Hussey Copper selling the red metal as a bacteria killer
May 12, 2013 4:00 AM
Hussey Copper's president and CEO, Joseph M. Mallak, near the open door of the 2,200-degree furnace used to hold 540,000 pounds of melted copper.
Rolls of copper strip product at Hussey Copper LLC, in Leetsdale. The .003 inch copper strip is used to wrap "high voltage" cable wiring.
By Len Boselovic Pittsburgh Post-Gazette
Seventeen months removed from bankruptcy, Hussey Copper is profitable again and eyeing growth in its main markets, as well as a promising new one based on the red metal's germ-fighting might.
The medical community, facing threats posed by antibiotic-resistant bacteria, is interested in studies showing copper can kill 99 percent of bacteria within two hours after germs come into contact with the metal. Research documenting the benefits of outfitting hospitals with copper fixtures has even shaped the nation's health care overhaul, which next year will begin punishing those with the poorest records of keeping patients infection-free.
Leetsdale-based Hussey is already capitalizing on the interest in antimicrobial copper, retrofitting the intensive care unit of a major hospital with copper fixtures.
"We feel that it's an exciting thing for us going forward," said president and CEO Joseph M. Mallak, who was installed after a New York private equity firm paid $107.8 million in December 2011 for the copper producer.
He said 2012 was Hussey's first profitable year since 2009.
"We're even better than we were last year," Mr. Mallak said, declining to provide sales and earnings numbers for both periods. "You don't normally walk into something like this and it's cash flow from day one."
Hussey is Mr. Mallak's third resuscitation of a bankrupt company. The 47-year-old CEO spent time at The Reserve Group, an Akron, Ohio, private equity group that hired him to restructure several of its portfolio companies. He also worked at Ford, aluminum producer Aleris and Textron, which makes products for the aerospace, defense and transportation markets.
Mr. Mallak said Hussey's bankruptcy could have been avoided if previous owners had invested more in the business. In the months before it sought bankruptcy protection, limited capital forced the company to only fill orders it had the money to fill, he said.
By the time the 165-year-old company declared bankruptcy in September 2011, it owed more than $69 million to creditors. Court documents indicated Hussey lost $3 million in 2010 on sales of $381.9 million, after earning $1.1 million on sales of $308.4 million the previous year.
The new owners, Patriarch Partners, invested between $5 million and $6 million in the business in 2012, which Mr. Mallak said was more money than the prior owners had invested in the previous seven years. Patriarch will invest twice as much this year, he said.
Mr. Mallak said the company also is benefitting from more effective hedging and pricing mechanisms Patriarch installed to protect Hussey from volatile copper prices, something that contributed to the bankruptcy. Copper prices have fallen about 9 percent this year.
"No process is perfect, but we've eliminated the vast majority of the volatility," he said.
Hussey is an integrated copper producer. The company does everything from producing the raw metal by melting scrap; processing it into sheet, plate and other semifinished forms; and fabricating finished parts. The company employs about 530 at Leetsdale and in Eminence, Ky.
Last month, members of United Steelworkers Local 8377 ratified a five-year contract covering about 180 workers at the Leetsdale plant. Mr. Mallak said the length of the contract provides stability for the company.
That's important as it tries to capitalize on the rebounding housing market, as well as expected growth in demand from hospitals, schools and other markets for antimicrobial copper.
Hussey's biggest customers are electrical equipment suppliers such as General Electric, Siemens, Schneider Electric and Eaton. Mr. Mallak said the pickup in the housing market is helping demand for Hussey's copper roofs, gutters, duct work and other construction-related products.
But the market that excites him most -- maybe it's because his wife and six other members of his family are doctors, and three nieces and nephews are in medical school -- is based on copper's bacteria-fighting properties. The interest is in keeping with Hussey's legacy: The company was founded in 1848 by Curtis G. Hussey, a dentist.
A 2009 study published in the Annals of Microbiology reported that Egyptians used copper to sanitize drinking water and wounds in 2400 B.C. The Greeks and other cultures used it to treat sores and skin infections. Antibiotic-resistant bacteria reawakened medical interest in the metal and led to studies that found that copper kills MRSA, E. coli and several other bacteria strains.
Other studies concluded that replacing plastic, wood, stainless steel and other materials with copper significantly reduced the presence of bacteria over long periods of time and that patients staying in hospital intensive care units equipped with copper surfaces developed fewer infections than patients housed in noncopper rooms.
Researchers used copper on products frequently touched by patients and hospital staff, including nurse call buttons, bed rails, IV poles, faucet handles and push panels on swinging doors.
An executive with the Copper Development Association, in New York, said there is no single explanation for why copper kills bacteria. Harold Michels said scientists offer several reasons including that copper interferes with the metabolism and respiration of the germ.
"It is not one thing. It is a multifaceted mode of attack," Mr. Michels said. "We really have no simple, definitive explanation. We know it works."
Hussey is selling a U.S. Environmental Protection Agency-certified form of the metal that allows it to claim that its copper kills certain bacteria based on test results reviewed by the federal agency. It also has developed an EPA-registered product to control odor causing bacteria in heating and air conditioning systems.
Beginning in October 2014, Medicare and Medicaid will penalize hospitals that have the highest rates for patients who suffer infections during their stay. Hospital-acquired infections kill nearly 100,000 Americans annually and increase health care costs by as much as $45 billion annually, according to U.S. Department of Health & Human Services officials.
Mr. Mallak said there are a number of other possible markets for antimicrobial copper: nursing homes, schools, rehabilitation centers and public facilities. Hussey is providing copper for drinking fountains at Atlanta's Hartsfield-Jackson International Airport, he said.
"We're pretty excited about where we're going with this," Mr. Mallak said.