Operating a service center in the South Florida market presents challenges unknown to the industrial Midwest or the rest of the Southeast. Such is the case when you’ve got water in every direction but one.
Orlando Garcia is keenly aware of the challenges. Garcia operates three distinct distribution companies in Miami, carrying on the legacy of his grandfather, Orlando Gomez.
Gomez founded the oldest of the companies, Everglades Steel, in 1974. He had been in the sugar business in his native Cuba, then got into the steel business in Puerto Rico. Upon arrival in South Florida, he opened up the metal service center, primarily to serve the industry he’d grown up in.
He worked not only with the large sugar operations in South Florida, but also to former colleagues who had similarly left the communist country to set up shop in Costa Rica, Guatemala and other places in and around the Caribbean. “That’s how it started, supplying the sugar industry,” says Garcia.
Today, Everglades Steel, the original company, stocks a variety of carbon steel products, including angles, channels, bars, plate, sheet, coils and tubing. While it still serves the sugar market, it’s grown to include other industries in South Florida.
In 1993, the company expanded its operations with the purchase of Medley Pipe and Steel. The renamed Medley Steel Supply was purchased from the country of Israel, which had been gifted the business when the previous owner died without heirs. Medley specializes in structural steel products.
One decade later, the company grew again with the founding of Metallic Products LLC, which deals in aluminum and galvanized products. The three companies are located just a few miles from each other in the northwest portion of Miami.
Likewise, all three of the businesses are heavily tied to the construction market, which is the dominant consumer of metal products in South Florida. “This area doesn’t have a big manufacturing base because the real estate is too expensive. We know a lot of industries have left here for Ft. Myers or Orlando because real estate is much cheaper,” he says.
On the other hand, those high prices and the remote location are quite the barriers to entry, and an enticement to leave. “A lot of the big companies don’t see it as a big market or a growth market. So our business has grown a little because of that,” Garcia says.
The high cost of acreage isn’t the only concern. For any distribution company, it’s quite a long way to your nearest producer of metal. That makes any supply constrictions, including disruptions caused by trade action or a tightened freight market, an even bigger worry.
“The trucking issue is a concern,” says Nelson Fernandez, general manager of Medley Steel. “Something we were getting in two days now takes two weeks.”
The company mitigates its supply concerns through its membership in the North American Steel Alliance. The buying cooperative has been invaluable to the company’s growth, Garcia says.
Garcia’s companies also differ in other ways. Its staff is entirely bilingual, a must in its location. “We do a lot of walk-up business. I’d say about 80 percent of those customers come in speaking Spanish.”
But the biggest differentiator between the three companies and their peers is in their other customers. The companies founded by Orlando Gomez are still selling to customers around the Caribbean.
The companies have an export manager that handles the sales to the islands or Central American countries such as Costa Rica. Most of the work is done through freight forwarders, who occupy a major place in the South Florida market.
Essentially, the freight for-warders are handling shipments to the islands for a variety of customers. They will include a shipment from Medley Steel in with other goods bound for the Grand Cayman Islands, for instance. “Whatever is headed in that direction, the freight forwarder organizes and maximizes,” Garcia says.
The export business is not quite as large a part of the business as it was when the company’s patriarch was selling to his former colleagues. But it still represents about 20 percent of the business, a number that can shift depending on the business climate. “When the dollar is weak, it helps us in the export market,” says Garcia.
But even when it’s strong, the company still finds outlets on the export side. The ability to quickly get a piece of material to the islands compared with European suppliers makes Garcia’s companies attractive to some of the overseas customers. Miami-area shippers may be sending three containers per week to Costa Rica, whereas a European freight company may only be sending one barge per month to the country.
“If you’re going to buy from Europe, there’s money up front, and the quantities have to be enough to buy from them. We’re more flexible. The smaller quantity order is our game,” Garcia says.
The companies have been flexible in other ways. Metallic Products was primarily a supplier of ornamental metal when it was opened, but has since grown to provide more aluminum extrusions and sheet and plate. Similarly, Medley has enjoyed growth by expanding its value-add capabilities. “We do some light fabrication, not to compete with our customers, but for quick turnaround and some of our export customers,” Fernandez says.