AA Metals Grows As True Distributor
Orlando-based master distribution company adds value without competing with customers on processing
By Dan Markham
on Sep 21, 2018
Jack Cheng is putting his extensive educational background to use.
The founder of AA Metals in Orlando has an academic resume that’s tough to match in the metals distribution sector. Cheng earned a bachelor’s degree in nonferrous metals in his native China, then followed it up with a master’s degree in the continuous casting of steel and a Ph.D. in steelmaking.
He relocated to the states for more education, studying metallurgical engineering at the University of Kentucky, where he also received his MBA and a second Ph.D. in aluminum metallurgy. His educational pursuits allowed him to work with many of the leading aluminum makers, including the automotive side of the business with Aleris and can stock with Tri-Arrows.
“I spent all my time in school and never worked for any company before,” Cheng recalls.
That changed in 2003, when Cheng finally decided to put his many degrees and knowledge into practice. He opened AA Metals, securing aluminum extrusions from global producers and selling it into the domestic supply chain.
His original operation was run out of his home. “We bought and shipped metals from overseas, but we didn’t touch them. All I did was paperwork.”
The business expanded to cover sheets and coils in 2005. A year later, Cheng realized that the delays common with importing metal made deliveries more challenging. “I decided I needed inventory.”
A customer had some existing warehouse space in Orlando and Cheng relocated the business, now with stock, to Florida.
Since then, the growth has been tremendous. The company bought 13 acres of land and constructed a new a warehouse and office space in the city.
AA expanded by opening satellite facilities in Baltimore, Los Angeles and Chicago. The company began selling material in Europe, and is considering an operation in South America.
“We mainly distribute to Florida from here, but we’re sending material all over,” says Ruth Gomez, the company’s operations manager. Locally, the company’s products primarily go into the typically strong construction industry in Florida, both residential and nonresidential.
Additionally, AA has expanded its original product line from extrusions to sheet and coil and then into other materials. “Our main focus has always been aluminum, with some stainless. We’re starting to sell more galvanized. We’re diversifying the products,” Gomez says.
The expansion of the product line has resulted in a 90,000-foot warehouse expansion, taking the company’s space under roof to more than 200,000 square feet. The new addition opened in late July.
But there’s one area the master distributor hasn’t touched: processing. “We’re not a normal service center. We’ll expand to other countries and we’ll expand to other product lines. But we’ll never compete with our customers,” Cheng says.
Instead, it considers its strength lies in helping its customers procure metal in the most cost- and delivery-efficient way possible. Its services include global procurement, door-to-door international logistics, just-in-time and consignment delivery options, hedging and long-term pricing options, technical support and after-sales service, and depot stock. That’s what it offers customers.
“The company adds value throughout the entire transaction beginning with pre-deal identification and matching of customers and suppliers to deal and contract execution and through after-sale services and evaluation of customer satisfaction and feedback. The company’s metal and trading services deliver a unique, compelling value proposition to both customers and suppliers,” executives claim.
Still, the absence of cut-to-length lines, cutting tables or sawing machinery does not preclude investment into the business. Two years ago, AA installed a new ERP system from Net Suite to improve efficiencies in the plant. Most recently, the company worked with Design Storage to install a new racking system in the facility.
Together, the systems are helping make the business run more smoothly. “We’ve got the racking system, barcode, scan in and scan out. It’s much more efficient, eliminating human errors and mistakes and reducing the handling of our materials,” he says.
So how does he put all that book knowledge to work? As a master distributor, it’s all about the customer. “The technical expertise is significant compared to our competitors,” Cheng says. “We don’t just buy and sell. We provide a lot of technical support and advice to our customers and our suppliers.”
The company has also managed to navigate the currently tricking conditions affecting id material without much of a hitch. “When the news came out we were struggling a bit, but we’re in very good shape now,” Cheng says.