Observing its sesquicentennial year in business, the Canadian
metals giant sees its greatest growth prospects in the United States.

By Corinna C. Petry,
Managing Editor

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A long, long time ago—when Canadians called Victoria their queen and the Grand Trunk Railway had not yet reached Toronto—two brothers started a wholesale hardware business in that frontier town: M & L Samuel.

Careful management and solid investing by their descendants, aided enormously by able and visionary managers and a knowledgeable workforce, have brought Samuel, Son & Co., Limited to annual revenues expected to approach $3.5 billion in 2005.

To put that in perspective, Canadian Business magazine’s listing of the top 50 Canadian public companies included firms grossing just over $5 billion. Thus Samuel, Son is one of the largest industrial companies in Canada, and No. 5 on this year’s MCN Service Center Top 50. Samuel, Son is also one of the fastest growing companies in the industry, progressing from $1 billion in sales in 1994, to $2 billion in 1998, to over $3 billion this year.

The past
The beginning was modest, however. Mark and Lewis Samuel established M & L Samuel as a commission and wholesale metal and hardware supplier, in both Toronto and Liverpool, England, around 1855.

In 1880, Alfred Benjamin joined as a partner, and the company became M & L Samuel, Benjamin & Co. By the turn of the 20th century, Lewis Samuel’s son, Sigmund, became president. Soon after, the company exited the “shelf” hardware business and focused on metals and heavy hardware. By 1912, Sigmund was a 50 percent partner. In 1929 the company relocated to new facilities in Toronto.

When Alfred’s successor, Frank Benjamin, retired in 1931, Sigmund became sole proprietor and changed the company’s name to Samuel. In 1960, the company moved to its current headquarters in Mississauga. When Sigmund died, his daughter, Florence Marsh, took over until 1962, when Sigmund’s grandson, Ernest Samuel, became president.

Under Ernest Samuel’s leadership, the company opened and acquired facilities throughout Canada and the United States. In 1985, three of the company’s manufacturing divisions were combined to create a new company—Samuel Manu-Tech Inc.—which was taken public on the Toronto Stock Exchange. Samuel, Son retains a 72 percent stake in Manu-Tech.

Ernest Samuel led the company for 38 years, raising it to become one of the top processors and distributors of metals in North America and the largest privately owned metal service center chain.

He died in 2000 and was succeeded by Elizabeth J. Samuel, chairman; Mark Samuel, vice chairman, president and chief executive officer of Samuel Manu-Tech; and Wayne Bassett, who is president and CEO of Samuel, Son & Co. Bassett, hired in 1974, is the first non-Samuel to run the company.

The present
The company is still privately held by the Samuel family. The board is made up of four family members, three outside board members and Bassett.

It is a huge organization encompassing about 90 facilities across six Canadian provinces and nine American states, 4,500 employees and 15 disparate divisions. These branches service customers throughout Canada and the U.S.

Metals sales, processing and distribution make up the largest piece of the pie with $2 billion in revenues this year. The company carries inventories valued at $600 million and runs extensive fabricating and manufacturing operations, such as blanking and tube production, a trucking company, international trade, research and development, even consulting.

The No. 1 challenge in managing this behemoth, Bassett says, is communication.

“Because we grew so fast, we had five different computer systems throughout the service center group. That has been consolidated into one system.”

Samuel, Son is now on an AS400 system with software developed in-house over the past 30 years, supported by “a fairly large group of IT people.” Compared with adapting off-the-shelf products, the homegrown system allows employees and managers “to do a lot more, a lot more quickly, such as analysis of inventory levels, sales levels, margin levels. Our system gets the right data to the right people very quickly,” Bassett says.

Every second Friday, the corporate heads host a conference call with about 50 division presidents and other top managers, especially to update them on marketing and purchasing news. Samuel sends out internal newsletters every second week to the major product groups: aluminum, stainless, carbon steel plate, carbon flat-roll. “They give detailed updates on each market.”

Each branch manager receives monthly and annual results of his or her branch, to share with key associates. Information about each division’s performance is shared among all branch managers in that division.

Once a year, Samuel hosts a 2 1/2-day management conference for its 115 managers. Corporate leaders share the company’s financial data and performance measures; forecast performance for the next year; and outline goals and objectives. The session is also critical for getting feedback from these managers. “We ask them what we should be doing to improve the company,” Bassett says.

The future
Samuel, Son’s revenues this year should exceed 2004 sales (which were just under $3 billion) by at least 15 percent.

“We don’t have specific targets for growth, but we would expect—based on what we’ve been doing—that we’ll grow our business, in tons shipped, by 5 to 7 percent per year for the next three years,” Bassett says. “That is exclusive of acquisitions.”

The company’s acquisition strategy is to stick with metals-related businesses and to expand mainly in the United States.

“Our sales are roughly 60 percent Canadian and 40 percent U.S. Our five-year plan moves us to where we reverse those numbers—so the U.S. will be 60 to 70 percent of our business and Canada will be 30 to 40 percent,” says Bassett. “We are not reducing our Canadian business; it’s just that we see most of our growth targeted within the U.S. market, which is eight to 10 times the size of Canada’s.”

Apart from its desire to see American expansion, the company wants to retain its balance between carbon steel and nonferrous products. “We are 50 percent carbon steel flat-rolled, 15 percent carbon steel plate, and 35 percent aluminum and stainless,” Bassett notes.

Except for its purchase of Clad-Tex last year, Samuel, Son has been sitting tight since 2003. Now, however, its management team is “actively looking at what’s available, and attempting to acquire some [assets] that will help us grow our business. We probably will be more active for the next couple years than we have been for the last three to five years,” he says. With its strong balance sheet, Samuel can finance purchases from cash flow, but also has substantial lines of credit available.

Executives also champion continued investments in existing facilities. In the past five years, the company spent more than $100 million to expand flat-roll processing capabilities, for example.

The plate group has clearly benefited from capital projects: Processed plate shipments have grown 10 percent a year during each of the past three years, prompting strong growth in revenues and profits.

Samuel & Fils recently installed three new plate-sawing machines in its Baie d’Urfe, Quebec, operation, while the Samuel Plate division has installed five new MPC2000 high-definition plasma-cutting machines, from MG Systems & Welding, at facilities in Buffalo, N.Y., Stoney Creek, Ontario, and Vancouver, B.C., this year. The division expects to install two more plasma machines shortly.

“We hope to continue adding to our capacity. These machines have allowed us to achieve excellent gains in productivity. The parts we make have set a new benchmark in our industry,” remarks Rick Balaz, president of Samuel Plate Sales.

What makes Samuel different?
Samuel’s metals processing and distribution business has plenty of competition, large and small, but differentiates itself in a number of ways. For one, its total processing capacity is huge: about 3 million tons a year. Specialized capabilities include precision blanking, high-definition plasma cutting, the stamping of residential door skins, annealing and strip rolling.

“One thing we have that’s different from others is our technical group,” Bassett says. The R&D centers in Concord, Hamilton and Stoney Creek, Ontario, are staffed by 35 metallurgists and technical specialists. “They visit a plant to learn how our customer uses the steel we supply, to show him how he can switch to more effective or lighter products, or newer grades, at a lower cost. We help them build better products.”

Samuel’s staff also has the expertise to create prototypes, particularly for the automotive and railcar industries. “The centers are there to help us develop manufactured products and processes that we believe are unique,” Bassett says.

One further advantage is Samuel’s transportation strength: it owns Kim-Tam Truck Leasing Ltd. and Marshall Trucking, the latter acquired in January. Kim-Tan provides transportation to all of Samuel’s business units. “We probably haul 85 percent of our metals on a Samuel truck. Our goal is to move that to nearly 100 percent,” he says.

Where the two companies do not operate, Samuel purchases trucks for individual branches—usually smaller service centers that drive 15-ton trucks delivering orders in a 150-mile radius. “We have added more trucks in the United States as our business has grown there. We like to be self-sufficient in trucking.”

This capability has helped when producers have fallen behind in their deliveries. “We have picked up our mill orders on our own trucks. We were able to get material when others couldn’t.”

Succession planning
As Samuel has become larger, its family owners and executive managers have had to think hard about developing talent from within to carry the company into its third century.

Bassett says it’s a challenge to attract “enough quality people to be the future leaders of the company. We spend a lot of time and effort to attract talent to starting positions, some right out of universities, people we believe can grow with the company.”

Samuel offers a four-year in-house educational and training program for supervisors. It covers the company’s vision, values, commitment to customers, and everyday concerns like inventory management. Hundreds of employees have “graduated” from the program in the past 10 years. The next step is a fifth year that focuses on strategic planning and instills an entrepreneurial spirit, because most units are managed independently. Corporate leaders intervene only when performance is questionable.

Bassett appreciates the dedication of Samuel’s people. “You go to any plant and look at the board that lists employees who have been there 10 years or more. The list is always huge. We have a very high retention rate.”

Among the company’s stated beliefs and values is this: “Our people are the source of our strength. They provide our corporate image and determine our reputation and vitality.”

This dynasty has only increased in vitality over time. And 150 years later, Mark and Lewis Samuel’s hometown has become the fifth largest city in North America, a major stop for the national railroad and England’s queen, who still visits Canada on occasion.