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MCN Case Study: Ratner Steel

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Ratner Branches Out After 27 years of operation, this first-generation service center expands into a second location at the Port of Indiana. By Dan Markham, Senior Editor For larger service centers with experience at opening new locations, such projects are no longer so intimidating. But when Ratner Steel Supply Co. was looking to add a second facility, it had no template to follow. In June, the Minneapolis-based flat-roll distributor completed its first greenfield expansion in Portage, Ind., relieved that all went according to plan. “We looked at our business in Minnesota and saw we were running at capacity. We either had to expand our facility in Minneapolis, which would have been very difficult, or look elsewhere,” says company founder Mark Ratner. “We started to look at where made sense geographically, where we could distribute steel, where were we buying steel.” Such questions led them to Northwest Indiana. “It was a natural for us to be centrally located near most of our suppliers, and in a geographic area where we’re already distributing product,” he says of the choice to build a new processing center and warehouse in the Port of Indiana. Still, more went into the expansion than just choosing a site. “We were able to take advantage of the best practices we’ve developed in 27 years and fine tune them in a greenfield site. That’s been a huge advantage,” he adds. Even before the company selected the site, it had already ordered the equipment to be housed there, due to the long lead time. In Ratner Steel’s case, the primary processing line is a Red Bud Industries half-inch by 72-inch cut-to-length line with a Red Bud Stretcher Leveler and a Bradbury e-Drive roller leveler. Ratner says the most important element of the expansion was choosing the right partners, from the equipment manufacturers to the contractors involved with the construction. “That’s 90 percent right there. If you get that part right, the rest goes pretty smoothly.” Ratner, along with General Manager Steve Gottlieb, oversaw the launch of the new facility, though keeping with company practice, freely delegated responsibility to various staffers. When the company turned the power on in June and was immediately able to run its first coil, it validated their efforts. “That’s a tribute to planning ahead and making sure we covered all the details,” Ratner says. The new facility includes 102,000 square feet, with 44-foot-high ceilings and extra-thick concrete floors to handle more tonnage. There is room for an additional processing line, but not much space to grow beyond the building’s footprint. “It would be great if we outgrew the facility. I’d be excited about trying to find another location to expand,” Ratner says. Ratner founded the company shortly after getting out of college, when he started working as an independent rep for a steel company in the Twin Cities. He was able to capitalize on some early opportunities, earning seed money to invest in his own business. By 1990, he was ready to follow the advice of his customers and open a physical location. He happened upon a building for lease that once housed a steel company and signed a month-to-month lease on the spot. His company remains in that location 23 years later. Ratner Steel has evolved through the years, its founder admits. “We’d sometimes go in a different direction. We didn’t know where we were going until we got there.” At one time, it was a full-line service center, but today it focuses on flat-rolled sheet and plate. Ratner has always believed in hiring individuals with character and teaching them the steel business, rather than just looking for individuals with steel experience. He will try to do the same with the new location, though it’s a different challenge. New hires in Minneapolis were able to immerse themselves in the Ratner Steel culture. At the new Portage facility, with its 30-35 employees, the culture is a work in progress. “There will be some transition, but we feel like we set an example. We’ll still hire on character, hiring people who are willing to learn and work together in a collaborative environment. We can make a decision pretty quickly whether they have the right DNA for us.” In all other ways, the Port of Indiana location will follow the Ratner Steel model. Ratner believes in carrying a lot of inventory, offering short lead times and a limited amount of processing to its customers. It specializes in providing supremely flat steel, and letting customers do the rest. “We don’t fabricate. We don’t laser cut. We’re not in our customer’s business. They rely on us to carry material,” Ratner says. He estimates about a third of his business is with other service centers and toll customers, a third with laser houses and a third with OEMs. The end-user customers represent a broad spectrum of manufacturers. No customer has more than 4 percent of Ratner Steel’s business. Thus the company has many eggs in many baskets and spreads its risk over many customers and many market sectors. Being willing to stock steel increasingly sets Ratner apart in a business where inventory has become a four-letter word. Of course, it puts the company at considerably more exposure to the vagaries in pricing, but Ratner mitigates that exposure through its strong relationships and broad customer base. “It’s the risk we take in the business, but thankfully we’re able to move 25,000 tons per month. If we make some mistakes, we can cover up quickly by moving the steel out fast.” ["It was a natural for us to be centrally located near most of our suppliers, and in a geographic area where we’re already distributing product." President Mark Ratner, Ratner Steel] At a Glance Name: Ratner Steel Supply Co. Address: 2500 West County Road B Roseville, MN 55113 Phone: 651-631-8515 Fax: 651-631-8512 Web site: Key Personnel: Mark Ratner, president; Steve Gottlieb general manager and CFO. Employees: 100 Locations: 150,000-square-foot facility in Roseville, Minn.; 102,000-square-foot facility in Portage, Ind. Shipments: 300,000 tons annually. Annual Sales: $200 million Products: Hot-Rolled, Hot-Rolled Pickled and Oiled, Cold-Rolled, Galvanized, Galvanneal, Floor Plate Equipment: Two half-inch by 72-inch Red Bud stretcher levelers; one quarter-inch by 72-inch Redbud stretcher leveler; one quarter-inch by 72-inch Braner slitter.

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