MultiServ

Source: Energy Digital

Date :3/18/2008 5:20:01 AM

Outsourcing used to be a dirty word. Not any more. Michel Kratz, President of MultiServ’s Americas division talks about the company’s multi-specialist approach and its dedication to the metals industry

Written by James Hurley & Produced by James McCann

“When you turn to a MultiServ operation in China, you’ll find the same fundamentals as when you turn to a MultiServ operation in the US,” says Michel Kratz, President of the Americas division of the global mill service provider. Kratz is telling me about the values that underpin everything MultiServ does. “We have very strong values and standards that are shared worldwide; integrity is a prerequisite to doing the job right with good engineering, service dedication and customer dedication.”

MultiServ certainly prides itself on its dedication to the metals industry and the 49-year-old Frenchman embodies this spirit. Providing a wide range of outsourced mill services, the company aims to deliver value by bringing focus, knowledge, resources and technological innovation to metal producers’ non-core business activities. It designs, owns and operates equipment and facilities to provide its customized services - its role is to provide cost-effective solutions which meet its clients’ requirements at each stage of the metal production process.

Performance driven

Kratz tells me that we should forget all the old negative associations outsourcing brings to mind. “It has evolved over time. In the old days, it was a way for large groups to get rid of hazardous and labor intensive services or to cover up for poor management skills. That’s no longer the case. Our customers are very sharp. They are cost conscious and performance driven. They expect cost competitiveness and that we are results orientated in terms of total cost of ownership benefit to them.”

That might mean that MultiServ isn’t necessarily cheaper on a particular cost of service - but the chain of cost will always be reduced. “We are a specialist. We’re dedicated to the metals industry; we’re not a diversified engineering services group. We work in the steel industry 24 hours a day. MultiServ could stand for multi-specialist. We have a range of services that is sharply focused on field of expertise. What the customer finds in us is an effective deployment of resources because we’re specialized.”

The company’s origins date back to the early 20th century when Eric Heckett began designing and installing scrap recovery operations in the USA. Ever since, MultiServ has been leading industry consolidation and is now the world’s leading mill service provider. One of the most significant episodes in this growth story came when Heckett MultiServ was formed through the merger of the Heckett and MultiServ companies as a result of MultiServ’s acquisition by Harsco Corporation in 1993.

MultiServ was not in the domestic US market at the time– it had lost this market in the late 1980s following a divestiture. “Through the Harsco acquisition, we regained presence in the US, giving us the global footprint we have today.” And MultiServ is a truly global company with a multinational management team that includes French, English, Brazilian and Chinese. “At a MultiServ management meeting we speak international English which is full of foreign accents and foreign cultures,” Kratz laughs.

Harsco is one of Fortune’s 1,000 largest companies in America and was recently named for the fourth time by Forbes magazine in its Platinum 400 list of the best big companies in America. Leveraging the scale of a global operation that employs approximately 21,000 people in more than 45 countries, MultiServ - a $1.5 billion dollar per annum division of Harsco Corp - has been able to dramatically increase the scale and scope of its operations. The company now delivers a diverse range of mill services to single site and multi-site customers in the global steel and non-ferrous metal industries.

Environmental Impact

MultiServ generally works at its clients’ sites, under long-term renewable service contracts, developing and utilizing specialized technologies and equipment to support its services. Its own highly-trained personnel deliver these services; the company can provide small teams delivering a select range of services through to dedicated teams of over 400 providing a complete range of services that encompass the entire metal production process, enabling metal producers to benefit from its expertise in on-site logistics for raw materials, semi-finished and finished products.

Increasingly, protecting the environment and minimizing the impact of the metal production process is at the heart of MultiServ’s business. “We could summarize our activities in three groups: very heavy logistics, general services and most importantly, environmental services,” Kratz explains. This includes metal recovery, by-product up-cycling and recycling, bringing new life and new value to spent resources. “People can look at it as an impediment or constraint, or they could see it as a recovered resource, bringing value back into the production chain.”

With the value of scrap metal in the US currently between $300 and $400 per tonne, compared to less than $100 per tonne ten years ago, the incentive to recycle is much greater. “We now have a value proposal to recover resources. We can handle sludge whereby ten years ago it was non-economical. Now it’s highly beneficial to the companies. It’s opening up great areas of opportunity.” MultiServ can segregate slag by quality and type, thereby maximizing its value to external markets.

MultiServ also offers environmental protection; dust containment and emission containment is a cost but comes under what Kratz describes as a ‘total quality vision’. “When you do the exercise of containing dust or emissions you look at your processes and efficiencies at the same time.

Often when you introduce those new enclosures, it’s part of a quality and efficiency drive. I have not seen any of our leading customers in the field of environment losing market share – quite the contrary. In the US and South America, the few that are struggling and close to bankruptcy are those that are poor in safety, poor in quality and poor in environmental protection. Conversely, our leading customers – US Steel for example – do very well in the environmental field and they also make record profits.”

Indeed, MultiServ mill services division was recently awarded significant multi-year contract extensions at two major steel plants in the Netherlands and US that are expected to generate more than $75 million in additional new revenues over the contract terms. These contracts exemplify MultiServ’s growing responsibilities for developing and executing essential environmental and logistics services in support of steelmaking processes.

File environment under best practice, then, which means return on investment. “It puts the emphasis on us to have the right sales pitch and for us to provide the big picture. We try to be a global provider of solutions.”

The contract awards included a major ten-year contract extension of MultiServ’s ongoing support to the seven million ton Corus IJmuiden strip products works in the Netherlands. This is a huge integrated mill that produces a wide range of steels for the automotive, construction, consumer and other industries and is one of MultiServ’s largest operating locations worldwide. In parallel with the mill’s increased production plans, MultiServ’s responsibilities will now nclude further development of on-site slag handling and processing systems in line with the Netherlands’ stringent environmental regulations.

Safety footprint & skills crunch

MultiServ strives to uphold the same strong values and provision of solutions wherever it goes in the world. Safety is one of its key corporate values. MultiServ’s well-established “SafeGuard” principles and policy emphasize that working safely is a condition of employment, that safety is everyone’s responsibility, and that preventing injuries and accidents contributes to business success.

The company’s CEO outlined its commitment to safety in a statement proudly displayed on the company’s website. “We all know that the steel industry is a dangerous industry, but we don’t have to accept accidents in our company,” he said.

“Our objective must be nil accidents, nil lost working days. We have to put a stop to all unsafe practices wherever they are and whoever is responsible. We have to ensure that every employee, every manager, every one of us shares in that responsibility and have the ultimate objective of being the safest contractor anywhere in the steel industry worldwide. That’s our objective. That’s what we must achieve.”

These words have fashioned, guided and determined its resolve to eliminate all unsafe practices, conditions and acts in MultiServ today.

It has achieved unprecedented levels of safety and performance, but the company ‘cannot and will not’ relax its efforts until it has achieved and maintained an accident free environment for everyone who works for and with MultiServ.

“We’ve been to places in South East Asia where bringing safety shoes to employees was unheard of,” explains Kratz. “Instead of working in those dreadfully unsafe conditions, we bring progress. We are also conscious of good stewardship to the citizens. We never get involved in anything that isn’t ethical. We’re driven by strong moral values that might make people laugh but we’re proud of it.”

The company is active in 40 countries spanning all continents. “We’re not a highly publicized company but we do the job and we intend to expand our footprint,” says Kratz. Locally managed in most of the countries it operates in, the number of expats on the ground is minimal. “We might have one Frenchman in North America, but I’m running ten countries,” Kratz laughs.

As companies become global in the nature of their management, there are an increasing number of international managers at senior level. “The world is very dynamic. We always facilitate mobility and try to give people opportunity. We want to be regarded as a company that provides opportunity for its people.” And recruitment, Kratz acknowledges, is a constant challenge for the entire sector.

“We are a not a sexy industry – we are a hard working one with noise, heat and dust so we don’t attract the average kid. The old fashioned way of good apprenticeships and good skill training is disappearing. We do attract solid people who like to work, but the skills set is a challenge.”

MultiServ is aware of the issue and develops continuous training programs, makes partnerships with vocational schools and training outfits and facilitates dialogue at site level. “We have a phenomenal training program. I think it’s quite unique in the industry. It’s the vehicle for a lot of best practice. We also have an intranet system called ‘e-knowledge’ so people can log in for information and a point of contact. We’re highly committed to training people.” Yet Kratz says a ‘skills crunch’ is inevitable and is going to be accentuated by the departure of the baby boomers. “We’re already seeing the start of that process and it’s definitely going to hurt us over the next five years. Companies will be forced to review their attractiveness, pay structures and benefits. It will be interesting to see how companies adjust to this challenge.”

The lesson Kratz learns everyday is that in recruitment, what you don’t do today will hurt you tomorrow. “There is a phenomenon that is generations. Companies work in half generation layers. The people who are the custodians of the business will leave in one go. The next generation will have been born in the 60s.” This lack of continuity presents a challenge for managers to deal with in terms of head count.

“Maybe the most difficult responsibility is to face underperformance. It’s like being a coach in a football team – you have to continually recruit good players and retire the not so good ones. I think management doesn’t always do this and has a ‘that will do’ attitude. They don’t drive the ‘A’ team.”

So time flies, five years seems to pass in a split second. “The young lad we recruit out of college will be the manager of this company in no time. They will bring you the right new technology, the right trends, they will keep your company at the forefront. But nobody has the road map. That evolves everyday.”

Click here to view the corporate brochure on MultiServ