There is a great piece this morning on Aleris, a Beachwood-based global manufacturer of aluminum rolled products, and how Steve Demetriou, CEO, has transformed the company out of Chapter 11. There are some valuable lessons we can learn in terms of how to grow and transform a company within the interview. Take the time to read
it as we believe many can incorporate similar strategies to propel growth and transformation.
By CLEVELAND, Ohio — Aleris, a Beachwood-based global manufacturer of aluminum rolled products, is in its third phase of transformation and growth. Five years ago, in the midst of growing fast, the company was in Chapter 11.
It’s a 10-year-old business, formed with a merger of two companies by four people in its Cleveland headquarters. Steve Demetriou was in charge then and now – leading 7,000 employees in the US., Western Europe and China.
Aleris is among the biggest suppliers of aluminum sheet to truck trailers nationwide. It’s the No. 1 provider of aluminum sheet for the residential building and construction industry in the U.S. Think gutters, downspouts and window trim products. And it also supplies metal that goes into products like washers and dryers and leisure boats.
In Ohio, the company’s Uhrichsville facility, south of Canton, is one of the most important suppliers of aluminum to the U.S. building and construction market.
Now Aleris is in the process of selling much of its recycling and extrusion businesses, so it can grow its rolled products business. They’re expanding in the U.S. and ramping up production and supplies in efforts to capitalize on the auto industry’s transition from using steel to aluminum in car manufacturing. Lighter vehicles means better fuel efficiencies.
The company is making this sweeping change based on industry data and expectations for huge growth in the U.S. market.
Ford Motor Co. is working on one of the biggest gambles in its 108-year history: A new version of its F-150 pickup truck with a largely aluminum body. It’s the best selling vehicle in the last three decades and the best selling pickup in the last four decades.
“It represents perhaps the most significant opportunity for the aluminum industry in years,” said Demetriou, chief executive officer, noting that Aleris has years of experience supplying automotive body sheet in Europe.
“We’ve played a key role as premium car makers have led the way in the transition to aluminum in Europe, ” he said. “And we believe we are well-positioned to serve this market here.”
Demetriou helped Aleris transform from a $1 Billion U.S. company into a $4 Billion global enterprise, that today includes more than 250 people in the Cleveland area and 340 in Uhrichsville.
Aleris is growing again. It started with a merger of an aluminum rolled products company and an aluminum recycling company. Then it quickly grew through a series of acquisitions until the global crisis hit. Between 2008 and 2009, volumes declined 40 percent, and the company faced heavy debt. Aleris filed for Chapter 11. Just 15 months later, the company emerged with a strong balance sheet, little debt, and a defined strategy for future growth.
While some of the company’s plants are more than 50-years-old, Aleris constructed a new aerospace plate mill in China a few years ago.
“It’s one of the most technologically advanced in the world – and we believe, the only one of its kind in Asia Pacific,” Demetriou said.
In 2013, Aleris completed a $70 million expansion in its Duffel, Belgium facility. Last year, the company invested more heavily in its Ashville, Ohio plant, part of its plans to invest more in existing operations.
But a big part of the company’s third transformation is divesting its recycling and extrusion business. The deals which are expected to close by the end of the first quarter, will lower employees to about 5,000 and generate aroud $600 million in capital. Aleris plans to use the money to further invest and expand its rolled aluminum products facilities. That includes a $350 million expansion at its Lewisport, KY site.
Q: What makes a leader?
I believe a strong leader has the ability to inspire an organization to perform at the highest levels while being very results-oriented. This means being visible, highly communicative and motivational, while also being relentless in holding other managers in the company accountable for the same leadership culture, and for delivering results. We are working hard to better involve our employees in our reinvention.” – Steve Demetriou, chief executive officer at Aleris
While many of our competitors, who were facing the same issues, obtained bridge financing or equity to ride through this storm, our major shareholder at the time, decided not to inject more capital. And as a result we turned to the Chapter 11 process. One of the reasons we emerged from bankruptcy so quickly was that our company was competitive and had a sound business model. As demand and pricing started to show some improvement, we were able to emerge from bankruptcy in 15 months, with significant financial support from our now current majority-owner Oaktree.
The Chapter 11 process was extremely difficult, but as I look back – It was a time in our history when our team was extremely focused and united. The objective was clear – emerge from bankruptcy a stronger company. We laid out the action plan quickly. We communicated it, and we regrouped every day to track progress and correct course. When we emerged as quickly as we did, and in such a strong position – there was a huge sense of accomplishment, and I think everyone felt that.
Q. How did the downturn and the bankruptcy impact the number of employees you had?
We had a solid company that we believed could compete over the long term and as such we were not forced to sell off assets or take unreasonable steps in downsizing the company. However, as is common in any economic downturn, we did right size the workforce globally and reduced the number of employees during this timeframe by approximately 17 percent.
Q. What did you learn about morale-building in your company’s darkest days, while taking the company through the bankruptcy process in a very depressed market?
Building strong morale is an important part of leadership, both in good times and more challenging times. In order to keep employees motivated, you must articulate your goals in a way that is clear and inspiring and you must repeat it over and over again -particularly in a large global organization.
We are employing a similar approach today, to maintain that same focus we had in the past, as we transform Aleris into a pure global rolled products company. We must continue to paint the picture of the exciting future that we’re working toward and make sure employees know how they can contribute.
Q. You’ve run this company since the start and just celebrated 10 years, where do you expect to be five years from now?
In five years we aim to be a more global, larger and more profitable aluminum rolled products company, enabling our customers to capture the unlimited potential of aluminum.
Q: Do you have a mentor or mentors?
I have had several business mentors throughout my career. Most notably, Paul Lego, a long time board member of Aleris (and formerly chairman and CEO of Westinghouse) was a key influence on me in my early days at Aleris prior to his retirement from the board.
I have been fortunate to have great boards and currently I am privileged to have great support and mentorship from the current leaders who make up the Aleris board.
Outside of the corporate world, the other key mentor has been and continues to be my father, Steve Sr., who has been a role model on the importance of leading, motivating and communicating.
Q. Is the reinvention mindset part of your company culture?
I have always believed that the businesses and companies I run should have the discipline of taking a step back, assess the landscape, and be willing to positively change or reinvent ourselves as if we just came in as new leaders. This is a key part of Aleris’ company culture.
At ten years old, Aleris is a relatively young company, and even as we’ve grown we’ve tried to foster and preserve an entrepreneurial spirit that you don’t find at larger companies with more mature, deep-rooted cultures. Nevertheless, a strong healthy culture is something you must constantly work at.
As we transform the company we are working hard to better involve our employees in our reinvention through employee surveys, town hall meetings, and meetings with smaller groups of people that don’t include managers. We’re using every avenue available to us to better engage our teams in our strategy. We want to help our people understand why the changes we are making will pave the way to a bright future for Aleris and how they contribute to our success.