Ian Flavell FCMA: finance director, Castle Cement.

PositionONE 2 ONE - Interview

Cement doesn't sound like the most glamorous of businesses. What attracted you to the industry?

The grey powder that we call cement appears rather insignificant, but it is a vital part of the modern world and used widely in all manner of structures. I've always wanted to be involved with organisations that make things--to have some kind of physical involvement with a product--and I've been lucky to be able to do this. All of the firms I've worked for have been in the business of selling to industry, not retail, so they tend to be well known in their own sector, but not necessarily outside.

Castle supplies a quarter of the UK's demand for cement: about three million tonnes a year. We were the only UK operation of Heidelberg Cement Group, but the group has just become much larger as a result of buying Hanson in September. Castle has three works--in Rutland, Lancashire and north Wales--and our HQ is in Birmingham. Hanson doesn't make cement, so there won't be any day-today overlaps here (although there will be in the group's US operations), but we're still working out what the merger will mean for the back-office functions.

What does the Hanson buy-out mean for you?

Its acquisition was routed through a UK subsidiary, of which I'm a director, so the mechanics of the deal were a big issue for me. Hanson is much bigger than Castle in the UK, so it's been a huge task. We are aiming to work out how we're going to integrate by January 1, so we haven't got long.

We're watching progress in the US, where Heidelberg and Hanson have similar-sized operations to merge, because they're facing many of the same issues as we are, and it helps to keep things common where possible. The group head office in Germany came up with the overall structure it wanted, but we have to work out how the UK side fits into this. We don't want to end up with a structure that's theoretically perfect but doesn't work in practice.

What are the costs involved in making cement?

Our sites and equipment are large and expensive. We recently took out three old kiln lines and put in a bigger one at our Welsh operation at a cost of 70m [pounds sterling]. It costs more than 200m [pounds sterling] to start an entire works from scratch.

Planning is also an issue. In Wales it took about four years from making the application to getting planning permission, including the public inquiry. It probably cost us 1m [pounds sterling] to get to the point of putting the first spade in the ground. I...

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