Growth at Scale

In little more than two decades, Steel Dynamics has grown into one of the largest steel producers in the country. Theresa Wagler takes us inside this impressive growth, and explains why sustainability is the next frontier

Despite being one of the only steel companies founded without the support of another steel company, Steel Dynamics, Inc. (SDI) has grown to become one of the largest steel producers in the United States and a member of the Fortune 500 in just a couple of decades. It is also one of the only steel companies that has turned a profit in every quarter except one, in 2009.

“If you look at our operational metrics compared to our peers, quarter over quarter and year over year, we stay at the top of the class, which is something that’s very important in this cyclical industry,” says executive vice president and chief financial officer Theresa Wagler.

SDI’s compensation structure is also unique. More than 80 percent of executive management and 60 percent of plant employee compensation is “at risk” to performance-based measures. In addition, every nonunion, full-time employee receives annual restricted stock unit awards that vest in two years, which aligns their interests with the other shareholders. SDI also provides profit sharing that is directly tied to the pretax consolidated profitability of the company. “As the company does well, so should the employees,” Wagler says.

SDI has found that its employees thrive in an environment where they have ownership in decision-making and accountability. “We have the best employee group around—they are innovative, passionate, and bright,” Wagler says. “There are direct lines of communication between all levels—when there are ideas, we want to hear them.”

In fact, the idea for one of SDI’s highest margin, differentiating products came straight from the shop floor. SDI is the only steel company in the United States that offers a paint line contiguous to a steel mill, allowing it to paint steel in-house rather than adding a step to the process, which in turn saves freight, time, and money.

Another employee stepped up in the aftermath of Hurricane Katrina to source hydrogen, a key component to the steel-making process. While SDI’s primary supplier was twenty feet underwater, an employee took it upon himself to locate equipment that could produce hydrogen on a limited basis. With the approval of divisional management, he was able to purchase and install it within days, which kept his facility running without having to go through a lengthy, bureaucratic process.

Such an approach is the standard at SDI. From day one at orientation, employees are encouraged to keep the lines of communication open—all the way up to the executive team, who actually pick up the phone. “They don’t have to post ideas to the Internet or send me an e-mail,” Wagler says. “Give me a call, and let’s talk about it.”

“They don’t have to post ideas to the Internet or send me an e-mail. Give me a call, and let’s talk about it.”

When Wagler joined SDI sixteen years ago as its 657th employee, the company was comprised of one electric-arc-based steel mill and land that was to be used to build a second. Today, the company has five electric-arc furnace steel mills, six steel-coating facilities, six steel-fabrication locations, more than ninety metals-recycling locations, two iron-making facilities, and more than 6,800 employees.

Both greenfield construction projects and acquisitions have contributed to SDI’s robust growth. “One important aspect of our growth was planned to mitigate market risk through product and geographic diversification, while also focusing on a continual shift to a higher, value-added product portfolio,” Wagler says. “Another important aspect was vertical integration in order to gain control of our primary raw materials that are needed to produce steel.”

SDI has also supported growth through a disciplined process of capital investment with accountability and a strong balance sheet. During the last two years, the company has opportunistically accessed the credit markets to reduce the overall cost of borrowing and ladder out its debt maturity profile. “We have been maintaining record levels of liquidity in anticipation of growth opportunities that we believe may arise in the coming years,” Wagler says. “Our unyielding focus on remaining a low-cost, highly efficient, customer-centric company results in best-in-class financial and operating performance. Our performance drives strong cash flows to not only support our current operations, but to support our continued growth.”

Now fully integrated and self-sufficient, going forward SDI is focused on growing its steel segment. The company also plans to not just increase revenues, but also improve overall margins. “Our growth must be additive to margins, counter-cyclical where possible, and be in areas where our culture of performance-based incentive compensation and ownership can thrive,” Wagler says.

SDI recently added a more formalized process for financial planning and analysis that has advanced strategic planning and the ability to take into account longer-term economic environments, giving the finance team the ability to turn data into information for making decisions.

Another important initiative for SDI is corporate citizenship, and operational and growth strategies are aligned with sustainability as a priority. Environmental stewardship is achieved through high environmental standards and the collection of scrap metal to reuse in furnaces to generate new steel products; social stewardship is achieved through charitable foundations and encouraging employee volunteerism; and human capital stewardship is achieved through a commitment to safety and employee development. “We take the role of ‘corporate citizen’ very seriously,” Wagler says. “We work each day to benefit our long-term success and growth of shareholder value. Remaining diligent with our resources is an important aspect to achieve that goal.” 

A full service law firm, Barrett & McNagny LLP has been serving the needs of the business community with the finest in legal services for over 135 years.  We have proudly worked with Steel Dynamics, Inc., one of the nation’s premier steel companies, as well as its outstanding executive team since the company’s founding in 1993. We continue to look forward to many more years of growth and collaboration.  For more information, visit