The key to Globe Specialty Metals' recent success is its focus on being the lowest-cost producer in its industry through vertical integration, process efficiencies and strategic location, says CEO Jeff Bradley.
"We’ve always been firm believers in being a very lean, low-cost company and part of that lean, low-cost strategy is being vertically, backward integrated and having control over the raw materials, too,” says Jeff Bradley, CEO, Globe Specialty Metals.
For Globe Specialty Metals Inc. CEO Jeff Bradley, it makes no sense to ship raw materials from afar when the transportation expenses could cost more than the materials themselves.
In fact, why not lessen the company's vulnerability to price fluctuations by owning the resources? That's exactly the business strategy this New York-based company has adopted to sustain growth in the cyclical silicon metals industry.
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Globe Specialty Metals supplies silicon metals and silicon-based specialty alloys, which are key ingredients in hundreds of consumer products ranging from shampoo to tires and aluminum castings for automobile rims.
It's also a key material in solar panels and silicon chips for the semiconductor industry.
Globe Specialty Metals has grown its revenues 65% since its initial public offering in 2009 to $705.5 million in fiscal 2012, which ended June 30. The company reported record earnings of $54.6 million in 2012.
The key to the company's recent success is its focus on being the lowest-cost producer in its industry through vertical integration, process efficiencies and strategic location, Bradley says.
The company's core business dates back to 1871. The business, called Globe Metallurgical Inc., filed for bankruptcy in 2003. In 2006, an investment company called International Metal Enterprises Inc. purchased Beverly, Ohio-based Globe Metallurgical, the largest silicon metal producer in North America.
The three basic ingredients in silicon metal are quartz, a specialty low-ash coal and wood chips. Raw materials and electricity account for 75% of Globe Specialty Metals' costs, Bradley says. The company owns all of its raw materials supplies, a base it has built over recent years through acquisitions.
"We've always been firm believers in being a very lean, low-cost company and part of that lean, low-cost strategy is being vertically, backward integrated and having control over the raw materials, too," Bradley says. "Think about how many companies are so beholden to their suppliers, and that control is such an important piece of this low-cost story."
