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May 1, 2014

A Dramatic Evolution

Cargill’s Mike Taylor talks about global markets, new technology, strengthening safety programs and effective staffing.

 

Mike Taylor has built his entire career in the metals markets at global conglomerate Cargill. He started as a trainee in a metals-trading subsidiary and then worked his way through sales, sourcing, commodities trading, distribution and processing jobs, along the way living in Chicago, New York, Minneapolis and Houston.

As head of Cargill’s Steel Service Center since 2003, Taylor oversees some 330 employees at nine processing and distribution facilities throughout the United States from his office near Houston. His customers include manufacturers in a variety of industries including energy, transportation, other steel service centers, heavy machinery and construction.

Taylor also serves as the MSCI Safety Committee’s chairman, a post responsible for gathering intelligence and sharing best practices throughout MSCI’s member companies and the industry.

How have your career and Cargill’s metals business evolved with the global economy?

I was hired into what was then our industrial group: base metals trading, steel trading, steel mills and steel service centers. I stayed in more or less that exact grouping of businesses my entire career. In the early ’80s, we were importing products from around the globe for our customers. In the mid- to late ’80s, economies began to change. The United States was more regularly exporting products, and I worked with steel producers here to export to Europe or Asia. Then exports became less favorable, and I went back into a role of managing our U.S. business. In the mid-1990s, I was asked to manage our East Chicago, Ind., steel service center. That’s how I got into steel inventorying and processing. I have had the opportunity to see all aspects of the supply chain we operate in—to apply that front-end supply-chain knowledge and extend it to our U.S. customers.

Aside from its size, how does Cargill’s metals business differ from other service centers?

In the United States, we represent a window to the world. We have a collection of steel producers here that we buy from, but we also have a unique footprint globally that allows us to see what opportunities there may be to bring in foreign products. Our overriding brand guides our principles of doing what we say, being reliable in the supply chain, and having a broad portfolio of global trade and risk management capabilities. There are all kinds of risks that we deal with when we sell a product. We help ensure security all along the supply chain, help customers optimize inventory turnover and design pricing solutions for their specific needs, among other things.

This industry has not invested as quickly as other industries in providing the latest and greatest technology to make our supply chain very visible and efficient.

 

This issue’s cover story describes the increasing blending of the manufacturing and service economies. To what extent have your metals centers become more service-oriented?

As a part of our customers’ supply chain, we want to be viewed as a partner of choice, to have the right assets and technology serving customers. We work at being innovative in providing services that fit our customers’ need. That could be logistics, fixed or floating price solutions, metallurgical expertise, or access to all markets domestic and global. We can go out and find the right product at the right time at the right price. Similarly, for our suppliers we represent a reliable customer, bringing consistency to their supply chain. We have to listen and align our capabilities to be able to serve all our customers.

How will technology and data management change the industry?

Our customers want a secure supply chain they can rely on that gives them a market-based competitive evaluation or price for their product. They want some visibility into that; they want to build and invest in suppliers that have those capabilities. That’s where Cargill differentiates itself. But this industry has not invested as quickly as other industries in providing the latest and greatest technology to make our supply chain very visible and efficient. I think that all those things are coming—the ability to see where your product or your order status is to enable greater ease of doing business. It will create a lot more inventory-management and supply-chain management efficiency.

 

Will your new steel-processing center in Windsor, Colo., offer products and services and include technology that older ones might not?

Northern Colorado is in the middle of one of the largest oil shale formations in the United States, so the primary industry served will be oil and gas—energy—with the fabrication and distribution of steel. We have a very defined product and service offering we have developed over the last decade, primarily originating hot-rolled coil and processing it into sheet and plate or other coil. We started by putting a sheet-and-plate depot in and began to build a customer base there. Hopefully we’ll be cutting steel in Colorado during the fourth quarter. The facility will be 60,000 square feet, with probably 10 to 12 employees at the beginning and up to 25 when it is fully operational.

Are there practices shared from Cargill’s agricultural operations that have improved your side of the business?

Cargill is a 150-year-old company that has been involved in supply chain and managing risk for all 150 years. The expertise of linking areas that have surplus supply with areas that have deficits in a safe and efficient way has always been something Cargill’s very good at. We have global analytics and commodity risk management experience; we’re able to take that core competency and offer price-risk solutions to our customers.

Talk about your role as chairman of the MSCI Safety Committee.

As an industry, we have a collection of so many companies—producers, processors, service providers—we should be using our collective knowledge to provide the safest environment for the supply chain. MSCI announced two years ago its first safety conference. This conference has provided an appropriate platform for dialogues around best practices, safety exposures, different experiences our companies have had, and this summer will be our third annual event. Through MSCI, we have formed a board-represented safety committee with a collection of senior managers of member companies, developing an agenda of items aimed at learning from peer group experience.

The emergence of a stronger energy industry in the United States could be an interesting change in the competitiveness of U.S. manufacturing.

 

What are some of the leading safety issues?

If something goes wrong, very bad things can happen very quickly. Whether it’s at a steel mill or a steel service center, or working in confined spaces or with electrical exposure or elevated work heights—just to give a few examples. Member companies have been able to come together and discuss their experiences, the solutions they’ve developed and gaps that remain. Through the MSCI website, there’s data around safety statistics and performance, to help create benchmarks. What we’re really trying to do through the association is raise awareness among all member companies and hopefully improve their operations.

Can you describe a goal for improving safety at Cargill?

We want a program in place that encourages peer-to-peer observations of behaviors in plants without the threat of disciplinary action. We’re trying to have every employee really engaged in the operations—daily, weekly, monthly—to encourage employees to be watching for behaviors or actions in a facility that might be done better. It’s not meant to say, “Gotcha.” It’s meant to say, “Hey, I noticed this. You could have been standing in a better area when this happened.”

How does the regulatory environment for service centers help or hinder plant safety?

The steel service center industry is by and large regulated by OSHA, and from an employee health and safety viewpoint, I think the OSHA regulations are about right. They’re well intentioned and appropriate for our business. At Cargill—and I think probably at most companies—we look at OSHA as a minimum standard, and we really hold our standards to a higher level and strive to exceed those levels.

As an industry, we should be using our collective knowledge to provide the safest environment for the supply chain

 

How does Cargill evaluate and fill its human resourcing needs?

On an ongoing basis, we do strategic workforce planning, looking at where our business is today and what we think the needs are going to be in the future, and at the type of talent we have. We have a “talent talk” each year, identifying any gaps, and then we actively create training and development opportunities for our employees that will enhance their capabilities. In the recruiting process, when we have a map of the type of talent we’re looking for, it makes us better at bringing the right people into our organization.

What trends in the industry excite you right now?

The emergence of a stronger energy industry in the United States could be an interesting change in the competitiveness of U.S. manufacturing. North America will be an interesting place to manufacture things. There’s also a lot of infrastructure that’s needed in the energy sector as it increases capacity, to transport or store or eventually rebuild to export energy. Whether it’s trucks or barges or railcars, storage facilities, tanks and pipelines, all those things benefit the metals sector—steel mills, steel processors, steel fabricators, the whole line.


Deborah L. Cohen is a Chicago-based business journalist who writes about topics including entrepreneurship, personal finance and legal affairs. She was previously a correspondent for Reuters, Crain’s Chicago Business and Bloomberg News.