looking at earnings per employee is critical,” he insisted. “Let’s just say we go ahead and buy a building products company, get $200-million of Ebitda or something like that, and pick up 5,000 or 6,000 employees. Compare that to buying or building a steel mill and employing 600 people that generate the same amount (of Ebitda) if not more.”
SDI is equally prudent in its approach to capital outlays, which it prefers to fund through free-cash flow. “We try to always differentiate ourselves in our investments,” Millett commented. “We recognize we are in a commodity market and a cyclical marketplace. So, the question becomes what do you do to differentiate yourself and always maintain high utilization through your mills?”
SDI’s top executive points to recent and tightly targeted investments in the company’s paint and rail businesses as prime examples. “We took about $60 a ton out of the supply chain thanks to the way we structured the paint business,” he noted. “And by going long and even longer in quarter-mile lengths of rail, we’ve created value for the consumer.”
Although Millett does not rule out advances on the technology front, he expects “the supply chain to change most of all over the next five to 10 years.
“There does not appear to be transformational technology on the horizon,” he said. Instead, he expects to see efforts focused on reducing freight cost and somehow building value along the supply chain.
“Whether it’s millennial or generational change, the customer base just wants to press a button and ‘boom’ everything will be ordered and arrive without any problem,” he observed. “I wouldn’t say we are going to be like the Amazons of the world, but I think it is going to gravitate that way.”
After looking forward, Millett took a minute to look back over an almost four-decade-long career spent in steel and intersecting with industry giants.
“I have been very conscious of the Keith era and my era,” he reflects. “The last seven years have changed the company. It has become a lot more complex. But, I think we have positioned it well.
“At the same time, we have positioned it from a foundation that was really built,” he emphasized. “I am always conscious that it ain’t me. It is three of us,” Millett said. “But more importantly, it is all 7,700 of us.”