How one family-owned service center evolved with the market.

By Tim Triplett,
Editor-in-Chief

• Quick Facts
  

Until the late ‘80s, Thompson Steel Co. was in the cold-rolled strip business, specializing exclusively in the annealing, slitting and cold rolling of narrow carbon steel strips. Adapting to the changing market conditions, the company made a successful transition to full-service provider of carbon flat-rolled products.

As mills got better at producing coils without such a critical need for additional cold rolling, Thompson Steel executives realized they needed to expand their company’s focus beyond just strip. “Now we cover the whole market for flat-roll,” says Ed Ryan, executive vice president of the Canton, Mass., service center.

The family-owned business, founded in 1922 as a wire mill by George Thompson, was purchased in 1974 by Ed’s father, current chairman George Ryan.

Today, in addition to its Canton headquarters, Thompson Steel operates seven service center locations, employing 350: North Hollywood, Calif.; Paulding, Ohio; Dayton, Ohio; Franklin Park, Ill.; Roseville, Mich.; Rome, Ga.; and Fountain Inn, S.C.

The company acquired North Hollywood-based Arrow Metals in 1986. Today, Arrow Thompson Metals is a distributor of stainless steel strip products.

Thompson purchased the Dayton and Rome locations from Dayton Steel Services in 1997 to strengthen the company’s presence in the automotive market. The Michigan and Ohio locations are close to traditional Midwestern auto suppliers, while the Georgia location services suppliers to the new BMW auto plant in Spartanburg, S.C., as well as other transplant automakers in the Southeast, Ed Ryan explains.

“The transplants have been doing well all along,” Ryan says. “The domestics in the Midwest experienced a slowdown, but that has picked up,” in part due to the well-received promotions of employee discounts for consumers.

Besides automotive, the housing boom is fueling sales of appliances and home hardware, two other big customer segments for Thompson.

The company still maintains the equipment it needs to produce “real strip,” Ryan says, including annealing, slitting and cold rolling of narrow coils. All Thompson’s service centers offer slitting services and some cut-to-length. The Paulding plant is equipped with furnaces for hardening and tempering of high-carbon steel.

Thompson’s heat-treating operation allows some customers to streamline their manufacturing process. “In the past, one customer would make a saw blade, then heat treat it. Now they can buy heat-treated strip from Thompson and just make the blades,” Ryan explains.

Four years ago, Thompson installed a high-speed multi-cut blanking line from Red Bud Industries at its Fountain Inn facility. A year later, it was one of the first to invest in a new slitter design from Red Bud, which can handle 72-inch coils up to 60,000 pounds at speeds up to 1,000 feet per minute. At its various locations, Thompson also uses equipment from Herr-Voss Stamco, Braner USA/Loopco, Delta, Cincinnati and Ruesch, among others.

Ryan also attributes some of his company’s success to its use of Axiom enterprise management software at five of its seven locations (the Dayton locations continue to use their legacy systems). Shopping for a new technology platform seven years ago, Thompson determined that Axiom, from Axis Computer Systems Inc. in nearby Marlborough, Mass., was especially suited for coil processing operations.

Thompson does not make discrete parts, but rather cuts coil stock into multiple coils, explains Ryan. “Each of those multiple coils from the master have to maintain the same identity in terms of heat number, chemistry analysis, etc. The lineage has to go all the way through from the wide coil to the narrow product shipped to the customer. Axis was one of the first companies that could handle that relationship with coil products.”

The software is well designed for inventory control, he adds. “Anybody can slit and do the mechanical things, but to survive in this business you have to handle your inventory right.”

Thompson tries to keep only two months inventory on hand, based on contracts with its major customers. Steel prices have declined by $120 to $140 per ton since the beginning of the year, Ryan notes. “We try to keep it lean so that if pricing shifts either way, we don’t get much of a slam.”

Thompson’s strategy: having multiple locations near to customers, and offering products customized to meet their specific needs, appears to be effective. “If it’s a flat-rolled product—from very narrow, tight tolerance strip to 72-inch-wide quarter-inch galvanized sheet—we have the expertise to supply it,” Ryan says.