Industry standard

BURNHAM – It’s been two years since Standard Steel was purchased by Sumitomo Metal Industries and Sumitomo Corporation. Since then, the company has remained relatively silent, with the exception of recent appearances before the Rotary Club of Lewistown and at Juniata Valley Chamber meetings. But Standard Steel is ready to open its doors, so to speak, and let the community in.

Standard Steel CEO Dan Condon and Executive Vice President Alan Majewski recently sat down with The Sentinel to discuss the new parent company, changes that have been made, plans for the future and why they have kept silent until now.

Q: What are some of the changes that have resulted from the purchase?

Condon: We meet a lot and our priories are now safety, quality, delivery of the product on time and cost effectiveness. We have to do all of them but we do them in that order. Having said that, we also make our decisions based on consensus now. We get a group of managers and teams together and we work until we come to a consensus on what should be done. That requires a lot more time and effort and meetings, which can be very frustrating, especially if you are more used to making a decision and just going. In the long run, when we do have a consensus, everyone is pretty happy with it and on board. We feel success is much more likely to happen.

Majewski: I think there have been a lot of positive changes since the new ownership, and a key one that comes to mind is the use of teams to address problems or opportunities that we have within the company. For example, if we have a problem or opportunity, some issue to be addressed within the company, we’ll step back and select individuals from across the different functional areas of the company. So you might have a representative from manufacturing or engineering or finance or sales. And we’ll put these teams together based on who we feel can best contribute to a solution or best maximize an opportunity. We meet with them regularly and they really take ownership of whatever the issue is.

Q: Has the workforce changed since the purchase, and will it change in the future?

Majewski: We have roughly 700 employees. It’s been a pretty stable workforce level before the purchase and after the purchase. The only changes involved management when the previous CEO and COO retired. Both were replaced with reps from the buying company. Dan was brought in to be CEO the first day of the new ownership.

Condon: We think the workforce will continue to be pretty stable. We fluctuate based on the volume of the economy; if it’s good we bring more people in, if we go into a recession we have less people. The main thing for us is that the workforce should be stable as long as we can keep our markets and stay competitive globally. A lot of people are reaching retirement and will most likely retire within the next five years, so we are looking and have been hiring to prepare for that.

Q: How has the transition been since the purchase?

Condon: The transition has been very smooth. From the side of the people here at Standard Steel, I’m sure there was a lot of apprehension about the new owners and what was going to happen. We are all workers here, whether you are management or union, and the management and the union had the same concerns – We’ve got a new owner, what are they going to do? So we are bonded by that. I think that everybody has calmed down since then and is feeling more secure with the new owners. We, along with the people in the plant and the people in the community, really need this to be successful.

Majewski: When you talk about challenges in this business, it can always be the economy, but Sumitomo is bringing a lot to the table, in terms of expertise, technology, investment and upgrades they are making. All of that goes to them establishing credibility as a good owner.

Q: What has been the effect of working with a Japanese company?

Condon: I’ve found, in the 23 years I’ve dealt with both Japanese and American management philosophies, that it is a great mixture, a great balancing act. The Japanese culture on consensus is such that they meet a lot and are determined to get a consensus on everything. Sometimes us Americans are quick to pull the trigger. On the other hand, we aren’t afraid to try new things. And so if you can moderate and get both of these cultures to work together, you will have a very successful company.

Q: Will we see any improvements to the Standard Steel campus?

Majewski: I think we will, over time, improve in all areas of our company and the appearance of the physical facility goes along with that. Over time, we’ll assess what improvements make sense and some of them will be visible to people driving by and some of them won’t. But long term, the physical facility will evolve as we’re evolving as a company.

Condon: If we went in and made tremendous changes to the campus to glorify it, but there was nothing that improved the product quality or improved the safety or cost effectiveness, well that’s a house of cards type of thing. What happens is we spend a lot of money, but don’t get any return. Our first focus is to make the this a stable and profitable company. We plan to improve the campus, but we have to do that by generating profit. So we’re investing now in the process that will bring people to us so we can generate income to improve things throughout the company.

Q: Why has the company remained so quiet since the purchase?

Condon: There is nothing overt or intentional about that. The real reason is that we’ve been here a year and a half and we did a lot of work before coming here, but there are a lot of changes to be done, a lot of planning. We’re in the middle of a capital project. And so it wasn’t anything overt, but we’ve been pretty busy. I think the important thing is that this company has had rough times at times and our focus isn’t to put ourselves on a pedestal and say we’re here. It’s “let’s get this company on the right track where we can make sure we are a stable employer.” The best thing we can do for the community is make sure we are a stable employer.

Q: Where does Standard Steel rank within the global steel market?

Majewski: The important thing to note here is that we only make steel that we need to produce the railroad wheels and axles. We don’t sell steel into the open market. So the key indicator is our market position in railroad wheels and axles rather than steel production. Now, we’re part of Nippon Steel and Sumitomo Metal which, as a total company, is the second largest steel producer in the world. We provide wheels to several of the class one railroads, which are the largest railroads in North America, to major maintenance suppliers of the railroads as well rail car builders. We also supply wheels to locomotive builders and maintenance suppliers, Amtrak and the regional transit authorities. It’s always an ongoing evolution of customer base.

Q: What type of expansions or upgrades will we see in the near future?

Condon: We have a $62 million expansion going on, which is pretty prominent. We are upgrading our steel making process. We are moving to what is called micro clean steel so that’s a big event for us because we’ll have world class steel as far as cleanliness. We’re bringing in a proprietary process called a SIRD press, or Sumitomo incline rotary dishing press. It’s a process that Sumitomo has that makes a higher tolerant wheel and will improve the quality of the wheel.

Majewski: It’s a prime example of the benefit of being owned by Nippon Steel and Sumitomo Metal, because they have this technology and they are bringing it here to make our process better. They make the same products, but with a little different marketing. We believe that these changes will set our product apart as a premium product.