Carmeuse Group

Perfect fitVice-president of engineering Aidan Connolly explains to Gary Toushek how a major new acquisition complements the strategic approach of this capital intensive lime and limestone business. In the 1990s Carmeuse Group, founded in 1860 in Liege, Belgium, as limestone-based products company Carmeuse SA, focused its sights on North America and acquired six limestone companies with 14 locations, including manufacturing facilities and limestone quarries or mines, most near the Great Lakes, including three in Ontario, Canada. Today Carmeuse Group has 70 lime production plants in 14 countries, and its subsidiary Carmeuse North America BV, based in Pittsburgh, Pennsylvania, is the largest producer of lime and limestone products on the continent, manufacturing and distributing more than six million tons per year of lime products, and four million tons of chemical limestone and aggregate. Its markets are the steel production (largest customer sector), power plant (second-largest customer sector), heavy construction, glass production, and water treatment industries. At the time of this writing, Carmeuse North America has just completed a deal to add a new, major acquisition, Cleveland, Ohio-based Oglebay Norton, with its 13 locations, also in the eastern US and Great Lakes regions. Carmeuse North AmericaÔÇÖs vice-president of engineering, Aidan Connolly, calls it ÔÇ£a perfect fit,ÔÇØ since most of CarmeuseÔÇÖs business is in lime, with a smaller portion in limestone, whereas Oglebay Norton produces much more limestone than lime. Limestone is a sedimentary rock composed largely of the mineral calcite, or calcium carbonate. Burning limestone produces lime, or calcium oxide. The calcination of limestone is one of the primary chemical reactions discovered by mankind thousands of years ago.Connolly is responsible for the technical aspects of CarmeuseÔÇÖs work in North America, including project engineering, process engineering, geology, mining engineering, corporate quality and corporate maintenance. ÔÇ£To me, personally, the most interesting aspect of my responsibilities is the opportunity to influence the strategic direction of this company. We have to ask ourselves what areas we have advantages in, as well as possible areas that we may not be particularly advantageous in, and therefore we can choose which areas to pursue for various reasons, either adding strength or leading with strength. ThatÔÇÖs the most exciting part of my job, and from that strategy we develop other aspects that touch the areas of my realm. For example, we make decisions about where the company is going to invest capital, which drives capital projects, which in turn drives project management and project engineering. We make decisions about how weÔÇÖre going to compete in the marketplace, which is impacted by the geology of our mineral deposits. And it also points quality efforts in the direction that corresponds to our strategic approach.ÔÇØ He says the companyÔÇÖs leadership team, which reports to president & CEO Thomas Buck, operates as a cohesive unit, with the various executives representing their respective functions, to develop approaches to certain customer markets. ÔÇ£For example, recently we had an initiative to grow our business in the chemical limestone arena, and I had a responsibility to work closely with our marketing, sales, and technical people to arrive at an appropriate strategy. From there, we laid our foundation then developed a list of companies that we viewed as favorable potential acquisition targets, and by chance, one of those, Oglebay Norton, recently became available on the market, and now the deal has just closed, suddenly making us a very big player in the chemical limestone business, which is a natural complement for us.ÔÇØConnollyÔÇÖs primary function is to manage the companyÔÇÖs project management and capital investment program, which has grown four times its size since 2004 (he joined the company in 2005 after 23 years in the paper industry) and he thinks itÔÇÖs a significant challenge for Carmeuse to manage that kind of explosive growth and subsequent investment. ÔÇ£This business is capital intensive, and we need to build well designed, efficient plants that can operate for decades. There are three aspects to a capital project: a budget, a schedule, and a level of performance. At the end of the day, you will ultimately be forgiven for having a budget problem or a scheduling problem, but you will never be forgiven for building something that doesnÔÇÖt work properly.ÔÇØ The company wants to get more involved in the coal burning power plant market because of the dramatic growth in the opportunity for flue gas desulfurization in power plants. ÔÇ£There is increasingly, over the coming years, a need driven by environmental regulations concerning coal burning power plants, which release sulfur in their process, and theyÔÇÖre required to scrub that sulfur. The most popular method is to use lime or chemical limestone. WeÔÇÖve used mainly lime for several years, but now weÔÇÖre starting to enter the limestone market in a major way.ÔÇØThe company has already stepped up its focus on this market. In 2007, for example, as a result of landing a new contract with a power company with three plants in Alabama, Carmeuse decided to build a new plant adjacent to its current plant in Saginaw, on the same site as its quarry, to pulverize limestone for flue gas desulfurization. ItÔÇÖs the single largest capital investment in a plant that Carmeuse has made to date in North America. The acquisition of Oglebay Norton gives Carmeuse North America an annual revenue of about $900 million, which is approximately 70 percent of the total revenue of the Carmeuse Group. Connolly sounds both confident and humble to be part of the leadership team that is taking the company into the future. ÔÇ£Carmeuse has a long term perspective and a leadership team with the capability to seize opportunities as we expand and grow. The team was in place when I got here, so I canÔÇÖt personally take much credit for it. But knowing that the owners of this private company have enough faith in the teamÔÇÖs current performance to make a substantial investment in acquiring Oglebay Norton, and to hand us the keys to operate and integrate it to derive value from the acquisition, is exciting. There was tremendous serendipity in that I was asked to lead a study into how we could grow into the chemical limestone business, and helped the team understand that it was indeed a good direction in which to growÔÇöand then along came Oglebay. ItÔÇÖs a great opportunity and weÔÇÖre up to the challenge.ÔÇØ ┬á Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *   ┬áFirst published March 2008