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Growth has returned to the largest service companies in North America after two lackluster years of performance. And even more is expected to follow.
Total revenues for the 50 largest service center companies grew 11.7 percent in 2017 to $51.5 billion. After reaching a post-recession high of $55.6 billion in 2014, service center revenues declined in consecutive years all the way down to $46.1 billion last year. That 2017 figure represented the lowest total since the disastrous 2009, when revenues plummeted almost 37 percent to $38.4 billion.
To rank the Top 50, Metal Center News conducted
an email survey in July and August of the magazine’s
largest subscribers. When available, secondary
sources were used to confirm information. In most
cases, figures from privately held companies are
presented without independent verification.
Companies are ranked based on total revenues
from sales, processing and distribution during
their last completed fiscal year, which for most
was calendar year 2017.
As it does every year, Metal Center News
compiles sales figures for North America’s largest service center companies for their most recently completed fiscal year. For most companies, that represents calendar year 2017. The result is the MCN
Top 50, now in its 16th year.
Besides the growth in 2017, this year is shaping up as one of the best in service center history, according to projections of 2018 revenues provided by respondents.
Not every company, including none of the large publicly-traded company, offer projected sales figures for the current year. Still, 36 companies did include 2018 projected revenue figures. Of those, every company anticipates 2018 revenues will exceed last year’s total.
As a whole, the companies that provided revenue projections forecast an average growth of 13.9 percent over 2017. If the rest of the list followed suit with that kind of growth, Top 50 revenues in 2018 would total $58.7 billion. That total has only been reached once in the history of the survey, during the pre-recession boom year of 2008.
As it has every year since 2008, Los Angeles-based Reliance Steel & Aluminum was by far the largest service center company in North America. Reliance’s $9.7 billion in 2017 revenues was almost three times larger than the next-largest figure, from perennial No. 2 Ryerson Inc., Chicago. Roswell-Ga.-based Kloeckner Metals was at $2.9 billion, and two Canadian service center companies, Samuel Son & Co., at $2.8 billion and Russel Metals at $2.5 billion, rounded out the Top 5. Russel moved up from No. 9 in 2017, pushing thyssenkrupp Materials NA down one spot.
The Top 10 service center companies remained unchanged, with just some shuffling of the order. Revenue growth of 19.8 percent for the Top 10 outpaced the rest of the industry. Still, the Top 10 companies represented less than 60 percent of the Top 50, and less than a quarter of the total service center industry, demonstrating the distribution market remains highly fragmented.
Reliance’s claim as the continent’s dominant service center company is not limited to revenue figures. The company also has almost three times as many stocking locations, warehouse space and employees than any of its competitors. The company employs more than 15,000 people, representing about a quarter of the total in the Top 50. It operates more than 300 warehouses, totaling 35 million square feet of space.
The gains in 2017 revenues were pretty much shared across the board. Only three companies reported sales declines last year compared to the previous fiscal year, and in each case the drop was only minimal. Two other companies reported matching revenues from 2016 to 2017.
One area that saw a decline in 2017 was the billion-dollar club. Last year, 13 companies reported sales of more than $1 billion, one fewer than 2016 as a result of a slight decline in revenues from Steel Warehouse. However, if 2018 projections hold, next year’s listing will feature 16 companies topping $1 billion in revenues, as Steel Warehouse rejoins the club and Kenwal and Triple-S Steel get there for the first time. Even with one fewer member, revenues for that group grew 9.4 percent compared with last year.
Newcomers to this year’s list include No. 27 A.J. Oster, Warwick, N.J., which acquired Alumet last year; No. 29 United Steel Supply, Austin, Texas; and No. 50 Owen Industries of Omaha, Neb., which has been pushing toward inclusion for several years.
The most notable omission from this year’s list is Central Steel & Wire, a fixture in the Top 25 for the entire run of the survey. The Chicago-based company, which had earnings of $514,000 in 2016, was acquired earlier this year by Ryerson.
Another constant presence in the Top 50, No. 40 Contractors Steel, Livonia, Mich., was also acquired in the first half of 2018 by Union Partners. The Chicago-based company has become one of the most active acquirers in the metals space in the last few years, and almost certainly will have a place in the Top 50 next year.
Besides Ryerson and Union Partners, other Top 50 companies that have made acquisitions this year that will affect next year’s survey include Reliance, Samuel and Russel Metals.
Among the other companies that did not respond to this year’s survey were Marmon/Keystone, which has previously been a Top 20 company, and Kelly Pipe, which ranked No. 40 in the 2016 listing.
While all of the Top 10 saw increases last year, the movement at the bottom of the listing was equally notable. Last year represented the first time that any company made the Top 50 with less than $100 million in revenues. That trend was aborted this year, and three companies with more than that figure failed to crack this year’s listing. Two more companies anticipate 2018 revenues to reach nine figures in 2018.
Coinciding with an increase in revenues was a slight growth in facilities and employment for the Top 50. The companies operated 1,237 stocking locations, up from 1,214 the prior year, and employed 60,531 individuals, a 2.6 percent increase.
In contrast to these giants, the typical North American service center company maintains a single location, employers fewer than 30 workers and has annual sales revenue of less than $20 million, according to MCN