2007 Service Center News

Harbinger Capital Calls
for New Ryerson Board
Harbinger Capital Partners, a minority shareholder in Ryerson Inc., has nominated seven independent directors to replace the company’s existing board. Harbinger hopes to seat its board at the company’s 2007 annual meeting, scheduled for May 11.

Harbinger says it has become increasingly concerned that Ryerson’s board of directors and senior management have demonstrated a lack of focus on profitability and management of inventory, and that the current board has not fulfilled its responsibility to enhance shareholder value. A release from Harbinger claimed the current board lacks the necessary experience in the metals service center industry and has provided insufficient oversight of the company’s management team.

Among the seven director candidates proposed by Harbinger is Larry J. Liebovich, the retired president of Liebovich Steel & Aluminum Co., Rockford, Ill. Liebovich was a 20-year board member of the Metals Service Center Institute and the founding chairman of the North American Steel Alliance.

“This company has consistently underperformed, and there is a need for a significant change at the board level,” says Larry Clark, managing director of Harbinger Capital Partners. “Our seven nominees are experienced and independent and, once elected, will work to deliver value to all shareholders.”

Harbinger owns a 9.7 percent stake in the Chicago-based service center company, the country’s largest in 2006.

“Ryerson’s long-term strategy to simultaneously improve cost structure and productivity and expand its customer base while remaining a leader in a consolidating industry is the right one,” Clark says. “However, we believe the company’s performance over time demonstrates that the current management team has failed to execute on this strategy and requires better counsel—and we are taking this important step to provide it.”

Harbinger officials point to Ryerson’s operating margins since 1995, which have averaged 3.4 percent, less than half of the metal service center and processor average of 8.0 percent. The company’s below average inventory turns and a 4.5 percent average return on invested capital, below the industry average of 10 percent, were also cited as evidence of the company’s underperformance.

Ryerson officials have acknowledged receipt of the notice from Harbinger and say it has been forwarded to the nominating and governance committee of the board of directors for review.

Other metals executives among Harbinger’s nominees are Daniel W. Dienst, president, CEO and chairman of the board of metal recycler Metal Management Inc.; and Gerald Morris, president and CEO of Inalite International N.V., a holding company with investments in the metals fabrication industry.

The other proposed board of director nominees include Keith Butler, owner of BCS Placements LLC; Eugene I. Davis, chairman and CEO of Pirinate Consulting Group; Richard Kochersperger, director of the Food Marketing Group; and Allen Richie, a private investor and former chief financial officer of Protective Life Corp.

Samuel Purchases EMG from ESCO Corp.
Samuel, Son & Co. Inc., Mississauga, Ont., will acquire Engineered Metals Group from ESCO Corp., Portland, Ore. EMG is a distributor of stainless steel with facilities in Los Angeles, Portland, Denver and Hayward, Calif.

A transition is under way to separate EMG from ESCO and establish it as a standalone company with a new name and brand image.

Company executives described EMG as a strong platform for future growth. “We are excited about the opportunities this purchase of EMG presents as it opens up new opportunities in the western U.S. and provides the basis of further growth for the company and its people,” says Chairman Mark Samuel. “Both Samuel, Son & Co. and ESCO are privately held, family oriented businesses that share similar beliefs, values, cultures and long, proud histories.”

As with its recent divestment of the Integrated Manufacturing Group, ESCO executives say they divested the EMG business in order to focus ESCO’s resources on the company’s core casting businesses of Engineered Products and Turbine Technologies Groups.

“ESCO’s strategy is aimed at taking advantage of the continued, global growth in the mining, construction, aerospace and industrial gas turbine markets,” says Steven D. Pratt, ESCO chairman and CEO. “This sale positions ESCO to achieve focused growth and aggressively pursue these markets, while placing EMG with a firm for which engineered metals are part of a long-term priority.”

Terms of the transaction were not disclosed.

Mi-Tech Takes Over MASCI,
Plans New Processing Center
Mi-Tech Steel Inc., Louisville, Ky., has agreed to purchase 100 percent of the stock in Mitsui Auto Steel Canada Inc. from Mitsui & Co. Ltd. and Mitsui & Co. Canada. Terms of the acquisition were not disclosed.

MASCI currently operates a steel processing facility in Cambridge, Ontario. Following completion of the purchase next month, Mi-Tech Steel intends to proceed with a follow-on investment of approximately $12 million U.S. dollars to construct a new steel processing operation in Woodstock, Ontario.

The company plans to build an 80,000-square-foot operation that will have slitting capabilities from 0.015 to 0.250 thickness and up to 72 inches in width. The new facility is expected to be operational in mid-2008.

Mi-Tech Steel is a joint venture between Steel Technologies Inc. and Mitsui Steel Holdings Inc., a U.S. subsidiary of Mitsui & Co. Ltd., Tokyo.

“Mi-Tech Steel is very excited about the opportunities that the purchase of MASCI and our follow-on investment in Woodstock present,” says Stuart N. Ray, president and chief operating officer of Mi-Tech Steel. “We will have a great platform from which to serve our Canadian customers.”

MD Metals Reconditions
Old Slitter for New Building
A 1950s slitter is helping MD Metals expand its capabilities in the heavy-gauge, narrow-slitting and edging market.

The 50-year-old Lee Wilson slitter, which could only handle 32-inch-wide coils, had outgrown its usefulness at Acme Steel. But MD Metals owner Michael Dallek saw potential where others saw scrap.

“It was a bull slitter that could be reconditioned and brought back from the dead to be used in a business with a different kind of business model,” says Dallek. “Bull slitters with this kind of capability are not readily available, so when I saw this I had the vision of reconditioning and upgrading the line.”

With assistance from A & B Manufactur-ing, Dallek upgraded the slitter, adding a 60-horsepower feed motor and a 150-horsepower recoiler. He also reconditioned each component of the line and added new electronics to create a viable, efficient slitting line.

The slitter is now the centerpiece of operations at MD Metals’ new 20,000-square-foot facility in Chicago. It can take up to four cuts of 3/8th-inch high-strength, high-carbon or alloy grade steel. The company has slit 0.312-inch 1070 material to 1.625-inches wide. “Perfectly straight,” Dallek adds.

The heavy gauge slitting line is complementing other slitters at the operation because it can be used to break down bigger coils to narrower multiples for further reslitting on other lines.

MD Metals maintains three slitters and two Tishken edge conditioners and hopes to capture a segment of the heavy-gauge market.

“In this new facility, we’re now prepared to assist other warehouses and end-users on a larger scale,” Dallek says.

TK Services Acquires Alcoa Aerospace Unit
ThyssenKrupp Services is expanding its materials service business for the aerospace industry through the purchase of Alcoa’s Aerospace Service Business. Alcoa’s business provides high-grade value-added processing services for aircraft manufacturers.

The Alcoa business will be integrated into ThyssenKrupp subsidiaries in the United States, the United Kingdom and Germany.

In North America, through its subsidiary ThyssenKrupp Materials NA Inc., ThyssenKrupp Services acquired aluminum inventories and longstanding service and supply contracts with original equipment manufacturers and tier one suppliers to the aerospace industry, including Cessna, Bombardier and Vought Aircraft. The acquired contracts include advanced processing of aluminum plate and sheet products, such as sawing, shearing, sheet leveling, drill-and-tap and first-stage machining. The contracts will be serviced out of the facilities of ThyssenKrupp Materials NA’s TMX Aerospace Division in the U.S. and Canada.

“We are extremely excited about the new opportunities this acquisition brings to ThyssenKrupp Materials NA, as it further diversifies the customer base for our integrated supply chain management programs and allows us to bring an expanded range of services to our existing customers in the aerospace sector,” says Richard J. Greaves, president and chief operating officer of ThyssenKrupp Materials NA.

Alro Metals Buys St. Petersburg Steel
Alro Metals Service Center Corp., Jackson, Miss., has acquired St. Petersburg Steel Corp., Clearwater, Fla. The company name will be changed to St. Petersburg Steel Alro.

St. Petersburg Steel has been a leading distributor in the Florida market for many years, specializing in tool steel products, according to company officials. The Alro and St. Petersburg offerings will include an expanded range of carbon steel, aluminum, stainless, copper, brass, bronze, cast iron, tool steel, plastics and industrial supplies.

Sunbelt-Turret Expands into Ohio, Texas
Sunbelt-Turret Steel Co., Charlotte, N.C., has announced expansions into Houston and Warren, Ohio, beginning in the first quarter. Sunbelt-Turret, a sister company of Turret Steel Industries, is a warehousing distributor of carbon and alloy hot-rolled, as well as forged, rough-turned bars.

Both new locations will stock bars up to 26-inch round and maintain multiple saws capable of cutting them, as is currently done in the Charlotte operation. The inventory will include both annealed and heat-treated products.

“We are confident that our large steel inventory and state-of-the-art cutting equipment will open many doors for us in these new locations,” says Sunbelt Steel President Wayne Gould. “Our current facility already maintains one of the largest inventories of forged bars in the country. We believe that our ability to turn orders around within 24 hours, often same-day, will continue to make us a valuable supplier.”

Jake Klein, son of Sunbelt Steel co-founder John Klein, will head the new Houston operation.

Reliance Adds Encore Group, Industrial Metals and Surplus
To its Growing Service Center Chain
Los Angeles-based Reliance Steel & Aluminum Co. completed 2006 much the same way it started the year, by expanding through acquisition.

Reliance reached an agreement to acquire Canada’s Encore Group of metals service center companies, which includes Encore Metals, Encore Metals USA, Encore Coils and Team Tube. Encore, Edmonton, Alberta, was organized in 2004 in connection with the buyout by management and a private equity fund managed by HSBC Capital Canada Inc. of former Corus CIC and Corus America businesses. The company specializes in the processing and distribution of alloy and carbon bar and tube, as well as stainless steel sheet, plate and bar, and carbon steel flat-rolled products, through its 17 facilities.

Encore’s net sales for the 12 months ended Dec. 31, 2005, were $254.8 million (Canadian).

Earlier in the month, Reliance purchased Industrial Metals and Surplus Inc., Atlanta, and related company Athens Steel Inc., Athens, Ga.

Industrial Metals specializes in the processing and distribution of carbon steel structurals, flat-rolled and ornamental iron products. Industrial Metals’ net sales for the 2005 fiscal year were approximately $72 million.

The management teams of Encore, Industrial Metals and Athens Steel are expected to remain in place, according to Reliance officials. The transactions will be finalized during the first quarter.

Briefs
Bob Mraz, TW Metals vice president of sales and marketing, was named a finalist in the “Global Sales Leader of the Year” category of the 2006 Selling Power Sales Excellence Awards. The new awards are jointly presented by Selling Power magazine and The Stevie Awards, hailed as “the business world’s own Oscars.” It was no surprise to Jack Elrod, president and CEO of TW Metals, that Mraz was a finalist for such a prestigious award. “Bob has been instrumental in making TW Metals the best global service center in the industry,” he says. “Bob’s leadership converted 23 diverse branch sales processes into a single, company-wide process, creating a more unified, results-oriented, proactive culture within the sales organization. He led the company up the value chain within our major customer’s globalization efforts, resulting in major global long-term agreements. He also is responsible for leading the largest sale in TW Metals’ history.”

Steel Technologies de México S.A. de C. V. has purchased a 0.187-inch slitting line from Red Bud Industries to be installed at its newly constructed service center in Ciudad Juarez, Mexico. The line will be capable of processing 72-inch wide coils at weights up to 60,000 pounds and consists of a coil stage and load system, uncoiler, peeler breaker, entry crop shear, two packed arbor slitting heads, scrap winder, tension system, leveler, exit crop shear, dual turret recoiler, coil lift, turnstile and packaging line.

Industrias Montrerrey S.A. de C.V., a subsidiary of Grupo IMSA in Monterrey Nuevo Leon Mexico, has recently purchased a multi-blanking line from Herr-Voss Stamco for expansion of the capacity at its service centers. The new line is capable of processing 0.075-inch-thick, 60-inch-wide coils weighing up to 55,000 pounds at production speeds up to 250 feet per minute. The line is designed with two interchangeable precision slitter heads for the cold-rolled steel, pre-painted, HSLA and zinc-coated steel that will be processed on this multi-blanking line.

Machine Concepts Inc., Minster Ohio, reports a record year in leveler and straightener sales in 2006, with 16 units delivered and orders for 17 new units booked during the period. Six of these units incorporate the company’s patented AutoFlat closed-loop shape control system. Recent new product developments at the company include: part straighteners, pressroom straighteners with roll bending, basic noncassette levelers, and a new lower-cost version of AutoFlat.

Keystone Specialty Metals has installed a new heavy plate edging line at its Bensalem, Pa., headquarters. Keystone now has six flat-roll processing lines, including three light-gauge and three heavy-gauge. The new line increases Keystone’s production capacity by 14 percent, says Scott Fine, Keystone vice president.

Vulcanium Metals Inc., Northbrook, Ill., has been registered to AS9100:2004 through November 2009. This upgrade to VMI’s ISO registration, originally issued in March 2001, covers the distribution of commercially pure and alloy metals, specializing in titanium, to the aerospace and commercial markets.

Raco Steel Co., is expanding blanking capabilities at its Markham, Ill., location with a new 10-gauge Red Bud multi-blanking line, scheduled to be installed in the summer. The 72-inch-wide, 0.135-inch multi-blanking line will handle coils up to 50,000 pounds. The line will consist of a coil stage and load system, uncoiler, peeler, crop shear, pop-up flatness inspection table, motorized grip feed system, CNC programmable slitter, shear mounted stacker with drop stack-air flotation system, part diverter, and auto strip stacker.

People
Tom Compton retired as president of Precision Strip, effective Dec. 31. He has been replaced by Joe Wolf, who had been vice president of operations at Precision Strip, a subsidiary of Reliance Steel & Aluminum Co. Compton will remain chairman of the board.

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

Company founder and chairman Russ Maier has assumed the role of CEO of Michigan Seamless Tube LLC, South Lyon, Mich., following the resignation of Mike Rinker. Additionally, Kathleen Maier has been named senior vice president.

Chris Custer has been appointed operations manager for McNichols Co., Tampa, Fla. Custer will be responsible for daily warehouse activities, including staff supervision, inventory control, on-time delivery of product and a full line of fabrication services and equipment.

Todd Casper has joined Ranger Steel as a sales representative at its Tulsa, Okla., distribution center. Casper had been in outside sales for 10 years with Macsteel Service Centers USA.