MCN Top 50 Service Center Industry Giants
In its annual survey, Metal Center News ranks the largest, most successful service centers in North America.
Combined revenues among the industry’s Top 50 service center companies actually grew around 5 percent in 2008, though industry executives are forecasting declines averaging 20 percent in 2009. The Top 50’s revenues totaled $60.6 billion in 2008, up from $57.5 billion in 2007.
The results of the latest Metal Center News Top 50 survey appear to suggest that the first three quarters of 2008 were strong enough to offset the disastrous fourth quarter when the economy took its historic nosedive. The current Top 50 range from over $8 billion in annual revenues down to $170 million, including 19 companies that took in a billion dollars or more in 2008.
MCN polled the industry’s largest players in July and August and ranked them based on total revenues from their last full fiscal year, calendar year 2008. Los Angeles-based Reliance Steel & Aluminum Co. widened its lead as the industry’s largest competitor with $8.72 billion in 2008 revenues, up from $7.25 billion the previous year. Ryerson Inc. of Chicago ranked second with $5.3 billion in total sales, down from around $6.0 billion in 2007.
Rounding out the Top 10, in order, were: McJunkin Red Man Corp., $4 billion; Samuel, Son & Co. Ltd., $3.22 billion; Russel Metals, $3.16 billion; O’Neal Steel, $2.92 billion; ThyssenKrupp Materials North America, $2.9 billion; Macsteel Service Centers USA, $2.2 billion; Metals USA, $2.16 billion; and Namasco, $1.86 billion.
The only notable changes in the Top 10 are Carpenter Technology, which dropped from No. 8 last year to No. 13 this year, and ThyssenKrupp Materials NA, which dropped from No 4 to No. 7. Replacing Carpenter in the Top 10 is Namasco Corp., moving up from the No. 11 spot.
Despite the weakening market conditions as the year went on, a few companies even managed to make up some ground on the competition. Significantly improving their rankings were: Steel Warehouse, Cargill Steel Service Centers, EdgenMurray, McNeilus Steel, Contractors Steel, Lapham-Hickey Steel, Triad Metals and Magic Steel Sales.
New to MCN’s Top 50 this year are Coilplus, Liberty Steel, and Cambridge-Lee Industries. Since their acquisition by Russian producer Severstal in August 2008, Esmark and its sister companies now go to market as the Northern Steel Group Inc., ranked No. 25.
The Top 50 command an estimated 40 percent share of the metals market in the United States and Canada—perhaps even more considering their combined revenues grew while the market was shrinking.
In the aggregate, this year’s Top 50 now operate less than 1,400 stocking locations, down about 7 percent from the 1,500 reported last year. In total, their warehouses include about 120 million square feet of storage and processing space, down about 10 percent from last year’s 134 million square feet. The Top 50 companies in the service center industry employ a combined workforce numbering around 56,000 today, down nearly 14 percent from the 65,000 on the job in 2008.
Steel shipments by all U.S. service centers declined by 10.6 percent in 2008, according to the Metals Service Center Institute, Rolling Meadows, Ill. Likewise, shipments of aluminum products from U.S. service centers slipped by 9.3 percent. Canadian shipments of both metals saw similar declines. Total sales by the Top 50 could have been expected to decline. However, service center revenues also are a function of metals prices, which peaked at surprisingly high levels at mid-year before plummeting in the fourth quarter.
Because MCN polls companies each summer, respondents are also asked to forecast their expectations for the remainder of the current year. Based on mid-year 2009 predictions by leading service centers, MCN forecasts that aggregate revenues for the Top 50 will decrease by at least 20 percent this year, the result of lower metals prices and woeful demand in a recessionary economy that most likely won’t recover until well into 2010.
Service Center Top 10 Profiles
No. 1 Reliance Steel & Aluminum Co., Los Angeles—Reliance expanded its lead as the largest service center company in North America with the $1.1 billion purchase of the PNA Group last August. PNA’s volume raised Reliance revenues to $8.7 billion in 2008, up from $7.256 billion in 2007, $5.743 billion in 2006 and more than double what it took in just four years ago. However, the timing of the PNA deal, just prior to the market slump, caused Reliance to report its first unprofitable quarter since 1975 in the second quarter of this year.
No. 2 Ryerson Inc., Chicago—Ryerson’s revenues declined a bit in 2008 due to its spinoff of the PNA Group to Reliance and the weak economy late in the year. The company reported $5.3 billion in total 2008 sales, down from around $6.0 billion in 2007 and $5.9 billion in 2006. Owned by the Platinum Equity investment group, Ryerson had been in a restructuring and cost-cutting mode for the last couple of years. More recently it has announced new strategic initiatives, including additional service center locations in Utah and Texas, and acquisition of a controlling stake in the VSC-Ryerson joint venture in China.
No. 3 McJunkin Red Man Corp., Charleston, W. Va./Tulsa, Okla.—McJunkin Red Man Corp. reported $4.0 billion in 2008 revenues, up from $3.8 billion in 2007. Created by the merger of McJunkin and Red Man Pipe and Supply in November 2007, the company claims to be the largest North American distributor of industrial pipe, valves, fittings and related products and services to the energy industry. McJunkin was ranked No. 11 in MCN’s 2006 survey before the merger with Red Man.
No. 4 Samuel, Son & Co. Ltd., Mississauga, Ont.—Moving up from No. 5 last year is Canada’s Samuel, with $3.22 billion in 2008 revenues, up slightly from $3.15 billion in 2007 and significantly from $2.7 billion in 2006. The family-owned company has worked to expand its geographic reach on both sides of the border. Last year it purchased Namasco’s Canadian operations, and earlier this year it acquired facilities in New York and Rhode Island from Novamerican Steel.
No. 5 Russel Metals, Mississauga, Ont.—Also moving up a notch to the No. 5 spot in the ranking is Canada’s Russel Metals. Russel finished 2008 with about $3.16 billion in revenues, up from $2.56 billion in 2007 and $2.69 billion in 2006. Like Samuel, Russel sees growth opportunity in the United States. In November 2008 it acquired Norton Metal Products in Fort Worth, Texas. Bud Siegel, the outspoken leader of the company since 1997, retired this spring and was replaced as president and CEO by Brian Hedges, who was promoted from his position as executive vice president and COO.
No. 6 O’Neal Steel, Birmingham, Ala.—The largest family owned service center in the United States (not counting Samuel, which is based in Canada), O’Neal moves up from the No. 7 spot last year with $2.92 billion in 2008 revenues. The company reported revenues of $2.4 billion in 2007 and $2.3 billion in 2006. The O’Neal family of companies includes: O’Neal Steel, Aerodyne Alloys, Leeco Steel, Metalwest, Supply Dynamics, TAD Metals, Timberline Steel, TW Metals and United Performance Metals. O’Neal’s High Performance Metals Group has found success by focusing on aerospace alloys and other high-margin specialty products. Most recently, its TW Metals subsidiary acquired Stainless Tubular Products, a Fairfield, N.J., distributor of stainless steel tubing, pipe and fittings.
No. 7 ThyssenKrupp Materials NA, Southfield, Mich.—The North American distribution arm of the German steel giant, ranked No. 4 last year, reported 2008 sales of $2.9 billion, down from $3.2 billion in 2007 and $3.18 billion in 2006. The company is focused on value-added processing and distribution of aluminum, copper, brass, specialty metals, steel and plastics products. Divisions include Copper and Brass Sales, AIN Plastics, OnlineMetals, Ken-Mac Metals, ThyssenKrupp Steel Services, ThyssenKrupp Aerospace, TMX Aerospace, ThyssenKrupp Hearn and TKX Logistics. Its parent company continues work on a new, $4 billion carbon and stainless mill in Mount Vernon, Ala., which is scheduled to begin production sometime in 2010 unless it is delayed due to the poor economy.
No. 8 Macsteel Service Centers USA, Newport Beach, Calif.—Macsteel USA, a division of South Africa’s Macsteel Holdings, moves up to the No. 8 spot with $2.2 billion in 2008 revenues, up from $1.9 billion in 2007 and $1.8 billion in 2006. Most recently, Macsteel opened a new 100,000-square-foot service center in Portland, Ore., to service the Northwest.
No. 9 Metals USA, Houston—With $2.16 billion in 2008 revenues, Metals USA moves up from the No. 10 spot last year. The company reported 2007 revenues of $1.845 billion, and $1.802 billion in 2006. It continues to expand through investment in new facilities and value-added processing capabilities. Its most recent acquisition was VR Laser, a processor of carbon plate products in Philadelphia, Pa.
No 10 Namasco Corp., Roswell, Ga.—Moving into the Top 10 from No. 11 last year is Namasco Corp. with $1.86 billion in 2008 revenues. Namasco, along with its subsidiaries Primary Steel and Temtco Steel, are owned by Europe’s Klockner & Co. SE Group. Klockner claims to be the largest independent distributor of steel and other metal products in the European and North American markets combined. It sold its Canadian Namasco service center operation to Samuel, Son & Co. Ltd. in July 2008.
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