ALCOA manager sees bright future
Robert Norris | (email@example.com)
It’s been quite a ride for ALCOA in Blount County:
From the incorporation of North Maryville into a town that took the name of company in 1914, to construction of the first plant, the smelter and the dams, to a bustling economic dynamo that helped drive the nation’s World War II effort.
But in recent years, the South Plant potrooms were closed and the Tapoco project dams were sold. With that, you might suspect that the latest location manager for ALCOA’s Blount County facilities would be downbeat about the company’s prospects here.
You would be wrong.
In an interview with The Daily Times, Tennessee Operations Location Manager Ken A. McMillen talked about the prospects for ALCOA in Blount County. Here, in his own words, Ken McMillen:
Investing in future
“We’re having a great year. From a performance standpoint, we’re probably running better — this is my third time here so I’ve got some different snapshots in history — cash generation and profitability. We’re doing as well now as we ever have — on lower volume, lower versus history.
“We have very strong sales this year. We see a real good year ahead. And I think from a long-term standpoint we have some available capacity. You know, ALCOA’s a global company and they’re always looking at what fits where. So, we’re always open to those discussions and feel pretty good about the future here particularly.
“The smelter shutting down — obviously I would much rather have the smelter operating. Life was a lot easier when we had a smelter. Plus, not to mention there were more people working. But from a long-term standpoint, it’s a large high-volume business, so cost is critical. Obviously, for us it’s much better the higher you can drive the percentage of recycled material to lower your cost structure.
“The investment in the can-reclamation facility couldn’t have had better timing in terms of expanding our capabilities and lowering our cost structure. It is a much more efficient delacquering process, and it extended our can-recycling capacity, which really has helped us weather the storm of losing that steady supply of raw material coming from the potrooms.”
Focus on recycling
“I would wager we have a higher recycled content than just about anybody in this industry. So, from an environmental perspective, from a cost perspective, it’s a win.
“On the flip side of that, the recycling rate in the United States is terrible, and that hurts because people want cans. It keeps shrinking that profitability gap on the cans when there’s not that many available. Instead of having a (U.S.) recycling rate of 58 percent, ALCOA’s pushing how do we get to 75 percent.
“For the United States it’s embarrassing. Brazil is 98-99 percent. Now it’s a different country. There’s different rules, different legislation, but to me it’s kind of an embarrassment to see people landfilling something that you could recycle forever.
“(Aluminum is) not like paper or plastic. You don’t have to take it and send it to a different product or shred it up and make road base out of it. You’re not reusing it, you’re recycling it. And you can do it over and over and over — and people throw it away.
“For us, the energy savings, the recycling content, pulling out of the landfills — if we could drive that to 75 percent it could do wonders for this business locally.
“Truthfully, I’m very excited about what we have to offer here in terms of our equipment capabilities and the people. Our geographical location is very appealing — not just for recruiting and attracting new talent to the area, but from a transportation standpoint.
“We have some unique capabilities with this particular mill that other ALCOA facilities and other competition don’t have. So I think it opens up some flexibility for us in the future that I think we’ll take advantage of.
“To me it’s an exciting time because you’re coming in at the cusp of something where we’ve gone up significantly in volume. Now from a community standpoint, it’s not great that we’ve not added head count to do that. But it’s a credit to the people that work here — in our recoveries, our efficiencies, however you want to look at it, pounds per labor hour, your yields. They were all at record levels last year. We’re breaking those levels this year. The work force is doing an incredible job of making us profitable.
“I think it puts us in a great position with ALCOA globally. If there’s new investment that needs to be made, there’s a strong argument for making it here. That’s why I get excited about it, because we’ve got a great work force and they’re delivering results.
“The economy’s recovering, but it’s not recovered fully. I think every major corporation, if you look at their cash reserves, they’re holding onto cash. Cash generation is a huge focus. This plant has a strong history of generating cash, and we’re continuing to do that.
“So, I do think that we’re a key part of ALCOA’s portfolio. I’m not worried that tomorrow the Tennessee South or North Plant are going to be sold or auctioned off. We’re a key part of ALCOA globally.
“From a capital-investment standpoint, the Tennessee plant and Warrick (Ind.) plant — and it’s based on performance — year over year we get a very significant capital base to invest back into the business. Some for sustaining, some for cost improvement or efficiency projects.
“I think the folks are delivering results, and if you deliver results you get the reinvestment to either grow or at least sustain. We’ve done that year over year. The pusher preheats and the can-reclamation investment both have paid off tremendously for us. I think from a cost-structure basis, the pushers are exceeding what we put into the request for funding to get them. We’re exceeding on every metric. It’s been a huge savings in natural gas usage.
“And the same on the can-rec side. We grew the capacity at the same time we shrunk the cost base with the investment in can recycling. That’s the message that we’ve been trying to deliver to folks here.
“You don’t get those kind of investments if people are planning to do away with you, because you’d have to write it off. If you sell it, you’re going to get 20 cents on the dollar. People aren’t going to make those kinds of investments, in this economy, if they’re planning on doing something different with you.
“So the message we keep delivering people is if you perform — and for us the three key metrics are employee engagement, customer satisfaction and financial performance — if you do those things you’re going to get the reinvestment you need.
Building on the past
“The cold mill is 25 years old. So, for 25 years we’ve reaped the rewards of that. The equipment’s lasted well, the people have maintained it well. And again, you’ve got to have continual reinvestment when parts become obsolete and things go bad. And every time we do that we tweak the performance a little higher and it’s great business.
“Our vision and our values have always been sacred — no one touches ’em, everybody lives ’em.
“We’re standing on the shoulders of people who came before us and we owe it to them and the community to keep it going forward. And that was the whole message behind it. If you look at this plant, the hot mill, yeah, it’s an old dinosaur. It was built in 1942. But I’m telling you the people who built it — it’s incredible, because they overengineered that thing. It was wartime. It’d better not break. Here we are 70 years later and we’re making one of the highest surface-quality product lines in the industry at incredible volumes and performance standards. It’s got the capability to do other things that a lot of mills that were put in in the ’60s and ’70s can’t touch.
“The plant keeps reinventing itself. When it was the West Plant, North Plant and South Plant, it was 1942. They made 500 different products and had 15,000 people.
“You kind of go through reiterations. ALCOA got bigger with different plants to do different things. I do think the realignment in the late 1980s — the decision to say we’re going to make this a high-volume can-sheet facility, to put the investment in and to do it well — has paid off. We continue to reap the benefits.”