7-2009 Case Study: Alliance Steel
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Spotting the Gaps

Despite the poor economy, Alliance Steel has gained market share by wooing sales “rock stars” and filling “gaps” in the shifting service center landscape.

By Myra Pinkham, Managing Editor


Andy Gross, president of Alliance Steel in Bedford Park, Ill., seems to be one of the few industry executives with anything positive to say about the steel market these days. His service center on Chicago’s South Side, which specializes in cold-rolled and coated steels, remains in a growth mode despite the woeful economy.

“We are crazy busy. We have been since January,” says Gross of his Chicago operation. He estimates his business is up 7 to 8 percent in the northern U.S., though it’s down 15 to 18 percent in the South. Alliance projects total revenues over $75 million for 2009.

QUICK FACTS

Alliance Steel
6499 W. 66th Place
Bedford Park, IL 60638
Phone: 708-924-1200
Fax: 708-924-0200
Website: www.alliancesteel.net

Atlanta Offices
125 Town Park Drive
Suite #250
Kennesaw, GA 30144
Phone: 770-422-0272
Fax: 770-422-0977

Key Personnel: Andrew Gross, president; Jim Gerth, executive vice president-commercial; Tony Villasenor, vice president of Chicago operations; Mike Garvey, chief financial officer

Total Employees: 50

Market Area: Eastern U.S.

Facilities: One temperature-controlled 80,000-square-foot warehouse; five overhead cranes with 20- to 75-ton capacity; inbound/outbound rail service; two drive-through bays, two recessed docks; Atlanta sales office.

Products: Hot-rolled/P&O, cold-rolled, hot-dipped galvanized, electrogalvanized, galvannealed, aluminized.
Equipment: Braner 72-inch triple turret head slitter with precision cluster leveler, handles 60,000-pounds coils from gauge 0.010 to 0.250 inch; Cincinnati 60-inch slitter with Herr-Voss leveler, handles 45,000-pound coils from gauge 0.015 to 0.160 inch; ProEco 18-inch slitter with 10,000-pound capacity, handles gauge 0.010 to 0.115 inch; custom coil degreasing/brushing line.
Gross has been in the steel industry for over 30 years. He bought Alliance in 1997 and moved the company south from its Des Plaines, Ill., location. As he had done his whole career, he hopped from deal to deal, brokering primary and secondary material and serving largely as a master distributor to other service centers. “Then, as I saw the landscape of the industry change, I thought, we’re not going to survive with arbitrage,” Gross recalls. “We have to change into a full-blown service center, because if we don’t, we’re going to die.”

Today, Alliance operates from an 80,000-square-foot warehouse that houses three slitting lines and a coil cleaning line, plus an inventory of 15,000 to 20,000 tons of flat-roll. It employs about 50, including those at its Atlanta sales office. While the company has experienced some natural attrition, it has not laid anyone off, Gross says proudly.

In fact, Alliance has been in a continuous expansion mode since 2004. Its biggest investment went toward the purchase of a new Braner slitting line that began production in January 2008. The new technology, with a triple turret head that allows for quick changeovers, brought valuable efficiencies to Alliance’s operations. “We doubled the output in one shift by putting in this new line,” Gross notes.

More recently, the company added 6,000 square feet of new office space and is planning an upgrade of its computer system, opting for an on-demand version of Steelman software.

Unlike larger competitors, Alliance has a nimbleness that is an asset in these troubled times, Gross maintains, giving him the vantage point to spot gaps in the market created by the shakeout of weaker players. Key to Alliance’s recent success has been the ability to woo “rock stars” to the company’s sales team. Alliance has added five salespeople in the past year and a half and hopes to hire more in the coming year.

“That has become our strength. I only hire sales pros that are known for their talent,” Gross says. “I’ve bought in a bunch of top-notch guys who have a big following. They have increased our opportunity to supply other industries, and that has really helped us.”

“Our model is to increase our coverage,” concurs Jim Gerth, executive vice president-commercial, noting that Alliance continues to win market share from competitors. “We are increasing opportunities for ourselves through new customers.”

As a leader, Gross has no tolerance for negativity. He expects his salespeople to work hard and turn over every stone, but also to enjoy themselves. “I have told my guys, don’t talk to people with your hands in your pockets and your eyes are on your shoes. Let’s keep it positive. You receive what you believe!”

By expanding its sales coverage, Alliance has expanded its customer base, which now includes companies in the transportation, electronics, store fixture and appliance markets, among others.

Gross and Gerth feel fortunate that, unlike many competitors, Alliance is not dependent on orders from domestic automotive suppliers. “However, we will support some transplant business,” he says, looking to the future. “That’s the only business the banks will support right now, too.”

The relationships Alliance has developed with the shrinking universe of steel suppliers are as—and perhaps even more—important than its relationships with customers, Gross asserts. When demand improves and supplies tighten up, the ability to get material will be crucial. “I have expanded my relationships with all the domestic mills. From AK Steel to Mittal Steel to U.S. Steel, we are making sure we are in front of these guys and they know who we are.” It helps that Alliance has continued to buy steel while many competitors have cut way back, he adds.

His company’s results are not all the product of salesmanship. Gross says he has felt a shift in the market. “There has clearly been a change in the last few weeks. We’ve seen a definite increase in activity on an inquiry level from our customers.” Other signs of recovery are the price increases widely expected from steel producers, he adds. Lead times from the mills have already stretched out to two months or more.

Alliance’s experienced and cooperative management team gives it the ability to make good decisions more quickly than other companies, says Gross, who believes in management by consensus. “We do everything by a vote. There are very few decisions that are not made as a group.”

“Our greatest asset is our sense of urgency,” says Gerth “We take pride in what we do, and we want to be the best at it. We want to be our customers’ first call, and you do that through hard work and determination.”

“I’m really proud of the people here,” concludes Gross. “They drank the juice. They believe in this. They have pride in Alliance Steel, and it has really helped us in troubled times.”

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