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December 2003
Excellence Across the Board
By Ellison Clary

     In a quiet corner of Charlotte’s SouthPark, a building products giant oversees the production of enough gypsum wallboard to circle the globe 14 times annually, supplying millions of construction sites throughout the United States.

     National Gypsum owns over 20 percent of the wallboard market, making it a major player in the construction industry, yet it operates in an unassuming manner, much like its soft-spoken CEO.

     “We try to let our actions speak for themselves,” says Tom Nelson, president and chief executive officer.  That applies to his personal life as well.

      The 41-year-old son of Swedish immigrants, Nelson is Stanford and Harvard (MBA) educated, and has been an investment banker, a White House Fellow, and, at age 26, a co-founder of a venture capital firm. Among his more notable experiences he cites an overland trip from Lhasa to Katmandu in a Chinese-made jeep; landing on the deck of the USS Theodore Roosevelt in an F-14; and leading humanitarian missions into the former Soviet Union in 1993.

      He sports a string of national and local civic memberships that fill a standard page, including the Harvard Joint Center for Housing Studies, Foundation for the Carolinas, United Way, Boy Scouts, Charlotte Chamber, and the Blumenthal Performing Arts Center. Yet, he’s reticent to speak in detail about his community work.

      “I do that (civic work) because hopefully I can bring a business perspective and show them how they can benefit those constituents they serve,” says Nelson.

       For a less modest appraisal, listen to United Way President Gloria Pace King: “I find Tom a great supporter, but he also challenges us with tough budget questions. I can’t think of anything I’ve asked him to do that he hasn’t done.”

       And as for National Gypsum, King says, “They are one of the few companies that do a dollar-for-dollar match for each employee’s United Way contribution.” With more than 90 percent United Way participation, this year’s total raised by the company and its employees was in excess of $225,000.

       “They lead by example,” King says of the company, and that’s the way Nelson describes his management style: “I let people get their own things done as opposed to getting in their way.”

       Nelson came to National Gypsum as chief financial officer shortly after the Spangler family purchased the company in 1995 and was named president and chief executive officer in 1999. During his tenure, the company has increased production 45 percent, made major investments in plants and equipment, and earned the respect of customers and competitors.

      Recent growth stems from the U.S. housing market which has reached all-time highs, driven by low interest rates. People are adding to existing homes and building new ones that are significantly bigger and with taller ceilings. The residential market represents approximately 60 percent of National Gypsum’s business with the remainder in commercial and manufactured housing.

       “The demographics for housing look very good for the next decade,” Nelson says, “and we think we’re well-positioned for that. We intend to grow with the aggregate demand for housing.”

      “We are the low-cost producer in an industry that is price sensitive and requires operational excellence,” he continues. “National Gypsum is a company that has executed. We are more profitable than any of our competitors.”

      In addition to its 20 wallboard plants (one in Wilmington, N.C.), National Gypsum owns eight gypsum mines and quarries, including the largest gypsum deposit in the world located near Halifax, Nova Scotia. Gypsum, or calcium sulfate, is the primary material in the wallboard core. The company also owns and operates four paper mills which produce the face and back papers for the wallboard.

      National Gypsum has eight plants producing interior finishing products including the ready mix used to finish wallboard. Three cement board plants, a business acquired in 1998, produce underlayment for tile floors and walls.

      The company’s major brands are: Gold Bond drywall; ProForm interior finishing products, and PermaBase cement board. All are sold in Charlotte-area building supply centers.

      Nelson ticks off his company’s advantages including a national network of plants located near major markets which minimizes freight costs; vertical integration, giving the company quality and cost control of its raw materials; and modern manufacturing technology which has allowed the company to continually improve productivity and quality. The wallboard the company produces is 99.95 percent perfect, Nelson points out. “We have had an incredibly strong last decade of productivity improvement.”

       Dressed in an open collar shirt and khaki trousers, the former private equity executive with Morgan Stanley & Co. says he loves what he is doing and turns the conversation toward customer service. National Gypsum supplies Home Depot and Lowe’s as well as other “big box stores,” but a large portion of its business is with smaller, specialty distributors. Every day, thousands of orders come through the company’s centralized call center tucked away on the third floor of its headquarters. The center schedules trucks for delivery, pulling material from the nearest plant. It is not uncommon for a customer to get material in 24 hours or less.

      A special Web site allows customers to check availability, obtain pricing, receive invoices, and track orders. In fact, global positioning systems on trucks allow customers to see precisely where the truck loaded with their wallboard is located.

       “They’re far and away the easiest to do business with,” says Dave Walsh, whose Charlotte-based Building Materials Wholesale buys 40 percent of the drywall it supplies to contractors and homebuilders from National Gypsum. “I think they were the first in our industry to centralize customer service.”

      Walsh’s company is a member of the Drake Group, the nation’s largest organization of independent gypsum specialty dealers, which honored National Gypsum with its Vendor of the Year Award in 2001 and 2002. Independent Builders Supply, an organization of North Carolina dealers, also gave National Gypsum its 2002 Vendor of the Year award.

       Another topic Nelson likes are the advances the company has made in research and development and the products it has spawned. Last year, after finding a suitable building within a stone’s throw of the company’s Rexford Road headquarters, Nelson promptly moved R&D from Buffalo to Charlotte.

      “We now have R&D working side-by-side with sales and marketing and manufacturing to improve our processes and quality, lower costs, and come up with new products and services that will make a difference,” he touts.

       For instance, there’s “GridMarX,” wallboard made with guide marks  printed on the surface to help contractors fasten it to the studs. “It’s a great labor-saver, and we’re getting terrific feedback (from customers),” Nelson says of the product the company is patenting.

       The company introduced five new products this year, but innovation extends to the process as well. Nelson points to the firm’s plants near Pittsburgh and Tampa which produce wallboard from synthetic gypsum. This byproduct gypsum results from power plants scrubbing of coal-fired emissions. The two new wallboard plants are located near coal-fired power plants and can produce wallboard at a rate of 500 feet per minute. At that speed, the company can load five trucks every hour.

       This use of byproduct gypsum earned the company the Pennsylvania Governor’s Award for environmental excellence. The calcium sulfate produced by the power plant’s scrubbing operation is now recycled rather than going to a landfill.

       The company’s emphasis on safety has also earned it praise from the outside. This fall, National Gypsum was named one of America’s Safest Companies by Occupational Hazards magazine. The company was among 16 in the nation to win the award including industrial giants, DaimlerCrysler, DuPont, and Exxon Mobil Chemical. National Gypsum’s safety performance also has been recognized by the National Safety Council, the Gypsum Association, the Mine Safety and Health Administration, and the National Mining Association.

      “Working safely is the number one requirement for our associates,” Nelson attests. “In fact we list safety as one of our five core values. When operations are detailed enough to have a strong safety performance, good productivity, quality, service, and profitability follow.”

       The workforce of 2,700, with 300 in Charlotte, is predominantly male with various levels of education. The company reimburses employees’ continuing education costs, regardless of whether they’re job related. Pay and benefits compare well with local community standards, Nelson says, but he adds a caveat: “People stay long-term, not because of pay, but because they feel a good cultural fit, feel like they’re treated well and respected, and they’re doing work that’s important.”

       Page Odom, who has worked for the company nearly 30 years, says, “We’re performing at the highest level we ever have in any category.” Yet, Nelson is so reticent about National Gypsum’s success that Odom says he’s “almost surprised” he agreed to an interview. Currently senior vice president of Business Development and Technology, Odom calls Nelson a pragmatic leader who challenges everyone to find better ways to operate.

     Nelson is a private person, but he takes pride in having been a White House Fellow in 1992-93, working for Vice President Dick Cheney when Cheney was defense secretary. He values his membership in The Business Roundtable, a national group of business leaders focusing on the economy and fiscal policy.

      He also spends as much time as possible with his wife Anna Spangler Nelson and their daughters. He and Anna are also founding partners in the North Carolina private equity firm, Wakefield Group. When he is not working, Nelson enjoys skiing and golf.

      “He has a passion for golf,” says Barnes Hauptfuhrer, co-head of the Corporate Investment Banking Division for Wachovia Corporation, who helped fashion the $1 billion deal – financed entirely in Charlotte and involving the old First Union and the former NationsBank – that enabled the Spangler family to acquire National Gypsum. Even on the golf course, frequent links partner Hauptfuher says Nelson continually seeks improvement. “He still has not perfected his L-4 position,” Hauptfuher chuckles, then quickly adds, “I don’t know what that means either.”

      Working at National Gypsum or in civic organizations either nationally or locally, Hauptfuher says Nelson is team-oriented. He likens him to what business excellence author Jim Collins calls “Level 5 leaders” whose ambition “is first and foremost for the institution, not themselves.”

       “Tom Nelson serves our community with quiet resolve,” says Michael Marsicano, president of Foundation for the Carolinas, on whose board Nelson serves. Rarely do you see his name in lights but, frequently, he is behind the scenes getting the job done.”

     Nelson sees himself and other National Gypsum associates filling that role in Charlotte. “We do make our impact known, not only in the jobs we provide but by what we give back to the community,” he says, adding that employees serve in multiple civic roles, both as leaders and as supporters.

       For the future, Nelson plans for National Gypsum to grow with its markets and to continue to make a difference in the building products business and the communities where the company has operations. Everyone can count on his doing that quietly and confidently.

 

Ellison Clary is a Charlotte-based freelance writer.
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