July 26, 2016 Compound Assets

Volume 7 | Issue 5

Practicing its commitments every day in communities throughout the country has earned Koppers numerous national safety awards.

Although Koppers Inc. of Pittsburgh, Pa. is a world leader in two principal businesses, the company wants people to remember something else that’s important: “We would like people to know about our core values in the fields of safety, health and environmental affairs and the importance these core values play in a world that is more and more focused on sustainable development,” says Randall D. Collins, vice president of Safety, Health & Environmental Affairs.

Koppers has a large global footprint as a producer of carbon compounds and treated wood products used in a wide range of applications and industries, including utilities, railroads, construction, aluminum, chemicals and steel. Koppers, with revenues of nearly $900 million annually, employs about 2,000 people at 38 facilities worldwide.

The company formed in December of 1988 as a management-led buyout of carbon materials and wood treating assets from the former Koppers Company, Inc. It operates in mature businesses, wood treating and carbon materials and chemicals, with core values and inherent strengths that have led to long-term reliability for customers and other stakeholders.

Workin’ on the Railroad
The company’s wood preservation business is founded upon preservation of the world’s timber resources, says Collins. “This side of our business is dedicated to forest conservation,” he explains. “We take a wood product that would otherwise decay in five years or so and, as a result of treating and preserving it with Koppers chemicals, we can get another 25 to 40 years of service from it, thereby making a significant difference in the huge demands on the world’s forests.”

Treated wood, as a construction material, enjoys significant advantages over other competitive products, such as a reduction in the creation of greenhouse gases, energy consumption and lifecycle issues. By addressing soil and forest management issues through its wood preservation business, Koppers believes it is impacting public safety. “We are generating products that perform very safely and at very low maintenance costs for the greater good of the public,” says Collins.

Creosote is produced by Koppers plants globally and is used to treat industrial products, typically for railroads and utilities. In the United States, creosote is the preservative of choice for Class I railroads, Collins says. “Our principal customers are the largest railroads in the country, including CSX, BNSF, UP, and the NS.” For railroads, Koppers treats ties, switch ties, bridge timbers and crossing panels. Koppers also sells these products to short lines and municipalities for light rail use.” We buy raw materials on their behalf and season the wood materials until they are ready for treatment,” explains Collins. “At our wood treating plants, we then pressure treat the wood material with creosote.”

The second-largest customer block in the wood treating business is large investor-owned utilities such as Florida Power and Light, Duke Power, and Carolina Power and Light, says Collins. Other customers include electric cooperatives or REAs (rural electric authorities) and telecommunications companies. “These groups buy utility poles and cross arms from us,” Collins says. Koppers buys and seasons the wood material, drills or cuts the materials according to customer specifications, then pressure treats the wood material with a preservative. “In this business, we are providing a wood-treating service and we use the preservative of choice for the customer,” explains Collins.

Koppers purchases raw materials from public and private landowners. “In the utilities business segment, typically, the private landowners are paper companies such as Georgia Pacific and International Paper,” Collins says. “We buy their premium wood material.” To support its railroad treating business, Koppers works with about 900 U.S. sawmills, from whom it buys cross ties, switch ties, and bridge lumber.

The U.S. wood-treating business is primarily focused on industrial applications, while the Australian wood-treating business is a blend of industrial and consumer applications. Australian wood species are a bit different, which affects treatment-processing methods and time. “The customer base is similar to the U.S., with utilities, telecommunications companies and railroads,” Collins says. “There is also a very large do-it-yourself market in Australia in terms of wood-treated products for landscaping or light construction projects around the home using treated dimensional lumber.”

Carbon Materials and Chemicals
Mark McCormack is vice president and general manager of global marketing sales and development for the Koppers Carbon Materials and Chemicals Division. “Really the crowning glory of this division is the number of safety, health and environmental awards we’ve received,” McCormack says. “About 50 percent of our U.S. facilities received ISO 14001 certification in 2003 and the remaining global locations will receive ISO 14001 certification by the end of this year, which will mean that all of our facilities will be ISO 14001 certified.”

“ISO certification means our customers can rely on us as a supplier because our business and processes incorporate practices with a long-term perspective,” McCormack says. “We know these businesses inside out and we are taking care of our facilities in a way they can count on. We are right in the four corners of what the world talks about in terms of sustainable development.” This is what customers look for in a good, solid supplier of these products, which include carbon pitch, carbon black, creosote, refined tars, commercial-grade roofing products, specialty chemicals and phthalic anhydride.

The carbon materials business segment is centered on the purchase of coal tar from integrated steel producers which operate coke batteries, explains McCormack. “Coal tar is a byproduct of the carbonization of coal into coke and we buy coal tar through a global purchasing network,” he says. Koppers distills coal tar into three groups of products. The largest of these is carbon pitch. Carbon pitch is used as a binder in the production of anodes, which are consumed in the production of aluminum. “When alumina is reduced to aluminum, an anode is consumed,” explains McCormack.

The second group of products includes creosote used in wood treating and carbon black feedstock sold to the tire industry. “There is some vertical integration in this business in that Koppers Carbon Materials and Chemicals Division distills and produces the creosote we use at our wood treatment facilities,” McCormack says

Finally, at the lighter end of the distillation chain, is naphthalene and other chemicals. “We take the light-end distillate, naphthalene, and convert it into a plasticizer called phthalic anhydride,” says McCormack. “Broadly speaking, these are the three product categories that comprise the Carbon Materials and Chemicals business.”

It’s a business in which Koppers purchases the raw materials globally, produces the finished goods globally and ships finished goods globally.

Safe to the Core
Both the wood treating and coal tar distillation industries are well established. Wood treating dates back to the mid 1800s, and commercial coal tar distillation began about 1915. As a leading producer in both of these industries, Koppers operates many facilities with decades of operating history.

“One of our key focuses from the very beginning has been the management of our safety, health and environmental affairs because we have older facilities and we handle chemicals,” says Collins. “We use significant acreages of land in these businesses and it’s essential that the operations, products and chemicals are handled safely and in environmentally acceptable ways. To make sure of that, we have built systems, including what we call a SHEMS – which is an environmental management system with a safety and health component.”

The Koppers SHEMS is currently being certified globally by the International Standards Organization (ISO). By the end of 2004, Koppers expects to have ISO 14001 certification for all of its global facilities. The process “includes all the criteria that ISO specifies within their 14000 process and we retain independent auditors to review the facilities and determine the certification,” Collins explains.

“We believe our core values and commitment to state-of-the-art safety, health and environmental principles provide us a competitive advantage, because these businesses are heavily regulated,” continues Collins. “Because we operate on older sites, we have to earn the trust of the communities where we operate, so we can prove that we are the best at what we are doing.”

Collins says communities are taking a greater interest in all industrial facilities. “We began to see this trend develop about 10 years ago in the United States and now we see it globally,” he says. “The interest typically begins as fear. So what we’ve done is form community advisory panels at each location. We seek membership on these panels from a cross-section of community residents — police, fire, elders, students, clergy, etc. We discuss issues and try to find ways to resolve them so we can build trust in the communities where we operate. After all, the employees of Koppers live in these communities and we are interested in the well-being of the entire community.”

Koppers not only talks the talk, but walks the walk. It was named as one of 16 of America’s Safest Companies by Occupational Hazards Magazine. And the National Safety Council gave the company 24 safety awards for Koppers’ commitment to safety, health and environmental affairs.

“We expect to continue our leadership role globally in the industries we serve,” Collins says. “Our commitment to safety and environmental processes protects our employees, our communities and our customers. Our continued creative use of the purchasing and logistics networks we have in place will allow us to continue to be extremely efficient in moving our products safely around the world. We will lead through our continued research and investments in new products and the development of new uses for existing products. At Koppers, we have reason to be excited about the future.”

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