“We’ve always expanded during downturns,” says Donald R. Simon, who founded the Livonia, Mich.-based company in 1960 with a truck, a crane and 25 tons of steel. “We expand when things are slow, to be ready when they pick up.”

The company recently completed a 35,000-square-foot expansion of its facility in Wyoming, Mich., near Grand Rapids. It’s planning another 20,000-square-foot addition for this year. The company also is adding 45,000 square feet to its Cleveland-area facility in Twinsburg, Ohio—another traditional manufacturing state that is suffering disproportionately from the economic slowdown.

Continually growing the business is part of what sustains Contractors Steel in a region where bankruptcies have become a sad reality. “Sometimes you have to get a little larger to keep up the rate of service the customers have become accustomed to,” says Robert Simon, Don’s son and the company’s chief financial and chief information officer.

The company already has added two new pieces of equipment this year—a 6,000-watt Tanaka laser cutter and a ROUNDO section bending machine—at its 430,000-square-foot depot in Belleville, Mich.

These equipment upgrades follow Contractors Steel’s late-2006, multimillion-dollar investment in a sophisticated KASTO automated storage and retrieval system, which streamlines the process of receiving, storing and shipping the company’s 2,000 bar products. The 50-foot-tall automated system, which took two years to implement, contains over 2,550 cassettes that can each hold up to 11,000 pounds. Utilizing the high-rise design of the building, the entire racking system can store up to 27.9 million pounds of material in less than 13,600 square feet of floor space.

When an order is placed into the system, an automated gantry crane locates the material and delivers its cassette to one of two order-filling stations. Linked to the company’s MRP system, KASTO software maintains a real-time record of each item as it moves in and out of stock, including a physical description, dimensions, weight, material heat information and reorder points. The system can pick and choose to optimize the existing inventory.

“It knows what’s in each rack. If you want 500 pieces, it goes to the bigger racks that have the most steel. If you want five pieces, it looks at its inventory and says, ‘I can pull it out this way and empty this one,’” Donald Simon explains.

Altogether, the KASTO system can pull up to 44 picks per hour, far exceeding what the company was able to handle using side loaders. “Most of the time, it’s waiting on us,” he says. “This is the epitome of sophistication on this type of equipment. All you do is tell the system how much you want, press a button and it goes after it.”

Contractors Steel considers its newer Belleville facility its main processing center and a key component of its value-adding strategy. At Belleville, the company offers flame cutting, plasma cutting, laser cutting, saw cutting, cambering of wide flange beams, grinding, leveling, shearing, and operates a 20-foot press brake. Belleville is also the company’s only plant with rail access, which works in tandem with the company’s 80-truck fleet to handle deliveries to customers and the other branches.

“We’re always expanding our processing,” Simon says. “We can probably do as much or more than 95 percent of other service centers.”

Belleville acts as a hub for the company’s other locations. “This is a supporting house for our other plants,” he says. “We do the major processing for the other plants here. We store around 50,000 tons here, while the other plants store 20,000 to 25,000 tons.”

When customers call with large orders, the Belleville facility has the equipment and inventory to handle them. The company’s other locations, with leaner inventories, primarily handle smaller just-in-time jobs and fulfill regular repeat orders.

As a true full-line steel distributor, there is little the company doesn’t carry. It offers plate up to 16 inches thick, coil up to 72 inches wide, 20,000 tons of tubing, beams in a complete array of sizes, plus a wide range of bars, angles and channels.

Ranked 39th in Metal Center News’ annual Service Center Top 50 with $251 million in 2006 revenue, Contractors Steel is something of a contrarian in a market where others are cutting inventory. “We probably have more inventory now than any other time in our history,” says Simon. “Our turns are a little slower, but we carry a lot of stuff other people don’t carry.”

Though automotive is not a major end-use market for Contractors Steel, virtually every other steel-consuming market is fair game. One area that Contractors’ Steel generally stays away from is toll processing. Despite a building filled with processing equipment, the company is not interested in “other people’s work.”

“We don’t have time for it. We run as long as we need to satisfy our other plants and our customers,” Simon says.

Confident that demand for its processing services will continue to grow, the company is looking to add even more equipment in the near future. “We know if we provide the service, we’ll get the customers,” he says.

It’s that same confidence that has the company looking for a new location, its first geographic expansion since adding the Twinsburg facility in 1986. The exact site has not been chosen, though Simon says it will also be in the Midwest.

“We’ll be expanding, hopefully in the next year, in our processing and with different locations,” he says.