Fostering a new era: Braidy Industries CEO ready to ‘grind it out,’ ‘get it done’
August 1, 2020
ASHLAND – Less than three months with a new CEO, a high-profile northeastern Kentucky company is set to move soil at the future site of the Braidy Atlas plant.
With 510,000 cubic yards of dirt to be moved, Braidy Industries CEO Don Foster said the work will run until early December.
After two years of the large plot at EastPark sitting fallow since the “ground-breaking,” it’s hard for folks in the community not to get a pessimistic attitude about the project, said Boyd County Judge-Executive Eric Chaney.
“This area has had a dark cloud hanging over it with industry, with things leaving like AK Steel or the power plant down in Lawrence County,” Chaney said. “We have every right to be pessimistic. I feel right now, with this new CEO, I’m seeing things that make me think they’re heading in the right direction.”
Foster said he knows his job is to show results, not sell a vision — keeping a low profile since on-boarding at Braidy Industries, the new top dog said he has focused on the engineering and financial details of the project.
“I can’t change anything from the past. I don’t expect people to trust me the first time around. I’m not the type of person who sells the sizzle before they taste the bacon,” Foster said. “I don’t have a lot of hubris, I’m more of a humble-worker type.”
With a window of 27 to 33 months completion time on the mill, Foster said after updating the financial records and the engineering plans, he is now shifting to raising funds for the project.
“You own the land, all the permitting is established, your power contract is established, it’s ready to go,” Foster said. “We just need to attract the funds.”
The new CEO said he hopes to aluminum rolling out of the mill by May 2023.
Foster sat down with The Daily Independent this week in the first interview with the press in months to talk shop about his 41-year career in the metals industry, the latest news about the company and the state of aluminum in general.
Mr. Foster goes to Ashland
Foster got his start way back in 1979 with U.S. Steel after attending Indiana University and the University of Michigan. Overseeing the Gary, Indiana, plant, Foster rose his way up the company ladder after being “blessed with some good training and good mentors.”
A no-nonsense businessman, Foster eventually became the president of U.S. Steel International, where he was responsible for $1.2 billion — that’s billion with a “B” — in revenues.
As an officer at U.S. Steel, Foster said he became acquainted with the Ashland community through dealings with local steel mills such as ARMCO and AK Steel. He would again return to Ashland in the early 2000s when U.S. Steel bought out Marathon Oil.
That familiarity with the city where coal and iron meet gave Foster “a respect for the heritage and history here.”
“I didn’t walk in cold. I had a respect for the craft and trade here in town,” Foster said. “The fact that this community has had a lot of success in the past and had been in slow decline, a project like this (the Braidy Atlas Mill) would be a plus to everybody.”
After leaving U.S. Steel in 2003, Foster went on to help a gentleman named Uwe Schmidt — who made his mark at the equipment manufacturer SMS, a supplier in the Braidy project — develop a logistics company called MetalsBridge.
While only there for a year, Foster’s dealings with Schmidt would eventually pave the road for him to come back to Ashland.
From there, Foster went to work as an officer at L.B. Foster Company (no relation), a NASDAQ traded firm with its hand in rail, energy and construction. Heading up the construction division, Foster said he oversaw the re-decking of the Manhattan and Brooklyn Bridges, assisted the Army Corps of Engineers in rebuilding New Orleans after Hurricane Katrina and won the contract for work on the Panama Canal before he left.
Upon leaving there in 2014, Foster did a bit of consulting on various projects before he got a phone call from Schmidt asking him he wanted to head up Bridge Consulting — the firm brought in to manage Braidy during the Craig Bouchard litigation earlier this year — and get involved in the project.
“Mr. Schmidt called me and said, ‘You’re familiar with the Braidy project?’ I said, I certainly am, I’ve been watching it closely,” Foster said. “To tell you the truth, in 41 years in this business, I haven’t seen a project that has as much promise, particularly in this point in time.”
One thing to keep in mind, according to Foster, is that the metals industries is small. Foster had known the Bouchard family for years. James Bouchard, Craig’s younger brother, had worked for Foster twice at U.S. Steel. More than a decade ago, Foster had helped the Bouchards buy Wheeling-Pittsburgh.
It was James who had introduced Foster to Schmidt years ago, long before Braidy was even an inkling in the consciousness of eastern Kentucky.
Tom Modrowski, formerly the president of Braidy Atlas, is also a longtime associate and sits on the board of Bridge Consulting.
“We stay in contact with Tom … so we have access to Tom here at Braidy whenever we need to bounce an idea off him, which is a nice way to keep the knowledge base together,” Foster said.
The Securities and Exchange Commission report released in mid-June was the first look at the state of Braidy since the legal battle between Craig Bouchard and the board of directors that was eventually resolved with a $6 million settlement.
It wasn’t really stellar, which Foster said is by design.
“Those (SEC reports) are typically written to highlight risks for investors, so they’re pretty conservative,” Foster said. “There’s usually not a lot of neutral or positive news, they’re all risk-type news, so we expect it to be that way. It’s not a reflection at all of management’s positive view or early investors’ positive views on the project.”
According to the report, as of Dec. 31, 2019, Braidy Industries had $53.1 million of cash and cash equivalents, which were “not sufficient to fund the company for the next 12 months from the date of issuance of these consolidated financial statements.”
Foster said while he “wouldn’t say we’re looking strong,” Braidy is in no danger of shuttering its doors.
“We’re in a start-up mode. We’re in a cash-conservation mode,” Foster said. “I think we have ample funds on hand and a budget that’s been agreed on to get us well past the funding stage.”
While the company isn’t going anywhere, the name probably is, according to Foster. When asked if a name change is in the works, Foster replied, “Braidy is Craig’s daughter’s name. So that should tell you something.”
“We’re in the process of rebranding,” Foster added. “It goes in the same path as fundraising. It would be appropriate to rebrand.”
One of the biggest investments to date in the Braidy Atlas Mill is the investment by Russian aluminum giant Rusal in 2019. With promise of injecting $200 million into the mill, Rusal is a 40% owner of the mill and the chief supplier of raw product. Rusal contributed $75 million over a four-month period prior to pausing payments in late 2019 until Braidy pony-upped $300 million for the project.
In June, Rusal took back $10 million, per the SEC report. Foster said Rusal “is pleased with the management change” due to his past dealings with some of the biggest metals outfits in the Motherland.
“They know I understand business and they respect my background; that’s helped our communication with them,” he said. “What I really tried to do is take a look at all our key relationships and make more of an effort at communicating with them, so there’s no surprises throughout the system. I’m not concerned about Rusal changing their direction or interest.”
Per the report, shipments of slab aluminum will start no later than Dec. 31, 2021, a full year and half prior to the mill going operational. Foster said there’s no concern that the company will have a mess of slabs laying around prior to firing up the plant.
“We want them to be a supplier to us and they want to be a supplier to us. There’s an open dialogue on the dates, the volumes and how that mechanism is going to work. There’s no conflict here,” Foster said.
Then there’s the $15 million Kentucky loaned back in 2017 — State Sen. Chris McDaniel (R-Kenton) has spearheaded calls for more oversight, but those were derailed due to COVID-19. McDaniel said the settlement with Bouchard makes oversight “even more necessary and appropriate.”
“As long as there are all $15 million in taxpayer money out there, it will never overcome the stench of a bad deal,” McDaniel said. “Until they bring the jobs they promised, the company will never overcome being anything more than a pipe dream.”
Foster said he is confident history will show that “this will be one of the best investments Kentucky has ever made.”
“Remember when Toyota came down and all the controversy around that?” Foster said. “It turned out to be one of the greatest investments, but you had to get through the negative side of it, the Doubting Thomases and you had to get the business up and running. It’s been a positive story. I think you’ll see the same cycle.”
Foster also noted he has been working closely with the Cabinet of Economic Development and keeping that agency abreast on the project.