MCN Top 50 Service Center Industry Giants
In its annual survey, Metal Center News ranks the largest, most successful service centers in North America.
By Tim Triplett, Editor-in-Chief
Combined revenues among the industry’s Top 50 service center companies jumped by over 20 percent in 2010 as the industry continued its recovery from the recessionary conditions of 2009. Based on their last full fiscal year’s results, the Top 50’s combined revenues totaled approximately $46.8 billion in 2010, up from $38.4 billion the previous year, according to the findings of the latest Metal Center News survey.
Because MCN polled companies this summer, with half the current fiscal year in the books, respondents were in a good position to forecast their expectations for the remainder of 2011. If their estimates for the second half prove accurate, the Top 50 will see their collective revenues grow by another 20 percent this year, to over $57 billion. That will still leave them more than 5 percent below their $60 billion peak in 2008, however, (see Top 50 Combined Revenues chart).
For its annual Top 50, MCN polled the industry’s largest players in July and August and ranked them based on total revenues for their last completed fiscal year, which for most was calendar year 2010. Los Angeles-based Reliance Steel & Aluminum expanded its lead on the field with $6.3 billion in 2010 revenues. Ryerson Inc. of Chicago took the No. 2 spot with nearly $3.9 billion, followed closely by Houston-based pipe and tube specialist McJunkin Red Man Corp. with $3.85 billion.
Rounding out the Top 10, in order, were: Kloeckner Metals (the recently merged Namasco and Macsteel), $2.5 billion; Samuel, Son & Co., Ltd., $2.49 billion; ThyssenKrupp Materials NA, $2.4 billion; Russel Metals, $2.1 billion; O’Neal Steel Inc., $1.94 billion; Carpenter Technology Corp., $1.7 billion; and Steel Technologies, $1.52 billion.
The current Top 50 range from over $6.3 billion in annual revenues down to $125 million, including 13 companies that took in a billion dollars or more in 2010. Combined, this year’s Top 50 now operate over 1,650 stocking locations totaling over 130 million square feet—up from 1,400 locations and 120 million square feet reported last year. These facilities are staffed by a workforce numbering about 57,000, up from the 54,000 employed last year. With sales on the increase, these figures suggest that the industry leaders are in an expansion mode.
Despite—or perhaps because of—the challenging economic conditions, merger activity continued at a slow pace in the past year. The most notable deal was the “merger of equals” between Namasco, Roswell, Ga., and Macsteel Service Centers USA, Newport Beach, Calif.
Namasco, the U.S. subsidiary of Germany’s Klöckner & Co. SE, and Macsteel USA, the U.S. subsidiary of Amsterdam’s Macsteel Global B.V., announced their plans to merge in the first quarter. Macsteel and Namasco were tied at No. 8 in last year’s Metal Center News Top 50 Service Centers ranking. The combined company, which plans to go to market as Kloeckner Metals, is ranked No. 4 in this year’s Top 50 with an estimated $2.5 billion in revenues. The company has a network of 60 locations that process and distribute a full range of flat-rolled, plate, tubing, pipe, bar and structurals in carbon, stainless, aluminum and specialty metals to customers throughout North America.
In June, Cleveland-based Olympic Steel acquired Chicago Tube & Iron Company, Romeoville, Ill., in a $156 million deal that combined one of the industry’s largest flat-rolled distributors with one of the industry’s largest tubular specialists. Both companies will continue to operate independently, while offering purchasing efficiencies and “one-stop shopping” to large customers seeking sheet, plate and tubing, say company officials.
Reliance Steel & Aluminum Co., Los Angeles, the industry’s most prolific acquirer, continued its growth track with the July purchase of Houston-based Continental Alloys & Services Inc., a distributor of high-end steel and alloy pipe, tube and bar products. Late last year, Reliance bought the capital stock of Lampros Steel Inc. and a related interest in Lampros Steel Plate Distribution LLC. Lampros Steel is a service center company specializing in structural steel shapes with a facility in Portland, Ore. Lampros Steel Plate Distribution owns a 50 percent interest in a partnership, LSI Plate, a distributor of carbon steel plate with locations in California and Oregon. Reliance’s latest purchases bring the industry leader to over 220 stocking locations.
Other notable transactions in the past year:
n Worthington Industries, Columbus, Ohio, entered into a joint venture with Marubeni-Itochu Steel America Inc. (MISA) to combine ClarkWestern Building Systems and Dietrich Metal Framing. As part of the transaction, Worthington took over MISA’s three service centers in Ohio and Tennessee.
n Ryerson Inc., the industry’s second largest service center operator, acquired Singer Steel, a full-service processor based in Streetsboro, Ohio. Ryerson now has over 100 stocking locations.
n Last fall, Fort Lauderdale, Fla.-based Metals USA purchased an affiliate of Eagle Steel Products, Inc., in Jeffersonville, Ind. Renamed Ohio River Metal Services, the location expanded Metals USA’s processing and distribution of both ferrous and nonferrous products in the Ohio Valley. In April, Metals USA acquired Richardson Trident Co., a Dallas-based nonferrous distributor, bringing the perennially aggressive acquirer to 60 locations.
n Samuel, Son & Co., Ltd., continued its expansion in the U.S. market with the acquisition of Basic Stainless Inc., a specialty metals distributor with locations in Minneapolis and Marshfield and Green Bay, Wis. The addition of Basic Stainless brings to seven the number of Samuel locations in the Midwest region.
n Earlier this year, Alro Steel Corp., Jackson Mich., acquired Anderson Metals’ three general-line service centers in York and Huntingdon Valley, Pa., and Greensboro, N.C. Alro topped the billion-dollar mark in 2010 revenues.
Despite the decades of consolidation and the hundreds of mergers that have taken place, the service center industry remains highly fragmented. The Top 50 combined still account for less than 40 percent of an estimated $120 billion service center market—suggesting that the merger trend has a long way to go. n
Service Center Top 10 Profiles
No. 1 Reliance Steel & Aluminum Co., Los Angeles—With over $6.3 billion in revenues last year—60 percent more than its closest competitor—Reliance continued to lead the industry. Since 1981, Reliance has made 74 acquisitions and now operates over 220 locations with more than 9,600 employees. As large as it is, Reliance only claims about a 6 percent share of the still highly fragmented service center industry.
No. 2 Ryerson Inc., Chicago—Ryerson’s revenues grew to $3.89 billion in 2010, up from about $3 billion the prior year. Like most service centers, the company remains below its peak of 2007, when it reported $6 billion in sales. Ryerson now runs about 100 stocking locations with over 4,000 employees. Owned by the Platinum Equity investment group, Ryerson decided not to proceed with a stock offering in spring 2010 due to unfavorable market conditions, but may go public at some point in the future.
No. 3 McJunkin Red Man Corp., Houston—McJunkin Red Man Corp. reported $3.85 billion in 2010 revenues, up from $3.66 billion in 2009. 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. It now operates 400 stocking locations manned by 3,000 employees primarily in the U.S. and Canada.
No. 4 Kloeckner Metals, Roswell, Ga.—Combining Namasco and Macsteel, Germany’s Klöckner & Co. created the industry’s fourth-largest general-line service center chain with $2.5 billion in revenue. (The Kloeckner name is an Americanized spelling.) Klöckner claims to be the largest producer-independent distributor of steel and nonferrous metal products in the European and North American markets combined, with about 250 locations in 15 countries.
No. 5 Samuel, Son & Co. Ltd., Mississauga, Ont.—While based in Canada, Samuel is a major player on both sides of the border, and most of its growth in recent years has been in the United States. One of the largest family-owned companies in North America, Samuel saw $2.5 billion in revenues in 2010, up from $1.96 billion in 2009, but still below its peak of $3.22 billion in 2008 when the Canadian and American economies were still booming. The company now operates 98 stocking locations with over 4,400 employees in the U.S and Canada, as well as Mexico, Australia, China and the United Kingdom.
No. 6 ThyssenKrupp Materials NA, Southfield, Mich.—The North American distribution arm of the German steel giant moves down from the No. 4 spot last year with $2.4 billion in 2010 sales, up from $2.1 billion in 2009. It currently operates 80 stocking locations manned by 3,000 employees. The company is focused on value-added processing and distribution of aluminum, copper, brass, specialty metals, steel and plastic products. Its parent company is now in full production at its new $4 billion carbon and stainless mill in Calvert, Ala.
No. 7 Russel Metals, Mississauga, Ont.—Dominating the Canadian market, along with Samuel, is Russel Metals, which finished 2010 with $2.11 billion in revenues, up from $1.73 billion in 2009. Russel carries on business in three distribution segments: metals service centers, energy tubular products and steel distributors. The company currently operates 70 locations with over 2,400 employees.
No. 8 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 reported revenues of $1.94 billion in 2010, up from $1.6 billion in 2009, but still shy of its pre-recession peak of $2.92 billion in 2008. O’Neal has been relatively quiet on the acquisition front of late; its most recent purchase was Denman & Davis more than a year and a half ago. The company now has over 90 locations with 3,300 employees.
No. 9 Carpenter Technology Corp., Wyomissing, Pa.—Carpenter is both a major producer and distributor of stainless steels, titanium and other specialty alloys. It reported $1.7 billion in revenue from the distribution portion of its business last year, up from $1.19 billion the year before. It has distribution locations on four continents: North America, South America, Europe and Asia.
No. 10 Steel Technologies, Louisville, Ky.—Rounding out the Top 10 is Steel Technologies, a major processor of flat-rolled steel, with $1.52 billion in 2010 sales, up from $1.19 billion in 2009. Its 20 facilities, with 1,400 employees, are located throughout the United States, Mexico and Canada. Steel Technologies is owned by NuMit, a joint venture between steelmaker Nucor Corp. and Mitsui & Co., a Japanese trading company. NuMit is designed to serve as a platform for expansion in the North American steel processing