MDU Resources Group aren't the first words that come to mind when you think about construction materials. However, the Bismarck, N.D.-based utilitys deregulated businesses far exceed its retail gas and electric segments. Through 50 acquisitions since 1992, MDU has assembled a $1.3-billion-a-year construction materials and contracting business.
That business is called Knife River Corp. and it has a new president and chief executive officer, William Schneider. MDU's directors promoted him to the post April 6. He succeeds Terry D. Hildestad, who will assume a new position as president and chief operating officer of MDU Resources.
Schneider currently serves as senior vice president for construction materials at Knife River, a position hes held since 1999. He joined the unit in 1993 when MDU acquired Alaska Basic Industries, where he was vice president. Previously, Schneider worked for eight years with Associated General Contractors of Alaska and seven years with Kiewit Construction.
MDU prospered handsomely in 2004. The company reported earnings of $206.4 million, on revenues of $2.7 billion, compared to $174.6 on revenues of 2.3 billion in 2003. The company's construction materials and mining unit brought in revenues of $1.3 billion in 2004.
Oil and natural gas production continues to be the biggest revenue producer, says Cathi Christopherson, an MDU Resources vice president.
The company adopted its current strategy in 1985, when the Federal Energy Regulatory Commission partly deregulated pipelines and the company, known then as Montana-Dakota Utilities, separated its pipeline business from its retail gas unit. The company now describes itself as one that provides natural resources for energy and transportation infrastructure.
Knife River Corp.'s construction materials acquisitions have different service and product mixes. "Some do contracting and paving," says Christopherson. Another company provides all the cement needed for Hawaii, she adds. Owned by a single holding company, Knife River's units include Morse Bros. Inc, based in Tangent, Ore., Hawaiian Cement, based in Aiea, Hawaii, and Baldwin Contracting Co., Chico, Calif.
"We're constantly evolving" and looking for additional acquisitions, Christopherson says.
Diversification had been the common wisdom thoughout much of the utility industry as deregulation put the focus on new segments and subsidiaries, especially on merchant power generation. Independent power production, the foolsgold that tempted so many in the late 1990s, accounts for only $43 million in MDU Resources revenues in 2004.
The company did stub its toe on an international power venture. Petrobras, the Brazilian energy company, backed out of an agreement to market power from a natural gas-fire generation facility in that country of which MDU Resources owns 49%. The company says it is negotiating with Petrobras.
After the wipeout of 2001, utilities have returned to core businesses, reports the Edison Electric Institute, a utilities association. MDU Resources has made aggregate, cement and asphalt a core activity.
"We've been pretty much diversified throughout the company's history," says Christopherson.