For the first 10 years of its existence, Flatrolled Steel Inc. was a service center without a service center.

Mike Bollman formed the Houston-based metals marketer in 1995 after his previous employer opted to trim its product line and specialize exclusively in the distribution of hot-rolled coils. Spotting the resulting void in the marketplace, and at the urging of long-standing customers, Bollman saw an opportunity to set up his own “virtual” distributorship.

“Our customers asked us to continue to handle their business after my former company got out of the products they stocked: cold-rolled, pickled and oiled, and galvanized. So we started Flatrolled Steel,” says Bollman, the company’s managing general partner.

With commitments from some of those long-time accounts, Bollman launched the company with just a sales office—and the aid of various toll processors. “We had inventory, so we weren’t brokers. We just stored our inventory at many different toll processors around the 10-state area we cover. But we didn’t have any facilities or equipment of our own.”

In the past two years, the company’s business model has changed dramatically, taking on a more traditional look. Flatrolled Steel opened its first physical service center in 2004 in Grand Prairie, Texas, a Dallas suburb. In 2005, the company relocated its headquarters to Houston after purchasing an office/warehouse facility from another steel company.

The Grand Prairie service center houses a 10-gauge, 60-inch-wide Herr-Voss leveler, plus a roof-panel roll former. But it’s the line the company installed at its 150,000-square-foot service center in Houston that sets it apart.

In August 2005, Flatrolled Steel ordered a new Red Bud multi-blanking line with a Herr-Voss leveler. Bollman wasn’t looking for an ordinary line, though, but rather one that would distinguish Flatrolled Steel from competitors.

The new line now in production handles cold-rolled, galvanized and prepainted coils up to 60,000 pounds, from 0.012 to 0.135 inch thick, at line speeds up to 400 feet per minute. Making it truly unusual, the line has the ability to recoil a side cut off a multi-blanking order. “If someone called and wanted 20 x 80 inch blanks, you’d put two 20s side by side, and with the edge trim that would give you 7 1/2 inches of drop,” Bollman explains. “Our competitors have to scrap that drop. The likelihood of marrying up another order of the exact same length would be next to impossible.”

Flatrolled Steel, in contrast, can recoil that extra 7 1/2 inches, return it to inventory and slit it to narrower mults later. “That gives us about a 16 percent advantage over our competitors, because we don’t have to scrap it,” Bollman says.

Another feature of the new equipment is a gamma ray gauge readout system that provides continuous feedback on material specifications as it passes down the line. Using two inspection tables, operators check cut blanks for flatness, squareness, length tolerance and camber.

“All of these features are networked into our system so we can give customers ISO printouts when they get material off our line,” Bollman says.

Flatrolled Steel approached five or six equipment manufacturers about acquiring a line that would provide the recoil ability on the drop cut. At Red Bud, they found a receptive audience.

“We worked with their engineers to develop this product,” Bollman says. “We told them what we wanted and they helped design it.”

Dean Linders, vice president of marketing at Red Bud Industries in Red Bud, Ill., recalls that Bollman had a specific idea of what he wanted the machine to do and what services he wanted to offer his customers. “His goal was not to just catch up with the Joneses,” Linders says. “He wanted a machine that would exceed the capabilities and capacity of anything else in his area.”

The line, which was installed in September, has met expectations thus far. “We have cut the light side, the maximum thickness, small blanks and maximum widths. We’ve been able to get good products out of the extremes the machine is designed to produce,” Bollman says.

The move to a more conventional service center structure, with its own inventory at hand, has paid off for the company. Flatrolled Steel supplies galvanized, galvannealed, hot-rolled, hot-rolled P&O, floor plate, cold-rolled and pre-painted materials to the construction, HVAC, truck-trailer, computer, electrical and other markets in the South. Its sales revenues for 2006, projected at $60 million, will represent a 60 percent increase over last year, and the company anticipates similar growth in 2007.

While trading the toll processors’ storage charges for the cost of operating its own warehouses, the move has given the company a greater sense of control over its material, Bollman says. That control is supported by the company’s logistics options. Flatrolled Steel maintains its own trucks, and has rail sidings at both facilities for receipt of steel from foreign and domestic mills. Bollman tries to order most steel in barge quantities, given the company’s proximity to the Port of Houston. “The ability to buy steel at a good price so we can pass along those savings to our customers has been an important part of our business,” he says.

Since its outset, the company has striven to be a low-cost provider. For 10 years, it employed only salespeople, and even the addition of warehouses hasn’t changed that sales-first mindset.

“We had a lean operation when we were just a sales office. What we tried to do was carry over that same business formula into our physical plant and equipment,” he says. “For the most part, we have continued trying to accomplish more sales per employee than our competition.”

The emphasis on low overhead allows the company to plow money back into facilities, equipment and inventory. Carrying a larger inventory than many, Flatrolled Steel often gets orders from service centers. Bollman estimates that 5 percent of his company’s sales go to other distributors.

“This has helped us to grow. We’ve had steel when other people needed it, especially in 2004 and early 2006 when material was short in the market,” he says.