May 2011 - In spite of uncertain world events, Modern Metals’ editorial advisory board members are seeing improved demand for their products. Scott Kelley, president and CEO, Service Center Metals, Prince George, Va., says his business has “picked up rather dramatically versus where we were at this time last year. We saw a big increase in January in particular. Things have leveled off a bit since then, but business conditions are still relatively good.”

John Campo, vice president–market development and contract management, O’Neal Industries, Birmingham, Ala., says the traditional markets his company serves “have come back, and there really hasn’t been any change in terms of the type of products they buy. A lot of our market is geared toward the OEM side of the business: construction equipment, rail cars, forklifts and industrial equipment.”

One market that hasn’t bounced back is construction, which board members believe will be challenging at least through 2011. McGraw-Hill Construction also is reporting flat numbers for the market. Total construction statistics in March were unchanged from February as a result of “divergent behavior” in construction’s three main sectors. Nonresidential building increased in March, but both housing and nonbuilding construction registered declines.

Looking on the bright side, Rob Levey, general manager, commercial, Gallatin Steel, Ghent, Ky., points out that at least “construction hasn’t gotten worse. That’s the good news. And the future signs are positive, but it’s going to take another nine to 12 months before we see an impact from that.”

Whenever a market takes a turn for the worst, most business owners start looking for other options to keep the doors open. An April 13 story in the Chicago Tribune reported 122-year-old Carhartt Inc., Dearborn, Mich., is opening a 3,000 square-foot free-standing store in Chicago’s Wicker Park neighborhood. Out-of-work contractors, carpenters and construction workers aren’t buying new work clothes, so the company is endeavoring to reach a new generation of customers with this strategy.

“We’ve been looking on and off for years to get into retail,” said Mark Valade, Carhartt CEO, in the report. “We’re one of the last apparel manufacturers to get into it. More times than not, it seemed too daunting.”

Facing daunting challenges is part of executing a sound business plan. And metals companies are more than willing to take on the challenge, pushed by both their own goals and their customers’ needs.

Peter Baines, corporate vice president communications and corporate affairs, Samuel Son & Co. Ltd., Mississauga, Ontario, sees this flexibility in many of his customers. “The fabricators are an amazing group of people,” he notes. “They seem to be able to say, ‘I’ll take these machines and these production facilities and I’ll do this instead of that. And, in Canada, they are not only going into new markets in North America, they are going overseas, as well.”

With all this innovation, growth should be off the charts, but a foggy outlook means companies are tentative about investing.

“I think the difficulty is that people can’t see far enough out,” Levey notes. “There is not the certainty there has been in the past.” He says everyone is questioning if the economy is going to get better, and if it does, to what level.

“I think most financially sound companies are certainly looking to take advantage of good investments when they can if they have the working capital and the wherewithal to do it properly,” Levey continues. However, companies should be asking themselves, “Is it a value to do it now? Is it the right thing for the business long-term?”

Whether it’s a retail store in Chicago, new equipment or opening up a new location to better serve customers, it seems as if the investments companies are making today are geared toward future growth of their businesses and brands. Now if only the economy would cooperate.

To read more of the comments from Modern Metals’ editorial advisory board, check out this month’s cover story on page 18. MM