PHIL Dryden, SSI UK chief executive tells Business Editor Andy Richardson about the behind-the-scenes struggle to revive Teesside iron and steel making and his bold plan for the future
THE windows of Phil Dryden's office could do with a wash.
But peer through the layer of grime and you see a hive of activity outside.
To the far left two massive cranes load steel on a ship at Tees Dock, while below, locomotives carry torpedoes of freshly made iron from the blast furnace to the steel casting plant. It was there, two months ago, where hundreds of workers cheered the first slab off the production line.
"What you saw that day was the wedding party - the celebrations, cake cutting and champagne. Now it's about the day-to-day hard work that makes this thing last for the long term," said Mr Dryden.
The plant is in the second phase of an ambitious four-part plan to compete on the global stage.
"Phase 2 is not good enough for us to survive in the long term," Mr Dryden explained. "In the world league table in terms of efficiency and output we sit in the lower quartile. In tough times it will be those at the top of the league table that have the body armour to survive. We need to be in that top group."
These are tough times for the steel industry. A slump in construction and manufacturing has seen steel prices plummet dramatically. SSI's business plan expected slabs to be worth about £379 per tonne by now, instead they fetch as little as £334 per tonne. The potential losses are huge.
Last week, Win Viriyaprapaikit SSI's President, said the Thai-based company made a net loss of £57m in the January-March quarter, mainly due the cost of re-starting production at Redcar.
Some steel makers in the US have shut down production in recent weeks amid uncertainty about what China - the world's biggest consumer and producer of steel - will do next.
To help weather the storm the third phase of SSI's development will see the commissioning from January 2013 of a £35m Pulverized Coal Injection (PCI) plant that will enable the blast furnace to run much more efficiently and slash its intake of coke.
Cost cutting is uppermost in Mr Dryden's mind - hence his reluctance to pay for a window cleaner.
Delays to the plant's re-opening, which was hampered by third party union action, bad weather, and technical gremlins, prompted SSI's financial backers to seek assurances about their investment.
Seeing what has been achieved in such as short space of time, coupled with Mr Dryden's reputation for delivering major projects, should help the financiers to sleep easier.
Iron production is on target and shipments of steel have been sent to Thailand and to Turkey.
Despite uncertainty in the industry SSI is ploughing ahead in the hope that by the time the market revives it will be ready to take advantage. It's one of the many calculated risks that Mr Dryden has made.
At the start of the project his insistence that the blast furnace needed to be re-lined saw capital investment soar from £96m to £183m. The bank agreed to release the cash on August 24 only after they had sent independent validators to check that the Redcar team's story was kosher.
"Looking back, to think we were going to get things up and running by our initial target of December 8 was a real stretch," said Mr Dryden.
"There was very little contingency built in. It was a statement of intent - like when President Kennedy set a date for the moon landings - sometimes you have to focus people's minds by setting aspirational targets."
The December target was missed. The moonshot, to use Mr Dryden's analogy, had failed. The banks, and the firm's Thai owners wanted answers. Mr Dryden soon had more explaining to do as the new January 6 target was also missed. Before long he'd be calling the bankers twice a week with progress reports.
The delays cost big bucks. At its peak work on in the blast furnace was the biggest construction project in the UK, employing 1100 workers. The project cost the company a staggering £16m a month in the first four months of this year.
Does Mr Dryden now regret getting the bankers excited about a December start date?
"The world wanted to hear a date," he explained. "As far as the banks saw it you had set a date and you'd missed it. It's as binary as that. We needed date to start recruitment, and training. There was a plan and the dates we set were aligned to that plan. It wasn't plucked out of thin air.
"January 6 is the date I feel more strongly we should have reached."
High winds put the cranes that were lowering materials into the blast furnace out of operation for days.
The delays also brought advantages. About half of the staff were new, so time was spent bringing their skills closer to those of the more experienced hands.
"You can never do too much training," reckoned Mr Dryden. "Some of the costs we were incurring at that point helped to offset costs we could have hit when we went into production. Steel plants work best when they are running at high outputs."
How did Mr Viriyaprapaikit react to the delays?
"It is never easy to give or to hear bad news. But you weren't getting someone ranting and raving. We'd have a mature conversation loaded with disappointment. What's important is that it didn't damage the relationship between us and it was as good a reaction as you could ever expect."
And the banks? "Because the banks didn't understand steelmaking you were constantly having to explain why certain things were happening. They would ask - 'How many days in the UK is it windy and why didn't you build that in to the plan?'
"But in fact lots of the pressure around the plan came from the bank's desire to get this plant started as soon as possible.
"You give them all sorts of caveats about bad weather but all of those things are forgotten in the mists if time. The date becomes everything."
From January to April no more target dates were announced.
"We already felt enough pressure," said Mr Dryden.
By the end of February, the blast furnace was mechanically complete but a myriad of minor problems emerged.
Mr Dryden continued: "One of my passions is tampering with old cars. The issues we got were like if you've overhauled an old engine, replaced wires and suchlike and then little gremlins appear in the system. It was immensely frustrating." The project was further delayed when tiny cracks appeared in the bellows that are used to force air into the blast furnace.
Mr Dryden, an engineer, drew strength from daily meetings with his project team. "I am more comfortable discussing technical issues than I am standing in front of the banks talking about cashflow projections for the next three years. But I was having to do both."
"The pressure was significant," he said with trademark understatement.
"We started up on Sunday April 15. If you'd asked me on the Friday when are you going to start up? I'd not have been able to tell you. We were still getting bugs out of the system."
Four days later, local and national media were on hand to see the first slab roll off the production line. Again delays plagued the big day.
"There was no dress rehearsal. What you saw was the very first slab and we had to get it right. Up to the last minute we were tweaking things."
The third landmark was the loading of the first shipment of steel on May 11.
"We thought that would be the easiest of our three big celebrations," said Mr Dryden.
SSI had chartered a ship, the Blue Fin at a cost of about £1.2m. Before coming to Teesside it had to drop a cargo of treated steel at Bilbao, Spain. There was no chance of any delays unless it rained in Bilbao because the cargo couldn't be unloaded wet weather. In Bilbao it poured down for days.
"Around 2008 the consortium that owned this business spent thousands on some fancy piece of kit that tracks ships by GPS. You can now download an app on your phone for £2.99 that does the same thing. So we were all standing at the dock checking the app to see where this bloody ship was. It arrived with 30 minutes to spare," recalled Mr Dryden, who laughed at the memory of another stressful day.
"How did I feel at the end of all that? It was like the birth of your first, second and third children in the space of three weeks. Chaos and celebration all in one."
The fourth phase is scheduled for early 2014 when a third steel caster is planned at a cost of up to £50m. That will relieve bottlenecks in the system when slab production struggles to keep pace with the revamped blast furnace. But the move still needs approval from the SSI board and bankers.
Mr Dryden concluded: "I say to everyone who worked on the project - you should feel very proud. I was an unbelievable thing to have done.
"When I look around the offices they don't look as sharp cosmetically as I'd like it to but we have to cut our cloth to ride this storm. The windows haven't been cleaned, but I can still see the blast furnace, and it's going like the clappers. That's what matters."
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