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MCN Service Center Executive of the Year

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Click here to download entire article with pictures. 2012 Executive of the Year William Hickey Big Success, Small Ego Bill Hickey, president of Lapham-Hickey Steel in Chicago, personifies leadership, both of his third-generation family business and the service center industry at large. By Dan Markham, Senior Editor Bill Hickey, the 2012 Metal Center News Service Center Executive of the Year, loves to talk about the critical importance of U.S. manufacturing. He excitedly discusses Lapham-Hickey Steel’s long heritage as a distributor and processor and the company’s dedicated workforce. He can speak for days about politics and the need for free and fair trade policies to lead America’s economic resurgence. The one subject he isn’t terribly comfortable talking about is Bill Hickey and his accomplishments. Each year, MCN recognizes an individual whose career and business strategies represent a model for the rest of the industry. Hickey, the long-serving leader of his third-generation family enterprise, meets those requirements with ease. Hickey has headed up the family business, one of the largest service center companies in North America, for almost 35 years. He has been a key figure in the industry, serving as an officer in the Metals Service Center Institute and other trade groups. And he has become an increasingly important voice in the policy arena, leading the industry’s appeal for a comprehensive domestic manufacturing agenda and stronger enforcement of trade laws (see sidebar). But Hickey, in keeping with his modest tradition, sees his role as more of a cog in the machine than a driving force. Lapham-Hickey Steel was founded 86 years ago by his grandfather, Frank Hickey, and the Lapham brothers, Edward and Burnham. His grandfather had been an executive with Milwaukee Steel, while the Laphams were selling bar products for Edgar T. Ward’s service center company. Each was looking for something more. They found it through the Fitzsimmons Bar Co., which was looking to sell its cold-drawn bar depot in Chicago. The partners intended to open the new service center business on Jan. 1, 1926, but found themselves short of funds. With the help of another minority partner, George Clifford, they opened Lapham-Hickey Steel a month later. The company grew slowly through the early years. By the end of the Korean War, the Lapham Brothers had reached retirement age and wanted out of the business. They sold their shares to the Hickey family, where son William had joined his father. The Clifford family maintained a share through the 1970s, then sold its portion of the business. But even when the company fell under the sole ownership of the Hickey family, the operation never stopped giving the Laphams top billing on the marquee. “It was my father’s idea because that was the brand name. That’s what we’d worked so long for, and that’s what we were recognizable for,” Bill Hickey says. “All of us, as individuals, are replaceable.” That ego-free approach remains a guiding principle for Hickey, who says his company’s success is the byproduct of all its family members, not just the ones who share his last name. “This award is a reflection of the great group of people we have,” he says of becoming the 16th recipient of MCN’s Executive of the Year honor. “The people here make this place work. It certainly isn’t me.” His colleagues would vigorously dispute that assertion. “I can’t say enough about him; otherwise I wouldn’t have been here for 40 years,” says Jeff Hobson, the company’s vice president of operations and systems. “He sets a direction that we try to follow, but he’s always open to suggestions, ideas and thoughts. He allows us to do what we have to do.” Bob Pilond, the chief financial officer, has been with Lapham-Hickey for 18 years, which makes him a “short-timer” in an operation where the long-standing employee is the norm. The 69-year-old steel industry veteran says he should have retired several years ago, “but I just enjoy working with Bill. He’s very focused and very dedicated.” Though Hickey himself recently reached age 60, he remains as committed to the job as ever, establishing a work ethic that permeates throughout the organization. His son Brian, one of three children who have joined the family business, jokes that his father’s favorite hobby is Lapham-Hickey Steel. “I kid about it, but on weekends he will come in and look at inventory,” says Brian, who serves as general manager of the company’s original Chicago branch. In addition to Brian, Hickey has three other children with his wife of 38 years, Leslie. His oldest son Will manages the company’s Little Canada operation in Minnesota. Daughter Laura heads up the company’s maintenance and repair operations. Youngest daughter Mary Ellen is the only child who didn’t join the family business. Though he grew up in the business, working summers during his college days, Bill Hickey’s ascent to the leadership role was sudden and unexpected. In 1977, his father William suffered a cerebral hemorrhage one afternoon. He was dead by nightfall. At 24, and just a few years out of college, Bill was responsible for the family business, sharing the duty with a senior executive for the first few years. “The bell rings and you’ve got to go,” Hickey says of his rapid thrust into the chief executive’s role. “What can you do?” He did then what he would continue to do over the next three decades. He worked hard, sought out the counsel of those with more experience and knowledge and learned from each mistake along the way. “I was smart enough to know I wasn’t smart enough to run it. There were a lot of good people here who could help me, and I leaned on them.” He was a quick study. When he took over, the company had three operations: the main branch in Chicago, a second facility in St. Louis and a third in Neenah, Wis. Since then, Lapham-Hickey has grown to seven locations with 650 employees and more than $300 million in annual revenue. While substantial, the growth was not done simply to get larger. Each new facility, none of which is identical in products and services, was the result of a careful examination of each market and what it offered to the company and its customers. A prime example is the Wisconsin operation, which had relocated from its original facility in Neenah to nearby Oshkosh. The Oshkosh facility is a dramatically different operation than Chicago’s, which specializes in a number of different coil processing functions. The Wisconsin branch focuses on long products and its more recently opened fabrication operation. The fab shop was launched when one of the facility’s larger customers informed Lapham-Hickey that it was no longer going to buy steel, but fabricated parts. So, Lapham-Hickey did what was necessary to keep the valued customer. “We see more and more customers who want to buy components that are part of an assembly. They don’t want to invest money in capital equipment they’re going to run maybe one shift a day,” he says. “So we put in a laser, we put in a press brake.” The transformation from traditional service center to first-step manufacturer wasn’t embraced by all, as some customers were concerned their supplier was now competing with them. “I just said I was following my customer,” he explains. That customer-driven mindset and adaptability have been hallmarks of Lapham-Hickey Steel and key contributors to the company’s success. They are evident in examples both large and small. At the Chicago facility, the company specializes in slitting, with a broad range of widths. That includes small slitters capable of shaving strips into pieces no wider than a fingernail. This type of processing is not in high demand, nor high supply, resulting in highly specialized orders from all over the country. But such capabilities also create their own issues. Standard packaging options aren’t appropriate for some of these products, many of which are shipped through UPS. Lapham-Hickey’s solution: devote a small section of the facility to an internal lumber yard, manned by a carpenter who spends each day making customized skids and boxes for the uncommon orders, while the company purchases the standard sizes elsewhere. Likewise, Lapham-Hickey uses a mix of company-owned vehicles and common carriers to handle the larger orders. The fleet includes several closed vans for customers who want their orders protected from the elements. Company trucks also make daily runs to the branches in Minnesota and Wisconsin, allowing all them to share and effectively expand their inventories. “It’s a game of chess,” Hickey says of the mixing and matching of the different capabilities and products at each of the company’s operations. “But you’re running a portfolio of assets.” The company is constantly in search of ways to improve the performance and reduce the costs associated with those assets. The 225,000-square-foot Chicago facility, the oldest in the system, is in the early stages of a major overhaul, where cranes will be replaced, the layout changed and bays renovated. The process will take place over several years to ensure that multiple lines aren’t down at the same time. Such a slow process is OK with Hickey, for a number of reasons. For starters, as a family-owned business, the company feels less pressure for immediate returns on any investment. “I think it’s a competitive advantage. There’s not some faraway office making the decisions. I want to make sure that 10 years from now we have the right set of people, the right set of facilities, the right set of assets and the right set of capabilities in place for our markets,” he says. Furthermore, it suits one of his chief managerial qualities: patience. In a business environment where every decision needs to be made 15 minutes ago, or so it seems, Hickey has no problem pulling back on the reins and saying, “Wait.” “The cycle of business decisions has been compressed substantially in the last 10 to 15 years, which I think is a detriment to making business decisions. A lot of decisions are forced, because there’s a perception you have to reply now. I think some great decisions are made because you think about them for a day.” “He’s always been deliberate in his decisions. Our philosophy has always been that just because somebody else is doing something doesn’t mean we have to jump on the bandwagon. We methodically look at the pros and cons,” says Hobson, who along with Pilond and Executive Vice President Jeff Ford, serves with Hickey on Lapham-Hickey’s executive committee. The bigger the decision, the more voices Hickey will seek out. The company’s growth initiatives— whether opening a new location or adding a major piece of equipment such as the one-of-a-kind combination Butech Bliss/Leveltek stretch leveler the company installed in Chicago—tend to be collaborative decisions. “It’s a conversation between our management group, the salespeople, the operations people, the purchasing people,” Hickey says. “When you do a major change, you have to have more people giving you input.” While larger service center organizations have made inquiries about buying the company, Lapham-Hickey has opted to remain independent and family run. As an acquirer itself, Hickey concedes there aren’t a lot of service centers that are appropriate acquisition targets. Fortunately, buying market share is not a necessity. “We’re growing our business. We’ll continue to grow in 2013 with existing capacity and existing facilities. There’s nobody putting a gun to our heads saying we have to be twice as big. We’re big enough now to participate in the marketplace, to get competitive pricing from producer industries. All we need to be is big enough for a competitive price,” he says. Perhaps the biggest challenge to any acquisition is finding a target, not with the right products or markets, but with the right people. “The biggest problem in any industry is having good people to run your business,” Hickey says. “I look at some of the largest service center chains and wonder how they found 50 good managers. This is a very difficult business to manage properly because we’ve had so much transition in the last 10-12 years.” Yet Lapham-Hickey has been able to manage through the chaos. It’s done so by blending the traditional values established upon the company’s founding with an embrace of newer ideas and managerial techniques. Hickey recognizes the value in managing inventory levels, but won’t do so at the expense of having material to sell. He understands that the ups and downs of pricing are a fundamental reality of the service center business, but doesn’t rule out using some of the latest hedging mechanisms with customers who are determined to get a more concrete price for a longer period. Perhaps nothing better exemplifies the Lapham-Hickey approach to the business than the company’s inventory management system. The legacy system has been continually updated over the years. While short on appearance—its green screen format reveals its age—it is long on functionality, with mountains of useful data at each user’s fingertips. Employing bar codes, the system tracks each piece of metal every step of the way from order entry to loading the truck. The company has considered upgrading to newer technology, but has yet to find software that offers much better functionality than its homegrown system. One area of leadership that Hickey emphasizes is his relationships with others, both inside the building and out. It starts with treating people with respect. “That’s the duty and responsibility of a manager, to make sure everyone understands how their individual participation contributes a huge part to the success of the organization,” he says. The company’s extended family includes the relatives and friends of current employees who make personal recommendations, which Hickey considers a source of pride. “It might make things more difficult when there’s a problem, but by and large these people are committed. It’s telling when an employee says he’d like to have his family member work here. It says they believe this is a fine organization, an organization with a future.” Hickey is equally committed to building trusting, reciprocal relationships with folks up and down the supply chain. He is invested in the success of his mill suppliers and his end-user customers, and acts accordingly. “Every product that comes out of here has my name on it. My customers are going to get a quality product to make sure they keep competitive in their businesses.” His suppliers and customers have nothing but praise for the way Lapham-Hickey operates. “His organization conducts its business with the utmost professionalism, which is a reflection of Bill,” says Jim Sarwark, executive vice president with Nelsen Steel & Wire, Franklin Park, Ill. “They’re people you want to do business with because they have integrity.” “He’s a fair, balanced, honest businessman,” says Tim Hill, sales and marketing manager for Nucor Crawfordsville. The same sentiment is shared by his customers. “Anybody can sell on price. He delivers on quality,” says Reb Banas, president of Chicago’s Stanley Spring Stamping. “He’s a great guy with a great family and a great company.” Eventually, the time will come to turn that great company over to the next leader. Hickey has no formal succession plan at the moment, though he knows from history that sometimes these decisions are out of one’s control. “We have people in senior leadership who are in their mid to late ’50s. If something happened to me tomorrow, I’m sure one of them would step up and take on more responsibilities. If I retire 8-10 years from now, it may be someone who’s now in their 30s. I think we have enough quality people we’ll continue the organizational excellence we’ve had for a long time.” Tireless Champion of U.S. Manufacturing For many Americans, the first Tuesday in November represented the welcome end to the political campaigning that dominated much of the calendar year. But for Bill Hickey, the cause doesn’t end with the vote. For more than a decade, Hickey has been one of the metals distribution industry’s most prominent and effective voices, championing the need for free and fair trade, less cumbersome government regulation and a comprehensive U.S. manufacturing policy. When he wasn’t directing his own business, Hickey spent much of his free time this year speaking out on manufacturing’s behalf, primarily through the Metals Service Center Institute, Rolling Meadows, Ill. He was a regular speaker during many of MSCI’s Manufacturing Summits leading up to the 2012 election. The topic of manufacturing is an issue that interests him like few others. One of his primary activities away from the office is reading about the domestic and global economy. “There are only three ways of creating wealth – you mine, you manufacture or you grow,” Hickey says. “How we as a society don’t understand that manufacturing is a way of creating wealth is beyond my comprehension.” He has made it his mission to rectify that misunderstanding. But just as he does in business, he goes about that duty thoughtfully, intelligently and respectfully. “He is the voice of reason, conviction and order,” says Bob Weidner, CEO of MSCI, where Hickey has served as chairman. “He represents all that is good about our industry, the MSCI and our country.” Bill’s voice resonates, others say, because his knowledge of the industry is so thorough and his reputation so pristine. “When he speaks, people will sit up and listen. They know when he speaks, it’s not off the cuff, but things that he has given a lot of thought to,” says Jim Sarwark, executive vice president, Nelsen Steel & Wire, Franklin Park, Ill. “I am always amazed at Bill’s increased personal participation and grasp of both national and local politics. His ability to distill complex political issues down to something we can all understand is truly unique,” says Michael Meyers, general manager of sales for U.S. Steel’s Chicago sales office. The roots of Hickey’s involvement on the policy side stretch back more than 10 years, when a long-time customer told him it would no longer manufacture its products in the United States. The company was going to bring the product in from China at the same cost it was paying for the metal in the United States. As a student of the entire manufacturing process, not just the part of the supply chain occupied by service centers, Hickey knew such an equation didn’t add up. “I have an understanding of international costs of producing steel,” he explains. “It’s not rocket science. And that wasn’t realistic. Somebody was subsidizing the process.” He started talking to local congressional representatives, working with MSCI and taking other steps to get policymakers in D.C. to understand the issues facing manufacturers and the tilted field they were playing on. Though the setbacks have outnumbered the gains on topics such as Chinese currency manipulation, foreign subsidies and other forms of unfair trade practices, there has been some progress, enough to keep him from giving up the fight completely. “We have seen some changes. There’s certainly a much better understanding that this is a problem,” he says. “Ten years ago when you talked to a U.S. senator or congressman about currency, they looked at you like you were talking a foreign language. Now, at least they understand there’s an issue with currency valuation relative to the dollar.” Others have taken notice of his efforts. “Bill has worked tirelessly for the advancement of the industry, talking to legislators in Washington about free trade, fair trade. It’s obviously a chord that strikes deeply inside and up the ranks of Nucor,” says Tim Hill, sales and marketing manager for Nucor Crawfordsville. One supplier wouldn’t mind seeing him move from opinion giver to decision maker. “I tell him all the time he ought to run for office. He’s the kind of person we actually need making decisions in this country,” says Jim Banker, executive vice president, commercial, at NLMK, Farrell, Pa. Elite Company As the 16th recipient of MCN’s Service Center Executive of the Year Award, Bill Hickey joins an illustrious group of past honorees: • Michael Siegal, Olympic Steel, Bedford Heights, Ohio • David Hannah, Reliance Steel & Aluminum Co., Los Angeles • Norm Gottschalk Jr., Marmon/Keystone Corp., Butler, Pa. • Al Glick, Alro Steel Corp., Jackson, Mich. • Sandy Nelson, Earle M. Jorgensen Co., Lynwood, Calif. • Arnold Tenenbaum, Chatham Steel Corp., Savannah, Ga. • Bud Siegel, Russel Metals Inc., Mississauga, Ont. • Dave Lerman, Steel Warehouse Co., South Bend, Ind. • Bill Jones, O’Neal Steel, Birmingham, Ala. • Don McNeeley, Chicago Tube & Iron Company, Romeoville, Ill. • Wayne Bassett, Samuel, Son & Co. Ltd., Mississauga, Ont. • Gary Stein, Triple S Steel, Houston • Mike Petersen, Petersen Aluminum Co., Elk Grove Village, Ill. • Richard Robinson, Norfolk Iron & Metal, Norfolk, Neb. • Michael Hoffman, Macsteel Service Centers USA, Newport Beach, Calif. At a Glance Lapham-Hickey Steel Corp. 5500 W. 73rd St. Chicago, IL 60638 Phone: 708-496-6111 Fax: 708-496-8504 Web site: Founded: 1926 Locations: Six in Chicago and Madison, Ill., Oshkosh, Wis., Little Canada, Minn., Columbus, Ohio, Pawcatuck, Conn., and Fairfield, Ala. Employees: 650 Products: Cold-Finish Bar, Hot-Roll Bars, Hot-Roll Structurals, Hot-Roll Plate/Sheet, G&P/ TG&P, Alloys, Coil /Sheet, Spring Steel, Mechanical Tubing, Aluminum/Stainless Steel, Steel Reference Data Services: Sawing, Stretch Leveling, Coil Processing, Slitting, Shearing, Edge Conditioning, Cut-to-Length, Oscillating, Laser Cutting, Plasma/Punch Plasma, Oxy Burning, Forming, Shot Blasting, Stress Relieving, Blanchard Grinding, Heat Treating, Welding

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