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9-2010 From the Editor
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Top 50, MSCI Data Show Positive Signs

By Tim Triplett, Editor-in-Chief
For many service center operators, regardless of how long they’ve been in the business, 2009 was a career-worst year. The good news is that, on a percentage basis at least, 2010 could be among the best.

Results from MCN’s latest Top 50 Service Centers survey show that the industry’s Top 10 remained largely unchanged, with Reliance Steel & Aluminum in the top spot once again. Ryerson slid from its normal second-place slot to third behind McJunkin Red Man Corp. Rounding out the Top 10 were: ThyssenKrupp Materials NA, Samuel, Son & Co. Ltd., Russel Metals, O’Neal Steel, Macsteel Service Centers USA and Namasco Corp., and Steel Technologies.

Data from MCN’s poll suggest that the largest, most successful companies were no more immune to the effects of the recession than their smaller competitors, as the Top 50’s combined revenues declined by nearly 37 percent, to $38.4 billion in 2009 from $60.6 billion in 2008.

The magnitude of that decline is corroborated by industry shipment data. The Metals Service Center Institute reports that steel shipments by U.S. service centers dropped by 36.8 percent in 2009, while aluminum shipments were off by 38.4 percent.

But other findings indicate the worst may be over. For example, manpower reductions appear to have largely run their course. According to MCN data, service centers slashed their workforces by an average of nearly 14 percent in the 2008-09 timeframe in response to their dwindling sales. In the past year, the cuts continued, but by less than 4 percent. With MSCI reporting that first-half 2010 steel shipments were up over 19 percent and aluminum shipments were up over 17 percent, most service centers should be back in a hiring mode.

In addition, the Top 50 service centers now operate a little over 1,400 stocking locations, about the same number as reported to MCN last year, which suggests that rationalization of facilities is over as well.

Along with the rebounding shipments is a rebounding sense of optimism as the Top 50 are projecting an average increase of 25 percent in 2010 revenues, albeit from 2009’s depressed levels. That would surely be among the best annual percentage gains for most companies and would get Top 50 sales back up to 2005-06 levels. To regain the 2008 peak of more than $60 billion in combined revenues will take another 25 percent jump, however. Realistically, that may take a few years and will depend on metals prices. But the trend, finally, is in the right direction.

  
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