Wary of growing too rapidly, Lane Steel has set upon a strategy of measured expansion, including toll processing, which positions the firm for the long term.

By Myra Pinkham,
Managing Editor

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Though Lane Steel Co. has grown each year since it was founded in the early 1980s, company President Paul Gedeon continues to reinvent the Pennsylvania processor through ongoing reinvestment.

There’s no growth for growth’s sake at Lane, based in McKees Rocks, Pa. “We will continue to grow, but only as it benefits our customers, our vendors and our employees,” says Gedeon, 42. “We aren’t looking to double, triple or quadruple our size overnight. We’re just looking to grow 5 or 10 percent each year.”

Lane’s willingness to reinvest in its operation sets it apart from many service centers. It completed a $2.5 million upgrade last year that included a 50,000-square-foot expansion and the addition of a refurbished 72-inch Stamco leveling and cut-to-length line.

Lane Steel was founded in 1982 by Paul Gedeon’s parents, mother Kathleen and father Al, at a time when many steel service centers were struggling and going out of business. “We were like the grass that starts to grow after a bomb goes off,” the younger Gedeon maintains.

Al Gedeon was a second-generation steelworker who spent much of his career at J&L Steel Corp. Upon leaving J&L, he decided to parlay his experience and mill contacts into a secondary steel coil brokerage that could serve as his retirement vehicle. Though he did finally retire in 1995, Al remains Lane Steel’s chairman. Day-to-day operations are handled by Paul and his brother Michael, 40, vice president of production, along with Rick Zabrowski, the company’s chief financial officer.

Lane underwent its first transformation in October 1984, moving from just brokering to warehousing secondary steel in a 9,000-square-foot facility in McKees Rocks’ Lockhart industrial complex. Today, the company owns the Lockhart complex and utilizes about 200,000 of the 380,000 square feet of warehouse space and 14,000 square feet of office space located there. Lane now sells primary as well as secondary material, and offers a variety of toll processing services, forecasting 2006 sales in excess of $55 million—quite a leap from the $7 million in sales a decade ago when the elder Gedeon handed the reins to his sons.

Lane Steel’s product line now includes galvanized, galvalume, galvanneal, cold-roll, hot-roll, aluminized and painted sheet and coil for a variety of end-use applications, including construction and automotive. Its processing services include slitting, blanking, cut-to-length and shearing with about 40 percent of its line time dedicated to toll processing for mills and other service centers.

Lane ventured into value-added processing in the early 1990s as other service centers in the area closed their doors. “There was less equipment around to get your material processed, so in 1991 we installed our first piece of processing equipment—a McKay cut-to-length leveling line,” recalls Paul Gedeon. The company ran the line until last year when it was replaced with the refurbished Stamco equipment.

It was after adding a few more pieces of processing equipment—including a Paxson slitting line in 1994, an Iowa Precision blanking line in 1997 and a Cincinnati shear and Octagon slitter in 1998—that Lane Steel decided to venture into toll processing. The tolling experience led to a shift in Lane’s product mix.

“As we began doing higher-end toll processing, we learned that we needed to get into the prime business [selling prime steel], because some of our customers were no longer satisfied with a secondary product. They wanted something that would run better on their equipment,” says Gedeon. Today, Lane’s business is split evenly between prime and secondary sales.

Lane’s diversification has helped the company succeed during down cycles in which others have struggled, Gedeon explains. “Some service centers just do toll processing. Some just do prime sales. Some just do secondary sales. Some only slit. Some only blank. Some of our customers have both high-end and low-end jobs. We can accommodate them all.”

Gedeon further attributes Lane’s resilience to its willingness and foresight to change with the times.

“You have to change before change comes. You can’t just wait until it happens. You have to try to be ahead of the curve,” he says.

Lane reinvests in its infrastructure every year. Even in really profitable years, like 2004, the company doesn’t just “take it home,” Gedeon says, but rather looks for a new strategic opportunity. Some past investments have taken longer than others to pay off, he admits.

One example is a Red Bud blanking line that Lane purchased in 2000 to replace its Iowa Precision line. “That was a huge expenditure for us and it probably took us five years to get the right jobs for the line. But now the productivity is great and the profitability is right where it should be,” Gedeon says.

Lane’s latest major project, completed last May, was prompted by a serious need to improve its material-handling flow. “We were busting at the seams, and it was starting to take too much time for trucks to get in and out. We needed more space, and we needed it to be more truck-friendly so we could get our product to market in a more timely fashion,” Gedeon says.

To achieve its goal, the company added 50,000 square feet of pure coil storage space, bringing the total for the facility up to 200,000 square feet. This gave it the capacity to inventory up to 35,000 tons of steel, up from about 20,000 tons, while making the workflow safer for employees by installing a new racking system and two 30-ton Konecranes cranes.

Last November, Lane installed a refurbished heavy-duty Stamco cut-to-length leveling line (replacing the McKay line), which gave the company an entree into the strip mill plate processing market. The new line is capable of processing coils weighing up to 60,000 pounds in widths of up to 72 inches and thicknesses up to a half inch.

By buying a used machine and totally refurbishing it, “the flatness, speed and length tolerances are as good as they would be with a new machine, at about 40 percent of the cost,” Gedeon says.

Lane’s next planned acquisition is a heavy-gauge hot-roll slitter capable of making multiple narrow cuts. “We have been getting a lot of inquiries for slitting narrow hot-roll, but our existing Octagon slitter can only handle certain thicknesses (five cuts of 0.187 gauge steel). We need a line that can handle multiple cuts of quarter-inch-thick hot-roll,” Gedeon says. He doesn’t expect the company to move on this upgrade for another two to three years, however.

Looking forward, the Gedeon brothers say they will be content if they can maintain the same steady progress they’ve enjoyed since their father put them in charge of the family business. They have no grand plans for major mergers or acquisitions.

“We don’t want to be a $500 million service center and we don’t want to grow through adding new locations. We enjoy what we do, and we’re just going to stay the course,” Paul says.