Thanking You in Advance for Next Year’s Top 50
By Tim Triplett, Editor-in-Chief
Gathering data for this year’s Top 50 Service Centers ranking was even more challenging than in the past. Many owners of privately held companies are reluctant to share their revenue figure in a good year. Asking them to go public with it in a bad year is dicey. As I pointed out to several hesitant respondents: a receding tide lowers all boats. The economic downturn appears to be taking a comparable toll on most service centers.
In the aggregate, however, the Top 50 actually increased their total revenues for 2008, the last full fiscal year on which the ranking is based. Combined, the market leaders reported $60.6 billion in sales, up about 5 percent over 2007. Nineteen companies took in a billion dollars or more last year, up from 18 the year before. Obviously, industry revenues are a function of metals prices—which were relatively high for much of the year—and not just astute management. It seems like the market has been in a funk for a long time now, but the first three quarters of 2008 were actually fairly strong. It wasn’t until last year’s fourth quarter that the economy took its historic nosedive.
Beginning late last year, many companies began to economize. The Top 50 now operate about 1,400 stocking locations, down about 7 percent from the year before. Their combined total of 120 million square feet of warehousing and processing space is down about 10 percent. At 56,000 employees, their combined workforce is down nearly 14 percent.
Surprisingly, while many companies have closed facilities and downsized operations, the recession has not caused a major shakeout of service center businesses. Larger players are looking for acquisition opportunities, but say they are hard to find. Potential sellers may be hanging on until conditions are more favorable and they can get a better price. That suggests that M&A activity may heat up as the economy improves. As one executive said recently: “We’ve all had our confidence decimated. It will be awhile before anyone feels like placing a bet.”
The economy appears to be on the mend. It’s just a question of how long it takes to recover. I’m hoping that by this time next year, service center executives are once again feeling confident enough to respond to MCN’s Top 50 survey. After all, if some were reluctant to reveal revenues for 2008, a year with three good quarters, what will they say when MCN asks for 2009 figures, a year with at least three bad quarters?
Please remember, you’re all in the same boat. And thanks in advance for your cooperation.
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