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2021 Service Center Executive of the Year

Jack Bernstein, State Steel

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MCN Editor Dan Markham Jack Bernstein, the second generation of the family to head up State Steel, has helped build a diversified steel distribution company in the Upper Midwest.

If you speak to Jack Bernstein’s employees at State Steel, you invariably get one description of his work habits: unmatched. 

“Jack’s the first guy in, and the last guy out. He opens the doors and locks them up at night, figuratively and literally. He actually does that,” says Eric Rubel, State Steel’s director of flat-rolled and plate products who has been working side by side with Jack Bernstein for 23 years. 

Now if you speak to colleagues in the industry, another description is repeated: integrity. 
“His answer is solid. He’s going to stick to his word. If I have a verbal agreement on a product, it is what we agreed to,” says Phil Kooima, the founder of Kooima Company who went from being a customer of State Steel’s to more of a partner at the tail end of 2019. 

And if you speak to, well, just about any of the folks who knows Jack – co-workers, industry peers and the many people he has interacted with over the years – one other trait is mentioned: an abiding zeal for the steel industry.

“Jack is passionate about his business, his steel and about the quality of the product he puts in his plant,” says Sam Savariego, the founder of Delta Steel Technologies and a longtime equipment supplier to State Steel.

That topnotch work habit, his love for the business, his integrity, plus a few other traits such as honesty, intelligence and good humor, are why State Steel’s Jack Bernstein is the 25th recipient of Metal Center News’ Service Center Executive of the Year. 

Each year for the past quarter century, MCN has been honoring the leader of a service center company based on the leadership that executive brings to his business, his industry and the community at large. Jack Bernstein, the second-generation leader of the family business, checks off all those boxes. 

State Steel is an Upper Midwest institution, delivering a variety of metal products to companies from several locations around its hub in Sioux City, Iowa. “There is so much product sold in our area,” says Jack Bernstein, who has been involved with the day-to-day operations of the family company since the 1960s. “People don’t know how much manufacturing there is in our part of the world. It’s not just ag.”

State Steel has an all-too-common origin story in the service center universe, though where it’s gone from there for these iron men is uniquely the Bernsteins’. 

In the 1940s, fresh out of the Depression and fresh into World War II, Sam Bernstein relocated his family from Brooklyn, Iowa, to the larger area of Sioux City. He bought a tin baler and set up a scrap business, Sioux City Compressed Steel. They moved a lot of metal through the business in the 1940s, though war rationing kept the company from profiting too much on their operations.

By the late 1950s, the scrap business was struggling with low prices, as happens from time to time. Some friends of his in the manufacturing sector encouraged Sam to start selling new steel, so he erected a few sheds across the street from the scrap company and did just that. 

It was steel, though it didn’t really qualify as new. “In those days, you couldn’t necessarily get the steel mills to sell steel to you. It was a closed-loop club,” says Jack, who entered the business in the early 1960s, often tasked with finding any bit of used steel he could. 

Even without a consistent source from the producers, State Steel was a full line distributor from the outset, selling whatever product it could get its hands on. And soon, it was more than just a distributor. 

Shortly after entering the business, Jack Bernstein was in Chicago on one of his many trips to secure material. Ben Verson, father of Jack’s wife Gail, was the brother of the founders of Verson All Steel Press Company, a Chicago-based equipment manufacturer. Ben Verson urged his son-in-law to begin expanding beyond just distributing metal into processing, to add value to the product. 

State Steel bought its first Verson press in the mid-1960s, a machine that still runs in the Sioux City headquarters location, sitting side by side with state-of-the-art cutting machines from Bystronic and TRUMPF. “He was right,” Jack Bernstein says. “You need to add value.”

The business grew, with Sam – who died in 1996 at age 89 – giving way to Jack as the driving force of State Steel, which was making its mark as a distributor of choice in the Upper Midwest. In 1973, the company was trying to expand its reach into Central Nebraska, a task made more difficult by the distance and some encroaching competitors. Other companies had begun offering next-day delivery, something State Steel couldn’t match.

Dennis Edwards, an outside salesperson at the time, pushed Jack Bernstein for route trucks to keep pace. Jack did one better, scribbling out designs for a new facility and asking Edwards to find the land and run State Steel’s first satellite operation. “It was way more than I was asking for,” says Edwards, who now runs a similar State Steel operation in Omaha, Neb. 

“I have always, and still do, have an unbelievable admiration for Jack Bernstein,” Edwards says. “The honesty, the integrity, the enthusiasm for the business, it’s indescribable.”

Since that initial expansion, State Steel has added four other facilities, in Sioux Falls, South Dakota; Des Moines, Iowa; Spencer, Iowa; and Omaha. At each new facility, the company adds a shear, saws and press brakes, plus other processing equipment if the situation calls for it.

The company has also added coil processing equipment, both in Sioux City and Omaha. Among others, they run a temper mill from Delta Steel Technologies and a stretcher leveler from Red Bud Industries at separate facilities. “The stretcher can do things the temper can’t and vice versa. They’re entirely different products,” he explains.

Though State Steel’s current footprint is exclusive to the ring around Sioux City, the company won’t rule out expanding further. “As it develops, yeah. Anything’s possible,” says Jack Bernstein.

That’s an apt description of their current holdings. In addition to the core service center business, Jack and son David continue to maintain interest in the local scrap business, run by Jack’s brother Norman, plus a stake in a separate scrap joint venture. 

Most recently, in 2019, State Steel and neighboring SPS entered a joint venture to acquire laser-based fabricators Kooima Company (see sidebar), a further testament to State Steel’s willingness to adapt to a changing marketplace.

Unlike many in the service center sector, Jack Bernstein has an in-depth understanding of all aspects of steelmaking, the equipment used to process it and the proper applications of the finished product. Besides his history in the family business, he earned a bachelor’s degree in metallurgical engineering and did some brief post-grad schooling, though he downplays the relevance of his academic career. 

“There’s no background better than just going out and doing it. I’ve learned a lot more from our customers,” he says. 

But others who have worked with him beg to differ about what his education and understanding bring to the equation. 

“He is not just a steel peddler; he’s a metallurgical engineer. He’s very knowledgeable,” says   Savariego, who considers Jack not just one of his best customers, but one of his closest friends in the industry. 

“Jack from beginning to end, in the supply-demand link, he understands every bit. How to buy the steel, how the steel will be made,” says Steve Gottlieb, president of Ratner Steel. “When they buy a piece of steel from Jack, they know they’re getting the best possible piece of steel they can get to make that application work.”

Of course, that kind of knowledge could be exploited in the wrong hands. But that’s never the case with State Steel. 

“He’s not about getting the best of anybody. He’s trying to create a win-win relationship. He’s not going to beat you up, he’s not going to take advantage of you. He understands what his customers do and he cares about his customers,” says Gottlieb.

Phil Kooima can attest to that. Before the acquisition, his company was a long-time customer of State Steel, and he knows where he can turn when he has a question on metal. 

“I like to work with higher grades of steel many times. Jack became a resource to talk through some of those properties and the effect they would have in forming, machining, heat-treating, all those things. Sometimes I would just call to bounce a process off him to get his opinion if it was going to work,” he says. 

Acting in the customer’s best interests is the rule at State Steel, and one of the reasons the service center industry in general continues to thrive. 

“A steel mill can’t service a customer the way we can. I get upset if we’ve disappointed a customer, even if it’s not our fault,” Jack Bernstein says. “If we ship something on an LTL and the driver has an accident and it didn’t get there, how are we going to fix it? We only care about taking care of our customer, and that’s something we constantly tell our employees.”

Servicing customers became more challenging in the current market than in most times during his long career. The supply-demand imbalance created some trying times. 

“We have to be able to take care of our contract customers, or a customer who is not on contract but has been buying from us for 20 years. If we’ve been supplying people for all these years, and all of a sudden we tell them we don’t have it, we’ve got big trouble. So we’ve got to find a way to do it. That’s our job.”

Though initially hesitant to sell to a small operation such as State Steel, the domestic production community no longer has that issue. The company’s growth has been aided by its longtime membership in the North American Steel Alliance, where David Bernstein currently serves as the buying cooperative’s chairman. 

The company procures almost exclusively domestic product, its facilities too far removed from Houston or New Orleans to economically import material. The sole exception is some high-strength material from SSAB that is made in Sweden, rather than the domestic plants the company also buys from. 

By year’s end, Jack Bernstein had begun to see some improvement in the supply situation from mills, with lead times coming down. He’s excited to see the increased capacity coming online from some of the domestic producers, believing it’s needed. “We can’t let happen what happened with the chip supply,” he reasons.

Moreover, he’s also impressed with the management at today’s steel mills, believing the production base is “in very strong hands.”

While Jack Bernstein applauds the leadership elsewhere in the industry, his employees and peers have similar things to say about him. 
“I grew up in the business here. It’s where I’ve been the whole time. Jack has been my mentor to everything I know,” says Eric Rubel. 

Dennis Edwards has almost an identical take. “I‘ve learned everything from Jack. I’ve learned the product, the process, customer service.”
Bob Jacobsen, State Steel’s vice president of operations, had worked for another steel organization for 35 years. He retired from there, but came out of retirement to join Jack at State Steel. “Jack brings every trait to the company. He’s a joy to work with. Every day is something new and you learn something new from him. Everybody here respects the heck out of him.”

The sentiment is shared outside the walls, too. 

Ratner’s Steve Gottlieb says Jack Bernstein is one of the men he most admires in the industry. “I’m 59, and I still look up to him,” he says. 
Today, Jack’s focus at State Steel is on the flat-rolled side of the business, leaving son David to handle the big picture, corporate-wide items. Jack Bernstein helped lead the company into the flat side of the business and it remains his area of greatest enjoyment. 

“I love the different grades. You put on a coil you have 45 to 50,000 pounds of product,” he says. “Sixty to seventy percent of the industry is in flat-rolled.

“It’s where the action is.”

And for nearly 60 years, being part of the steel action is where Jack Bernstein always wanted to be.

Caption:
Jack Bernstein, right, is joined by his son David, center, who now runs the day-to-day operations, and brother Norman, left, who oversees the original scrap side of the business. 
(Photo courtesy George Lindblade)






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