Having begun life in the industrial gas business just shy of 40 years ago, it would be easy to suggest that Worthington Cylinders is a company still finding its feet in the industry.
This is not the case, however, as the company has certainly found its feet. It is firmly treading a global path as a leading pressure vessels manufacturer – a perhaps long and winding path that appears to be far from reaching its end.
The Worthington Cylinders story began in 1971, when Worthington Industries acquired cylinder manufacturing assets in Columbus, Ohio and began manufacturing refillable steel cylinders for LP-gas applications and non-refillable cylinders for refrigerant gas applications.
In the more than 35 years to have followed, Worthington Cylinders has grown to eight facilities in five countries, with over $600m in annual sales.
As President of Worthington Cylinders Corporations since 2005 and with 25 years of successful service within the Worthington Industries, Inc. parent group, Harry Goussetis has witnessed much of the business’ growth. When opportunities are presented, he has seen the company grasp them with both hands and consequently reap the rewards.
Taking advantage of growth opportunities
One such example is the acquisition of Worthington Cylinders in Austria, now a decade ago and cited as key moment in the company’s history both in Europe and back home in the US.
Acquiring the Austrian business gave Worthington Industries access to an already well established cylinder business with an ‘excellent reputation’.
It also provided Worthington Industries with its first foray into European operations, as Goussetis explains, “The story behind that acquisition is simple. By 1998, Worthington had established a significant presence in the manufacture of cylinders for the LP gas and refrigerant gas industries. They had also developed a modest presence in the industrial gas business with the acquisition of an acetylene cylinder facility in Alabama in 1992 and the acquisition of a facility in Canada in 1997 that manufactured small and medium high pressure cylinders.”
“The driving force behind the deal was growth. Back then, just like today, we were looking for opportunities to grow the company’s business and earnings. This operation gave us a chance to jump into a business that was well within our core manufacturing strengths, a purchase of a well regarded business with an excellent reputation, and represented our first step
The deal was then, an important step forward in the development of the Worthington Industries brand and building the company’s cylinder enterprise both in the US and overseas.
“The acquisition of the Austrian business was a key moment both in Europe and the US,” Goussetis reflects. “At the time, it was by far the largest acquisition Worthington Cylinders had made, and it set off a chain of events that saw us, within a few short years, acquire businesses in Czech and Portugal. By every measure, it was a great success.”
While Goussetis did not oversee the acquisition of the Austrian business in 1998, he did have an involvement in many of the integration issues that followed and was also directly involved in the later purchase of the company’s current Portugal and Czech Republic facilities.
Fast forwarding to present day, how does he see the development of the company’s Austrian cylinder operations since then?
“I think it’s fair to say that Worthington Cylinders Austria has developed far beyond our expectations. The business has performed well in strong and flat markets, has maintained its reputation for quality, and has taken advantage of growth opportunities when presented,” he says.
“We’ve invested significant capital in the operation, and the team has allocated it well to improve position. We’re very pleased with the team’s efforts, and with the benefit of looking back after ten years, very pleased with the acquisition.”
Looking ahead – focused on growth
Taking opportunities when they arise is clearly a strategy that has paid off for the group and its cylinder enterprise, with the figures to support the belief. The past ten years has seen the company’s cylinder business almost triple its sales in what is traditionally both a consistent and stable industry.
Establishing a strong global presence has undoubtedly played a fundamental role in such growth, an aspect that Goussetis indicates the corporation is keen to pursue further throughout 2009 and beyond into the next decade.
“Worthington Cylinders as a whole has grown substantially in the last decade. A decade ago our sales were approximately $224m. Today our sales in fiscal 2009 will exceed $600m.”
“Looking forward,” he enlightens, “our goal is to continue to grow the Cylinder business globally. We believe each of our main business segments – industrial gas, LP gas, refrigerant gas, air brake and specialty gas tanks, and retail products – have growth opportunities available, either by geographic expansion or new product development or organic growth.”
“Our mission is, and has been, to be recognised as the leading manufacturer of pressure vessels
in the world.”
Delivering upon such an ambitious mission will inevitably involve the negotiation of a number of obstacles, perhaps most significantly right now, the financial crisis and economic downturn.
Goussetis explains that currently the industry demand is stable despite the perilous pecuniary situation all around the world, but tightening budgets may yet affect business across the board for 2009. Given the inescapable financial predicament, this is probably no surprise and for a gases industry that is constantly exploring cost-efficiency, the objective remains the same.
“Current demand remains stable in most segments, but a number of customers are re-visiting budgets for 2009. Economic pressures and reduced availability of credit may adversely impact consumer confidence, and as a result, industrial gas producers and distributors may well curb asset procurement
activity in 2009.”
As we chat I note that a number of the major industrial gas companies have suggested reigning in the expenses next year and pose the question, is this the case for Worthington Cylinders or is the company sitting comfortably during difficult times?
Goussetis responds, “Comfortable is not a word I’d use, nor would our managers use it. An intense drive to reduce costs, and continually improve processes, throughput and efficiencies, has been central to our success in the past and is a core part of our culture.”
“We begin each year, in each operation, with a slate of projects designed to take cost out of our processes. I don’t see that changing, in good times or bad. In all our businesses, competition is intense and emphasis on improving our cost structure is critical. To answer your question directly, we always try to focus on cost reduction.”
The credit crunch is largely unavoidable however – it dominates our media streams and has a direct impact upon everyone from President-elect Barack Obama and the very biggest of financial institutions, to the average working individual on the high street.
Surely gasworld asks, there must exist a concern for the customer?
Taking us back to the central tenet behind Worthington’s operations, Goussetis acknowledges the ongoing concern for the customer as he describes the philosophy at the heart of the company’s evolution.
“Our company’s philosophy, instilled by our founder John H. McConnell, calls for us to follow the ‘Golden Rule’ and treat our customers, employees, investors and suppliers, as we would like to be treated.”
“The philosophy explicitly states the principle that without the customer and their need for our products and services, we have nothing. We take nothing for granted. We pride ourselves on our customer service, our delivery capabilities, and in doing what we can to make sure the customer is competitive and successful for the long term. When times get tough, the entire supply chain is affected, and we are surely interconnected.”
Curtailed cylinder market?
With tough times taking their toll and industry on the whole suffering somewhat (especially manufacturing), how is the overall cylinder market performing?
“A number of major industrial gas producers and distributors have told us they are re-evaluating annual budgets in an effort to deal with reduced liquidity in the credit market. We expect their efforts to curtail spending and maximise asset utilisation to curb demand in the first half of 2009,” he reveals.
“Rapidly escalating raw material prices have proven challenging for Worthington and our customers. Steel, energy and transportation costs experienced unprecedented increases during the first ten months of 2008. Continuous improvements and cost containment initiatives at each of our facilities, has enabled us to maintain stable production and mitigate the impact to our customers.”
As slightly curbed demand is likely in the first half of 2009, we’ve established the immediate impact of the economic meltdown. But what can we expect to see throughout the rest of the year and further ahead?
Goussetis suggests that the picture is currently unclear and uses the term ’uncertain’ to describe the next 12 months. Furthermore, he points to high raw material costs for products such as steel and valves as a fundamental influence.
Much talk and rumour has intimated that steel prices could be poised to lower considerably to perhaps even historical levels, but this is still ‘talk’ and for Goussetis there’s no definitive indication whether this will in fact happen.
Dependent to a certain extent on global manufacturing activity and consumer spending, the 54 year-old president describes Worthington Cylinders and the wider industry as ‘looking at a landscape that is less than clear’.
A cautious year ahead
Moving imminently on into 2009, Goussetis tells us how the cylinder market is shaping-up and what we can expect to see in the year ahead. This includes treading a global path with a sense of caution.
“It is difficult for us to generalise about the state of the cylinder market, given our broad business lines, each with its own supply/demand drivers. Until the most recent few months, most lines of business were reasonably stable.”
“In the industrial gas segment, we’ve seen consistent demand across all global regions. In Europe, our bookings look good for the balance of the year and several critical supply agreements have been completed for 2009. In North America, we’ve seen solid performance for industrial gas cylinders year-to-date, while enjoying robust demand for several specialty applications.“
“Looking forward from here,” he adds, “it remains to be seen what impact our businesses will face, as the economic outlook seems to change daily. Declining industrial activity and demand for any sustained period would certainly increase competitive pressures on everyone. We will continue our overall growth strategy, but with caution in the year ahead.”
Operating with a
Doing business amid changing markets and fluctuating exchange rates can present challenges in itself. Worthington is no different to so many global enterprises that endure this changing currency landscape.
Goussetis shares with us his view of the now strengthening dollar exchange rate and how it affects business operations.
“As with most global organisations, the dollar exchange rate can both positively and negatively impact our results. Depending on the base currency and the business, this can affect everything from raw materials and manufacturing costs to market prices and profitability and impact reported results.”
“The dollar’s weakness these past few years, and its recent strengthening, directly impacts the competitive landscape. If the dollar continues to strengthen against other currencies, it could reduce exports from North American manufacturers to places like Europe, and presumably increase imports into North American markets.”
Harry Goussetis Bio
Currently President of Worthington Cylinders Corporation (a subsidiary of Worthington Industries, Inc.), Goussetis has enjoyed a long and successful career under the Worthington umbrella.
As a lawyer by background and education, Goussetis spent almost five years in private law firm practice before joining the legal department of Worthington Industries in 1983.
Having served as Assistant General Counsel of Worthington Industries for a number of years, he joined Worthington Cylinders in 1998 as Vice President with responsibility for legal and human resources.
In 2001, Goussetis returned to the parent company as Vice President of Human Resources and then arrived back again at Worthington Cylinders Corporation in 2005, to take up his current role.
At 54 years of age, Goussetis enjoys a happy family life with his wife and two daughters, both now in their early twenties.