CHICAGO HEIGHTS | While navigating a path around hundreds of steel coils on a shop floor or walking past management offices, the jovial interactions among three Esmark Steel Group executives are reminiscent of those with family members or buddies at a bar.
Esmark Steel CEO Thomas Modrowski, CFO John Krupinski and President Mane Ogrizovich share what they describe as a humble upbringing in Northwest Indiana and a work ethic forged from their experiences in the region. The men didn't grow up together, but their days are now consumed with working together to rebuild a company that was one of the largest steel producers in the country prior to August 2008.
"It has been a lot of fun," Modrowski said last month. "It's not without a lot of hard work. You get some headaches."
But Modrowski doesn't expect those "headaches" to block Esmark from earning $1 billion in revenue by the end of 2013, as steel industry conditions improve and the company benefits from recent acquisitions of assets from bankrupt RG Steel in Yorkville, Ohio.
The tie that binds
All three executives started working together after Esmark leaders James and Craig Bouchard made their first acquisitions, Electric Coating Technologies in East Chicago and Sun Steel in Chicago Heights, in 2004.
The privately held Esmark continued to grow over the next five years and became the nation's fourth-largest steel producer. In August 2008 after contentious negotiations, the company sold its Wheeling-Pittsburgh Steel Corp. subsidiary and service center network to OAO Severstal for $1.23 billion.
After the 2008 sale, Modrowski went to the "sidelines" after signing a non-compete agreement and Ogrizovich and Krupinski joined Severstal's Northern Steel Group to run facilities. Months later, the industry began to show cracks under the weight of the global economic slowdown. The following year was one of the worst in recent decades for the steel industry.
Esmark Steel, whose headquarters are at the facility formerly known as Sun Steel, was formed in November 2009 with the goal of rebuilding through acquisitions of steel processing and distribution operations. The company was starting over with no revenue, but now the steel group employs more than 300 people in six states. It operates as a subsidiary of Esmark Inc., which is based in the small Pittsburgh area borough of Sewickley.
Despite the different paths they took to enter the industry and in subsequent years, Ogrizovich said the three of them are able to work well together because they complement each other and trust each others' decisions.
The Hammond-born Krupinski, 51, was the son of a union carpenter and left Northwest Indiana to work in finance prior to returning to the steel industry. Modrowski, a 56-year-old who hails from East Chicago, started his career at United States Steel Corp. Gary Works. Ogrizovich, 54, grew up in East Chicago's Indiana Harbor neighborhood and started his career at Inland Steel in East Chicago. Growing up in Northwest Indiana, the path to a steady career and income sent thousands of working age people in the direction of the mills, refinery, and construction sites.
"We kind of grew up in the same environment," Modrowski said. "We grew up the same way. We grew up in the same, without a lot of frills growing up in life and maybe that's what binds us all."
Industry in recovery
The tough days in steel, which Ogrizovich said aren't completely gone, has helped him, Krupinski and Modrowski become better managers. Ogrizovich and Krupinski returned to Esmark to senior-level positions in 2010 after Esmark repurchased service centers it owned, including Sun Steel.
Keeping inventories lean was an organizational strategy before the recession, and when steel shipments fell off precipitously during the recession's dark days, Ogrizovich said having less capital tied up in inventory was beneficial to the company. In the more volatile steel environment, especially as it relates to pricing, it's even more important for companies to analyze their sales plan and use their experience to minimize risk.
"You learn at the end of the day. You manage through it," Ogrizovich said. "You're not the only one going through it. Maybe you work a little bit harder and maybe you have to dig a little deeper at being creative. (You) try to keep emotion out and try to get things through logically."
Esmark's service centers expect to ship 400,000 tons of steel this year, which is up from 350,000 tons in 2011. Next year, that number could grow to 450,000 tons. Tinplate production at its recently acquired Ohio Coatings Co. could reach 300,000 tons in 2013.
Esmark deployed a new information technology system to make its diverse operations more efficient and invested resources to improve sales and service support, Ogrizovich said. The strategy may be paying off because October was the strongest month for steel shipments ever for the Esmark Steel Group, even as many players in the domestic steel service market continue to struggle.
It will take many more strong months to help build the billion-dollar business, but Ogrizovich said the personal achievement is just as important, if not more important, than the company's financial success. Since his two other colleagues share that belief, he said it makes it easy to work toward that goal.
Ogrizovich said: "We wake up earlier. We work harder and we go to bed later than most people we compete with. And as a result, with the three of us here, I like our odds."