2006 Service Center News

Esmark Appears to be Winner
in Fight for Wheeling-Pitt
Though an official tally had not been recorded as Metal Center News went to press, Esmark claimed victory in the battle to acquire Wheeling-Pittsburgh Steel Corp.

The steel company’s shareholders voted to support Esmark’s slate of directors at the Nov. 17 annual meeting. The company’s existing leadership had been supporting a friendly bid from Brazilian steelmaker Companhia Siderurgica Nacional.

But Esmark maintained the support of the United Steelworkers, which filed a grievance opposing the company’s attempts to merge with CSN one week before the annual meeting.

In the days leading up to the shareholders’ vote, the Chicago-based service center company’s bid received the endorsement of Institutional Shareholder Services, a provider of proxy advisory services. “Esmark’s strategy is more likely to enhance shareholder value over the long run,” ISS determined. Its “proposal would improve the company’s capital structure, and would provide W-P with a strong distribution network.”

After the vote, Esmark Chairman James Bouchard announced interest in acquiring the nearby Mittal Steel Weirton mill, which is expected to be sold as part of an agreement with U.S. antitrust regulators. Severstal and Hampshire Steel Group were also identified as potential suitors for the Weirton plant.

Copper Executives Predict Downturn in ‘07 Shipments
Red metals shipments will decline in the first half of 2007, if predictions by members of the Copper & Brass Servicenter Association are correct. Of the eight markets forecast, respondents offered an optimistic outlook for only two: defense and electronics.

CBSA surveyed distributor companies, plus brass mill, re-roll mill and metal strip platers to forecast market conditions for the coming six months.

For the defense sector, 100 percent of the respondents believe sales for the first half of 2007 will be even or up compared to the second half of this year, for an average 4.4 percent increase. The defense outlook is almost as positive when comparing projected 2007 shipments to the first half of 2006, an average increase of 3.8 percent (see table).

The electric/electronic market is projected to show a gain of 2.5 percent in the coming half vs. the final six months of this year. Additionally, shipments should be up 1.4 percent compared to 2006’s first half. Fewer then 10 percent of respondents believe the electric/electronic markets will show a decrease compared to this year’s second half. Only 14 percent project a decrease in comparison with the first half of 2006.

The automotive, household/appliance and construction industries are all projected to be off significantly in the first half of the new year.

Eighty-two percent of respondents believe that copper and brass shipments to the automotive market will be flat or declining in the first half compared to this year.

Gibraltar Acquires EMCO
Gibraltar Industries Inc., Buffalo, N.Y., has acquired the stock of The Expanded Metal Co. Ltd. and the stock of Sorst Streckmetall GmbH, which together are known as EMCO, a supplier of expanded metal mesh components and finished goods in key European markets. Gibraltar acquired EMCO from Clifton House Acquisition Ltd., a UK-based private equity firm. Terms of the acquisition were not announced.

EMCO manufactures large, small, and micromesh expanded metal products for the filtration, architectural, security fencing, electro-chemical, agricultural, leisure, building products and automotive markets. It operates manufacturing facilities in Hartlepool, England, and Hannover, Germany; and a warehouse/sales office in Poznan, Poland. EMCO serves customers in the U.K., Germany, and elsewhere in Europe, China, and India.

“The EMCO acquisition gives Gibraltar a global leadership position in the rapidly growing expanded metal market,” says Brian J. Lipke, Gibraltar’s chairman and CEO. “It expands our product offering, further diversifies our customer base and business mix, extends our reach in many new markets, and it is a perfect complement to our North America-based expanded metal operations.”

Following completion of the acquisition, EMCO’s current management team will continue to run its day-to-day operations.

Crest Steel Joins Reliance Chain
Continuing its growth through acquisition, Reliance Steel & Aluminum Co., Los Angeles, has agreed to acquire Crest Steel Corp. The transaction is expected to be final in early 2007.

Crest’s net sales for the 2005 fiscal year were approximately $129 million. Terms of the deal were not disclosed.

Headquartered in Carson, Calif., Crest also has facilities in Riverside, Calif., and Phoenix, Ariz. Crest specializes in the processing and distribution of carbon steel products including flat-rolled, plate, bars and structurals.

Reliance also announced it has entered into a new $1.1 billion revolving credit facility. The five-year, unsecured syndicated credit facility may be increased up to $1.6 billion at the company’s request with approval from the lenders. Bank of America leads the 15-bank syndicate.

The new credit facility replaces the company’s existing $700 million credit facility and its $100 million short-term credit facility. In November, Reliance used funds borrowed under the new credit facility to fund the repurchase by EMJ of $249.7 million, or 99.9 percent, of the EMJ notes.

All Metals Expanding Facility in South Carolina
All Metals Service & Warehousing Inc. has broken ground on a 48,000-square-foot expansion of its Spartanburg, S.C., processing facility. Construction of the expansion is expected to be completed by April 2007. The expanded facility will encompass 157,000 square feet.

“This is the first phase of our five-year growth strategy within the Southeast. The strategy will encompass multiple phases and has been in the planning stages for the past two years,” says Harry Simon, CEO and president of All Metals.

The expansion will give All Metals additional space to house current business and also allow room for upgrades to current equipment. The configuration of the expansion will allow All Metals to service multiple trucks for loading and unloading through the use of five back-in docks, in addition to current drive-through bays.

The second phase of the growth strategy calls for the purchase and installation of a 72-inch multi-blanking line to be operational by January 2008.

“We have seen an increase in demand from our customer base for us to become more efficient in blank processing,” says Ed Panek, senior executive vice president. “The lines we are considering will increase our efficiencies in addition to reducing costs for our blanking customers.”

O’Neal Takes AIM at Aerospace Supply Chain
O’Neal Steel Inc., Birmingham, Ala., has purchased the assets of AIM-OEM LLC and the equity of its affiliate Supply Dynamics LLC. Both companies are headquartered in Cincinnati, Ohio.

AIM was founded in 1993 as a full-service material management company. Through a creative partnership with Supply Dynamics, AIM has consolidated and forecast common materials across the OEM supply chain serving the aerospace industry. The company primarily serves the aerospace turbine engine and airframe markets, but its business is growing in the land-based turbine engine segment.

Supply Dynamics is a provider of solutions for raw material consolidation through what it calls “material demand aggregation.” Supply Dynamics provides web-accessible tools and reports that transform how customers forecast and procure common materials—everything from fasteners and bar stock to sheet metal and electronic components—across their supply chains, maximizing the efficiency of purchasing and inventory management.

“The addition of AIM and Supply Dynamics, in combination with three of our other subsidiaries—Aerodyne Alloys, TW Metals and Ferguson Metals—further strengthens O’Neal’s position among leading suppliers to the aerospace industry worldwide,” says O’Neal Chairman Craft O’Neal. “We’re not just supplying material, but helping aerospace customers manage their inventory more effectively.”

Ugine Stainless Going to Market as Ugitech
Ugine Stainless & Alloys, Doylestown, Pa., has become part of Schmolz + Bickenbach AG and will now operate as Ugitech USA, responsible for all sales and distribution of Ugitech division products in North America. The move is part of a global expansion made this year by Schmolz + Bickenbach, a supplier of high-quality specialty steel solutions worldwide.

“This is a tremendous step forward in our evolution,” says Ugitech USA Executive Vice President Mike Walsh, “and should reassure our clients and suppliers that we are committed to maintaining the strength of our core business and expanding into new product areas.”

As Ugine Stainless & Alloys, the company served as a specialized distributor of specialty steel long products with six U.S. stocking locations.

“Now the company is positioned to expand on other product and market opportunities, leveraging the vast sourcing possibilities that exist among affiliated Schmolz + Bickenbach AG companies,” says Walsh. “For our industry affiliates and customers, this means we can expand our level of participation and reach throughout North America, access new capital and become a predominant supplier of top quality specialty steel products.”

Schmolz + Bickenbach, Walsh says, has created a new model for success in specialty steels by integrating production and distribution while investing in the success of the new global entity. “We are strategically positioned in a group that has a proven track record for delivering healthy business growth throughout their production, processing and distribution activities,” he adds.

Marmon/Keystone to Build Service Center in Wisconsin
Marmon/Keystone Corp. will construct a 100,000-square-foot service center in Little Chute, Wis. Ground was broken on the new facility in September with completion expected in early 2007. The facility will operate as a satellite of the company’s Chicago operation.

“This new branch, located just north of Appleton in Eastern Wisconsin, will enable us to put our inventories closer to the local market area and allow us to expand in Northeast Wisconsin and the Upper Peninsula,” says Tim Spatafore, executive vice president of Butler, Pa.-based Marmon/Keystone.

Briefs
Klein Steel, Rochester, N.Y., has chosen to implement STRATIX, Invera’s enterprise software system. Klein Steel has a variety of processing capabilities that include sawing, plate burning, miter cutting and shearing. The company also uses the Kasto automated racking system, which will be integrated with STRATIX. Klein will be implementing a full complement of STRATIX features such as metal price book, saw and burning pricing, shop floor production recording, warehouse receiving, and WiFi functions. The implementation includes the STRATIX/SCORE product, the newly released executive dashboard.

American Alloy Steel, Houston, has signed a three-year contract with AT&T Inc. for the company’s Multiprotocol Label Switching Virtual Private Network service and ISDN Primary Rate Interface. The American Alloy Steel solution will connect the company’s headquarters with each of its remote facilities, resulting in increased efficiency and rapid response to customers. The service will deliver increased bandwidth and redundancy to American Alloy Steel’s fully meshed MPLS network, providing long-term scalability and a network capable of supporting future applications.

People
Vulcanium Metals Inc., Northbrook, Ill., has hired Steve Teague as southern regional manager. Teague, who has 25 years experience in the metal distribution industry, will call on aerospace, medical and oil patch clients while also representing VMI at trade shows and expositions.

Eddie Poindexter was appointed president of PFC Specialty Metals, Monroe, N.C., with Frank Poindexter becoming chairman and CEO.

Obituary
The copper and brass industry lost a respected leader when William J. Bohnen, president and owner of Guardian Metal Sales in Morton Grove, Ill., died Nov. 6 at his home in Hinsdale, Ill.

Mr. Bohnen was born Dec. 20, 1944. He was a graduate of Ripon College in Wisconsin, where he later served on the board of trustees. He also served two years in the U.S. Army as a captain.

He purchased Guardian Metal Sales in 1981, and operated the company until his death. His wife, Linda M. Bohnen, has taken over as the company’s president and CEO.

“Bill Bohnen will be greatly missed by all of his employees, as well as those in our industry who had the pleasure to know him,” said Joe Yereb, vice president of sales for Guardian Metals. “His management philosophy and his caring nature made us feel like we were more than his employees. We were part of his family.”

An active member of the Copper & Brass Servicenter Association, Mr. Bohnen served as president of the trade group from March 1994 through the spring of 1996.

Mr. Bohnen was “highly regarded for his knowledge of all phrases of our industry, respected for his intellect and uniformly appreciated for his outstanding sense of humor,” said Frank Brown, CBSA executive vice president. “Bill was considered a close personal friend by many of us within the industry, and will be deeply missed.”

Besides his wife, he is survived by three children, Laurie, Joshua and Leslie; one grandson; two brothers; two sisters; and several nieces and nephews. He was preceded in death by a daughter, Marcia.