It doesn’t take long to realize that Steven Leer enjoys his job. The chairman and CEO at Arch Coal Inc. has a deep understanding of the way the coal industry works, and he enjoys talking about it.
But one shouldn’t assume that this calm, easygoing personality means he takes a laid-back approach to running his business.
When the decision was made to merge Leer’s company, Arch Mineral Corp., with one of its fiercest competitors, Ashland Coal Inc., in 1997, Leer was all business.
“Six months is an outside time, I want it done faster,” says Leer, explaining how long he expects a merger to take from start to finish. “I don’t want to have a problem if the integration team of some particular group is sitting there saying, ‘The guy in the corner office is crazy. We can’t get it done in that time frame.’ In fact, in some ways, I even want that kind of tension going on. The teams have to have people bond from both sides.”
The reason for this particular merger was relatively simple: As coal markets continued to evolve from regional operations to more of a singular national market, the two companies were beginning to do more harm than good through their competition.
“There were obvious duplications of overhead,” Leer says. “To meet the requirements that we felt were necessary to be successful in safety and environmental performance and in meeting the market needs that were growing ever more sophisticated, that size and breadth of resources was going to allow you to be much more competitive in the world than staying a regional company.”
While the merger made sense on paper, there was still the matter of how to physically and culturally merge two separate businesses into one organization that would be stronger. Leer says that it takes a lot of effort to make such a large-scale consolidation work. But experience has taught him that the faster you do it, the better your chances are of being happy together.
“Integrations that take more than six months start to destroy shareholder value,” Leer says. “If people can speed it through, it’s difficult. It’s hard work and it’s a 24-7 approach for a period of months. But it ends up allowing you to get the real value that drove you toward the acquisition in the first place.”
By not being afraid to push his people beyond their limits, Leer now leads a 4,200-employee, $2.9 billion company that produces more than 100 million tons of coal each year. Here’s how he did it.