One of the perks of John Floren's new job – CEO of Methanex Corp. (TSX:MX) – is the view.
His corner office on the 18th floor of Waterfront Centre looks over Stanley Park and the North Shore mountains. He just hasn't been able to enjoy it as much he'd probably like.
A recent three-and-a-half-week trip to Medicine Hat, Boston, Norway, Finland, Sweden, London, New Zealand and Utah typifies the kind of gruelling travel schedule that an executive with a global enterprise maintains.
Last year, he spent 85% of his time on the road.
"This first quarter is busy because I'm trying to get to all the sites as the new CEO," said Floren, "but once that's completed, it will be a lot less travel than I've been doing."
The former senior vice-president of global marketing and logistics for Methanex officially took over as CEO in January after his predecessor, Bruce Aitken, retired.
"John brings with him a very strategic and focused background to the business," said John Gordon, Methanex's former senior vice-president of corporate resources, who is also now retired. "His broad understanding of the global industry dynamics is an asset."
Floren could not be stepping into the CEO's role at a better time. The company's stock was up more than 27% in the first three months of 2013, and it started the year with a cash balance of $746 million.
"We had a fantastic fourth quarter, pricing is high, all of the projects are moving forward, so I think we're set up to have a few outstanding years here," Floren said. "I'm pretty lucky to have been succeeding Bruce at this time."
Methanex makes one product – methanol – a building-block chemical from which dozens of chemicals, fuels and fuel additives are made.
The company has methanol plants in Canada, Trinidad, New Zealand, Chile and Egypt. Only 200 of its 1,050 employees are in Canada: 100 in its Vancouver headquarters and 100 in Medicine Hat.
It also owns its own shipping fleet, Waterfront Shipping, with 18 tankers moving methanol to global customers and backhauling other chemicals.
The world's largest methanol producer, Methanex already has 15% of the world's methanol market, and it's positioned – both geographically and financially – to capitalize on a rapidly increasing demand for its product.
The demand for methanol is growing at 8% to 9% annually, driven largely by the increased use of methanol as a fuel and fuel additive, and an abundance of low-priced natural gas – the raw material for making methanol.
Floren said it takes five years to build a new methanol plant. Methanex had several idled plants that it has been busy restarting or relocating, which will allow the company to quickly add an additional three million tonnes of production, giving it an edge over its competitors.
"The market itself is growing by four million tonnes per year, so to keep our current market share of 15%, we need to add about one million tonnes every two years," Floren said.
"There's no other new supply coming on in the industry. It takes about five years to build a new plant, so we're bringing on these three million tonnes of low-cost production at a time when the industry's really going to need it."
The shale gas boom has been good for Methanex. Low gas prices in North America allowed the company to restart its plant in Medicine Hat in 2011. It had been idled for 10 years. Methanex recovered the cost of restarting the Medicine Hat plant in less than a year. The company is also bringing its three New Zealand gas plants back into production.
In addition, Methanex is spending $550 million to dismantle one of its idled plants in Chile, float it up the Mississippi River and reassemble it in Geismar, Louisiana, where it has secured a 10-year natural gas supply contract with Chesapeake Energy Corp. (NYSE:CHK).
Methanex has four plants in Chile, but three were shut down when Argentina abruptly turned off its natural gas supply to Chile in 2007, and the fourth has been running well below production capacity.
Overnight, the company had to switch from being a methanol supplier to being a buyer.
"We made a decision to keep our market share when that happened, so we had to change the organization and go out and be able to purchase product to keep our customers while we worked on our supply situation," Floren said.
"Throughout that period, we had to change the skill sets of our people. We had to become a lot more flexible in purchasing product and moving product. It took us from '07 to this year to get out of that hole, and now we are producing more today than we were in '07."
Methanex will be able to pay for the $550 million relocation of the Chilean plant with cash.
"Being a single-product company, we keep a conservative balance sheet," Floren said. "Being conservative – because it's hard to predict the future – allows us to have this cash on the balance sheets, so if the world does blow up tomorrow for a reason we're not thinking about, we can still complete our projects without having to stop, and we can also survive as a company."
Restarting plants abroad has required a lot of travel for Methanex executives. But Floren is well suited to that lifestyle.
Floren's father was in the air force, so his family moved around a lot. He was 17 when he started working full-time for Shoppers Drug Mart in Thunder Bay, where he met his wife, Sherry. They were married in 1984 and have two daughters, now aged 20 and 21.
While working for Shoppers Drug Mart in Ontario and Manitoba, Floren put himself through university, taking night classes to earn a BA with a major in economics.
"My financial situation didn't allow me to pursue secondary education the way I would have wanted to," Floren said.
Later, in 1998, he took a 10-week management development program at Harvard Business School.
Floren left Shoppers Drug Mart to work for Quadra Chemicals in Montreal in 1985. He spent more than 13 years with Quadra and became an owner of the company.
In 1993, Quadra bought a company in Vancouver, and Floren moved here to manage the new acquisition. It was while in Vancouver that he became associated with Methanex, which was the local chemical company's largest supplier. Floren eventually moved back east, to Toronto, but in 1999, he sold his interest in Quadra, took some time off, and in 2000 he returned to Vancouver to join Methanex.
Floren ended up in Dallas for three years to run Methanex's North American marketing and logistics operations, then in 2005 moved back to Vancouver to become senior vice-president of global marketing and logistics. It was while in Dallas that Floren bought a home in Cape Cod – still considered the family's home base.
"We bought a summer home. My wife didn't want to spend the summers in Dallas. We had been going to Massachusetts, Cape Cod, for years as a family. We moved around a lot, so it was important to have a base for our kids, so every summer that's where they went.
Floren currently rents an apartment two blocks from work, but now that he is going to spend more time in Vancouver, he plans to buy a home here.
When he's not travelling, Floren plays hockey and breeds and races standardbred racehorses. He owns harness-racing stock in Lexington, Kentucky, and races them in Toronto at Woodbine.
It's not just a hobby – it's a business. And like Methanex, it's a business that appears to be doing well.
Asked how well horse racing pays, Floren smiled: "I've been very lucky."
