Sept. 28, 2016

Nucor Acquires Independence Tube

Minimill steelmaker Nucor Corp., Charlotte, N.C., has agreed to buy Independence Tube Corp. (ITC), a leading manufacturer of steel tubing based in Chicago, for $435 million. Nucor will supply hot-rolled steel to ITC for production of hollow structural sections (HSS).

"Independence Tube is a natural fit with Nucor. Their business model is similar to ours with extremely efficient manufacturing facilities and a highly variable cost structure. Our companies' cultures are also similar, sharing a belief in continual improvement, operating efficiency and the value of our employees," says John Ferriola, Nucor chairman, CEO and president. "This acquisition is another important step in our long-term strategy to increase the number of value-added products we can offer our customers."

HSS is used in a broad array of structural and mechanical applications including nonresidential construction, infrastructure, and agricultural and construction equipment end-use markets. ITC has the second highest market share in HSS, selling its products primarily through service centers, which are also an important channel to market for Nucor. ITC is primarily a producer of HSS and does not focus on products for energy or other pipe and tube segments. The addition of ITC to Nucor's portfolio will allow Nucor to offer a wider selection of products to its fabricator and service center customers and strengthens the company's presence in the key nonresidential construction market, the company says.

“This is an exciting opportunity for the employees and customers of Independence Tube. Both Nucor and Independence Tube have a strong cultural compatibility, particularly the importance and focus each put on safety, quality, productivity and treating our employees fairly,” says Dave Grohne, founder and CEO of ITC.

Founded in 1972 in a 53,000-square-foot facility on the southwest side of Chicago, ITC has grown to 1.7 million square feet under roof with two manufacturing divisions in Illinois (Chicago and Marseilles) and two manufacturing divisions in Alabama (Decatur and Trinity) producing tube and pipe products to ASTM A500, ASTM A252, ASTM A53 and ASTM A135/A795 standards.

As part of the market initiative, Nucor will also install a large-diameter tube mill at a facility in Iuka, Miss. Adding large size HSS to ITC's already comprehensive product line will create the widest product offering in North America for HSS solutions, Nucor says.

Nucor claims it is North America's most comprehensive provider of steel solutions to the construction and infrastructure markets with leadership positions in plate, bar and structural steels, as well as joist, decking, metal buildings and rebar fabrication. The addition of HSS further differentiates Nucor from its steel competitors, the company says.

ITC’s four strategically located manufacturing facilities in Illinois and Alabama, with a workforce of 335 employees, annually produce about 600,000 tons of tubing from hot-rolled coil purchased from various suppliers. The tube maker’s plants are located near Nucor's sheet mills in Decatur, Ala.; Crawfordsville, Ind.; and Ghent, Ky.

Amy Bennett, a principal consultant for Metal Bulletin Research, believes the timing was good for the acquisition, and wouldn’t be surprised to see more of these types of combinations. “You’re guaranteeing a market for your material. That’s a smart strategy,” she says.

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Tuesday, October 24, 2017