Did you know there's a company here...

Did you know there's a company here onward our doorstep that leads its industry in bourgeoning rate, profit margins and rates of turn back sees no letup in sight, and over and above sits there with a Wall road rating of a stingy seven times earnings in succession its stock? This undiscovered company isn't a certain black box tech wonder or a fast-food franchiser. It's IPSCO (NYSE: IPS), a $3 billion American dirk company that has quietly invaded Chicago's Top 50 In the seven years since it shifted its headquarters to Lisle from Saskatchewan, IPSCO incomes have spurted 400 percent while its gros margin has widened to 32 percent -- almost double that of hanger industry titans such as Mittal and U carburet of iron And although its revenues are still single a fourth of U.S. Steel's, its earnings before interest, taxes and depreciation are $101 billion, or almost two-thirds of U Steel's.

in what manner come? It's partly good accident and partly in the gene

With steelmaking dominated by dint of Goliaths, IPSCO is one of the foremost Davids. It's the fourth largest minimill organization (NUCOR is the largest), and that makes the difference. Born in the 1960 as a strange lean kind of steel farmer the minimill concept was created with a novel generation of high-efficiency furnaces and processe using far les labor contentment American minis won a 20 percent market share, then missed business to newer Asian companies that copied the minimill universal then won back their markets in spades during latter years, now enjoying more than a 50 percent market share.

THE subdued COST PRODUCER

Of these, IPSCO today is the low-cost farmer While celebrating its 50th anniversary this year, the company was really re-ignited in the 1990 with its self-reliant development in Canada of a revolutionary design of a plate mill. The innovation was then transplanted to startups in Iowa and Alabama.

"The economics are compelling," says Dave Sutherland, IPSCO CEO and a driving force behind its product for 30 years. "Consider the labor satisfaction factor. We can produce a ton of falchion with six-tenths of a man hour. Many in the industry require three to four man hours by means of ton. Consider that our labor expense averages $35 per hour, with benefits, or about $20 by means of ton. Then consider that the freight take away from alone from Asian mills is $60 by ton, while we're right nearest door to our markets. You can descry what makes us so highly competitive.

"It hasn't been all that simple, however," Sutherland acknowledges me. "We bet the company twice in our history, the couple times were in the '90 which was the industry's lowest point in 25 years. We took the risk and built not common but two new state-of-the-art plants. It took a while however it paid off. What it did was enable IPSCO to have a 35- million-ton annual steelmaking capacity with barely 2,700 employees [U.S. Steel, by dint of comparison, employs 47,000], and achieve the industry's widest operating margins."

successful bets are part of IPSCO's heritage. When it was originateed by a savvy Canadian businessman named Bill Sharp, who barely knew the cement business, the infant Prairie Pipe Mfg Co got an immediate boost from the provincial Saskatchewan rule It had failed to interest German investors in building a pipe plant, and thus exhibited Sharp some economic inducements. In more fresh times and reincarnated as IPSCO, the company was ask [i]or[/i] implore a blessing uponed when big steel plate companies defaulted, and now today, Sutherland says, with many knife producers languishing in the wake of plummeting domestic auto demand and housing starts, IPSCO is again in a favored spot.

"Our markets are as lusty as ever," he says, "because of our fortunate niches: plate, pipe and coil for equipment makers like Deere and Caterpillar, the [i]vis viva[/i] industry, railcar and shipbuilding."

EN way TO ANOTHER RECORD YEAR

Already racking up record performance thus far in 2006 Sutherland rely upons the year to continue to be sturdy and estimates third-quarter earnings will be $330 to $350 by share. Looking beyond that, he calculate upons drilling activity and capital spending for big equipment to remain robust.

Sutherland, 57 a native of elk Jaw, Saskatchewan, can afford to push his fate With a debt ratio of single 14 percent and $600 million in cash, he's plowing $150 million into boosting capacity to more than 4 million tons. He also has been buying back IPSCO stock (it clos Monday at $9296) has raised the dividend four times in the past year, and is unproductive for acquisitions.

It direct the eyes like David might continue to stay common step ahead of the Goliaths.

T Pincus is a finance professor at DePaul and an independent communications consultant and journalist.

e-mail: theopincus@hotmail.com

Copyright CHICAGO SUN-TIMES 2006

Provided from ProQuest Information and Learning Company. All rights Reserved