The pandemic once again highlighted the value of not letting a crisis go to waste.
The past 18 months – and hopefully scant few of the months to come – have been dominated by the coronavirus. The pandemic has tested the industrial economy in ways that haven’t been seen in generations, if ever.
Unlike the catastrophic recession of 2008-09, the pandemic did not result in a prolonged downturn for the metals sector in 2020. The overnight halt to the industrial economy was a jolt, but the turnaround began nearly as quickly.
Of course, the aftershocks continue to reverberate, most notably when it comes to the side-by-side concerns of escalating prices and material availability, a matched set that has touched nearly every commodity metal.
Most of the leading service center companies have managed their way through the unusual conditions with aplomb. But that doesn’t mean the unprecedented way COVID-19 changed the way businesses had to operate didn’t teach these leaders something along the way.
MCN talked to a handful of leading service center executives to get a sense of what lessons they were taught during the pandemic, about their companies and the industry as a whole, and how that hard-earned wisdom may be applied in the days, months and years to come.
What Did You Learn About Your Business?
Almost uniformly, service center executives polled by Metal Center News reported the unique conditions of the pandemic affirmed the importance of their human capital.
“The fact is, we can have all the strategies in the world, but it really comes down to how our people embrace those strategies and how they rally to the call,” says John Ganem, CEO of Kloeckner Metals Corp., Roswell, Ga. “It was an awesome thing to witness and be a part of.”
“Hopefully, we didn’t learn this in the pandemic, but it certainly became more evident that the value of your business is so closely tied to having great people,” says Craig Mathiason, president and CEO of Jemison Metals, Birmingham, Ala.
“I learned how resilient our model is, and how inspiring our folks are,” says Jim Hoffman, CEO of Reliance Steel & Aluminum Co., Los Angeles. “They were our frontline workers. They were going to work every single day, talking about the drivers and people in the plant, not knowing if they were going to get COVID. I was so inspired by how these people executed the plan.”
The value of staying the course and following on established best practices also became evident during the worst of times. “Esmark’s commitment to safety and to serving our customers enabled us to persevere,” says Roberto Alvarez, CEO of Sewickley, Pa.-based Esmark Steel Group. “By establishing and enforcing CDC, OSHA and Illinois state safety protocols, we were able to continue to successfully operate and, in fact, make our operations more efficient.”
Samuel, Son & Co. Ltd., Oakville, Ontario, saw something similar. President and CEO Colin Osborne says the pandemic “reinforced how deeply our core values are held. Specifically, in this case, putting employees first. Of course, we were concerned about the impact on our business and all our shareholders, but every conversation started with a discussion of our team members and how to keep them safe.”
For Lisa Goldenberg, the coronavirus and its effects revealed a lot about her company, Delaware Steel of Pennsylvania. “What the pandemic showed me is what was good about my business has gotten better, and what was bad got worse.”
Like others, she cited the resiliency and loyalty of her team members as one strength, as well as the strength of the company’s vendor relationships. “I’ve always appreciated it, but this is like on a cosmic level,” says Goldenberg, president of the Fort Washington, Pa.-based distributor.
Conversely, the challenges showed her the company was not as strong technologically as they’d like, both in terms of the options on hand and with all team members’ comfort with it. “The vulnerabilities and areas that needed improvement were really highlighted.”What Did You Learn About the Supply Chain?
Control. Specifically, how little any one company has.
If there’s one sentiment that carried the day among members of the supply chain is just how powerless most companies are when it comes to what happens outside the walls of the facility. That, and how fragile that external supply chain can be.
“One thing is obvious we can’t control is steel supply,” says Mike Barnett, president of Wixom, Mich.-based Grand Steel Products. “I found it very frustrating. We buy 95 percent of our steel mill direct, and majority of that is non-prime. Our non-prime buys did not change drastically, but the material availability certainly did.”
Mathiason said the pandemic served as a reminder of how interconnected the entire economy truly is. “I think we all understand how intertwined the economy is, but when you see the overall demand impacted the way it was, it’s a great reminder how we all rely on sustainable business conditions.”
Osborne saw something similar. “The pandemic really highlighted how many supply chains we take for granted are really quite vulnerable. And I’m not just talking about metal, but other key inputs like resins and computer chips. We’re now looking closely at critical elements in our supply chain to ensure we have alternative sourcing and build in more flexible strategies to make our sourcing more resilient and agile.”
“It’s humbling how little you can control,” Goldenberg says. “I can support my people. I can really manage my balance sheet. I can support my vendors. But so much is out of your control.”
At Kloeckner, “Control what we can control” has become a mantra. But the inability to directly influence outside events doesn’t make a company completely at their mercy, Ganem says. “This has expanded our view. While we can’t control a lot of things outside our sphere of influence, what we can do is anticipate what those uncontrollable things are and how we’re going to react to them.”What Can You Apply to your Operation Going Forward?
This, of course, is the most important subject.
“We talk about that a lot,” says Reliance’s Hoffman. “Let’s not waste this pandemic.”
If the COVID-related protocols revealed a better way of operating, then it would be foolish to simply return to suboptimal old ways of doing business.
For many respondents, one of the most applicable lessons is the idea that there is no such thing as overcommunicating.
“We did everything from video messaging to Zoom meetings to text messages to keep them informed to what the company was doing,” says Gary Stein, CEO of Triple-S Steel Supply. “We said early on, this is what we built the company for.”
During the pandemic, the leadership team at the Houston-based service center began hosting regular town hall meetings for the various geographies served by Triple-S. Every night for 2-3 weeks, Stein and some others in management would get on a conference call of up to 100 employees, filling the team members in on developments and fielding questions. It’s a habit that will outlive the pandemic. “We’re not going to stop doing that. It’s a lot of work, but the people love it.”
Osborne agreed, saying frequent communication was one of his company’s two big takeaways from the past 18 months. “Our HR and communications teams did an exceptional job in keeping everybody connected and informed as many of our employees transitioned to remote work. We made sure to share what we knew, what we didn’t know and how we were approaching the situation.”
Additionally, the pandemic reinforced Samuel’s push toward increased agility. “The pandemic was an accelerant in that it highlighted how critical it was to be able to respond to opportunities quickly and effectively, and often without perfect information. He cited a move toward shorter, higher-frequency meetings, “We learned to become more comfortable with making decisions based on the best available information we had and moving forward in ambiguous situations.”
Esmark’s Alvarez says adaptability is buttressed by strong relationships. “Collaboration is key. Working closely with our suppliers and customers, as well as our employees, we were able to pivot quickly and adapt to meet our customers’ and suppliers’ needs.”
Barnett likewise learned to lean even heavier on his peers in the industry, knowing they were there to serve as confidants on many matters facing the steel distribution business.
Of course, he also points out a sad reality.
“It’s been a whirlwind. It still feels like we’re in the middle of it, so it’s hard to say what the big takeaways were.”