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Esmark: Bouchard's unconventional vision for a steel hybrid.

Article Excerpt
Chicago-based service center company Esmark Inc. surprised the steel industry last year with its successful takeover of Wheeling-Pittsburgh Steel Corp. Metal Center News editors sat down with the architect of that maneuver, James P. Bouchard, to learn the details of his vision for a distribution-oriented steel company built around his newly acquired mill.

WHEN JAMES AND CRAIG BOUCHARD formed Esmark a mere four years ago, their goal was bold--to build a billion-dollar service center company within five years. Buying a mill was never part of the master plan.

Yet in November, Esmark completed the rather stunning takeover of struggling Wheeling-Pittsburgh Steel, winning shareholder approval of their plan and scuttling the company's announced merger with Brazilian steelmaker Companhia Siderurgica Nacional.

Esmark CEO and Chairman Jim Bouchard, who grew up in the steel business, doesn't take sole credit for the masterstroke. Instead, he says, it was the United Steelworkers who approached him about bringing his turnaround touch to this troubled West Virginia mill.

Bouchard's previous work, heading up U.S. Steel's Kosice plant in Slovakia, drew the union's attention. In a few short years, Bouchard had turned a bankrupt steel operation into a highly successful venture, a small regional steelmaker and processor operating in the shadow of Europe's giants: Mittal, Arcelor, Corus and ThyssenKrupp.

"The union wanted to see if we could build a footprint similar to Kosice in North America," recalls Bouchard, who left U.S. Steel to form Esmark with brother Craig, the company president. "So we toured the facility for the electric arc furnace grand opening. We saw the EAF, the caster and the strip mill. It had the fundamentals. Building a small Kosice here was possible."

For 18 months, the Bouchards worked on a plan that would not just reverse Wheeling-Pitt's course, but rewrite the blueprint for a North American steel company. But to say that Esmark has brought the "European model" to the United States--a model in which mills operate their own captive distribution--is a gross oversimplification. The Esmark model, as described by Bouchard, forms a sort of hybrid steelmaker/distributor. And it's a model-spawned by a unique confluence of market conditions--that is unlikely to be duplicated.

Bouchard's vision for Wheeling-Pitt wasn't simply vertical integration. The mill and Esmark's service center chain will operate...

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