Steel & Tube gets a man on his mettle

Steel & Tube's new boss Dave Taylor will present a top-to-bottom strategic review of the company to his board by the end of next month.

The former BOC (British gas giant) and OneSteel senior executive arrived from Australia in October to replace industry stalwart Nick Calavrias, who left last April after 19 years with the company.

Steel & Tube has been severely buffeted by the recession, last week reporting an 85 per cent drop in profit for the half-year to December, to $3.2 million.

However, the firm says it expects a gradual improvement for the second half.

Mr Taylor, 45, says the company will have a much clearer view of how 2010 pans out once the February and March trading figures are in. "But for the financial year it is going to be pretty tough."

Details of the strategic review are being kept under wraps, but it is clear no stone will be left unturned.

"Certainly we will be looking at the strategy in total, and challenging every single thing about the current strategy and saying `is that still appropriate?', and where it is not, we will be looking to replace certain parts of that strategy or revamping it entirely."

A few years ago Steel & Tube grew its distribution and related business as a way of pushing growth, which runs at 3 per cent to 4 per cent a year.

"As part of the strategy review, we will be asking the same question: where is the growth coming from?" Mr Taylor says.

"We will be looking to maximise the growth from within the core business, but that is not going to be meteoric by any stretch of the imagination."

Mr Taylor says the market has misread his appointment as a signal OneSteel will take more direct interest in the running of Steel & Tube after years as a passive investor.

OneSteel withdrew a $4-a-share bid to buy the remaining 49 per cent of Steel & Tube in October 2008. "Yes, I did come from OneSteel, but people have to bear in mind that I'm not a long-term OneSteel person," Mr Taylor says.

At the time of his appointment Mr Taylor was general manager of OneSteel's Australian Reinforcement Company which, like Steel & Tube, operates independently from the parent.

"I was there for only 18 months, in a business unit which really was on the periphery of OneSteel."

There had been no intention to align the differing culture and values of ARC with OneSteel, and Mr Taylor does not expect any change to Steel & Tube's independence in the foreseeable future.

"So I think people here who have interpreted my appointment, because I have come from OneSteel, as OneSteel looking to influence the agenda more, are misguided."

There are also no plans for OneSteel to make a renewed full takeover offer for the company.

Mr Taylor says he made it clear to the OneSteel board he was not interested in taking on a role that would make him redundant in the short term.

"That doesn't mean never, but at this moment in time there are no plans for OneSteel to come back and make another offer."

While OneSteel is a 51 per cent shareholder, his job is to look after the interests of all the company's owners.

"What is going to be a win-win for OneSteel, I think inevitably will be a win-win for the rest of the shareholders."

Mr Taylor says stepping in to fill the shoes of someone who has led a company for as long as Mr Calavrias had challenges and opportunities.

"Nick would have had a style and he would have seen things in a certain way.

"I can see that this has been, and is a great company. But I can also start to see where there are opportunities," he said, noting he was coming into the business with broader international experience.

Mr Taylor says he had seen the Steel & Tube vacancy at the end of 2008 but, as a relative newcomer, didn't consider himself in the running.

"I needed to continue to demonstrate my capabilities so I never thought too much about it."

However, the recruitment of a replacement chief executive dragged on much longer than expected.

It is understood an external candidate pulled out at the eleventh hour before Mr Calavrias' departure in April. A second look within the OneSteel ranks put the spotlight on Mr Taylor and his impressive international credentials.

The Manchester University chemical engineering graduate joined BOC in 1985.

BOC was one of the few firms then offering a management path for engineering graduates, Mr Taylor says. "I didn't want to be a chemical engineer per se."

Over the next 12 years he climbed the BOC corporate ladder, from operations engineer to looking after some of the company's biggest customers, including British Steel.

In 2000, he was promoted to head BOC's business in South Korea, soon managing key global customer relations. A move to Sydney followed in 2005 to lead the South Pacific process gas business.

The 2006 takeover of BOC by the world's fifth-largest gas company, Linde, from Germany, marked the end of Mr Taylor's association with the company.

Linde offered Mr Taylor the post of managing global operations from Munich, but he turned it down.

"I actually didn't want to go to Munich, I wanted to stop in Asia," Mr Taylor says. "I find Asia Pacific exciting, dynamic. Munich didn't fit into my plans."

A OneSteel head-hunter sounded him out to run a newly acquired steel reinforcing business. OneSteel had bought the Smorgon Steel business in 2007.

Two thirds of Smorgon was integrated into OneSteel, but the reinforcing unit had been kept separate to compete independently with its own reinforcing business.

History had shown that in similar industry consolidation the market share gained had been lost to competitors within two years, Mr Taylor says.

He took on the A$700 million (NZ$896m) a year business with 1100 staff across 40 sites, a questionable financial and safety performance, and poor staff morale.

"It was a bit of a turnaround role," he says.

"One of the things that I found very exciting moving into the reinforcing business was actually taking a strategy which, in my mind, was inappropriate and actually completely changing it and getting the entire organisation realigned, excited and motivated around that strategy."

Smorgon was rebranded the Australian Reinforcing Company and a top-to-bottom strategic overhaul saw it achieve its best six-month performance in the second half of last year, despite the tough economic conditions.

Mr Taylor says the Steel & Tube role is broader and provides his first exposure to running a sharemarket-listed company, albeit one that is much smaller than ARC.

There is no fixed term for the job.

"I don't suspect for one minute that I will be here 19 years like Nick was, but I can see myself here for four or five years quite comfortably."