McNeilus Steel has expanded rapidly in recent years and doesn’t intend to slow down

May 2012 - Pat McNeilus, owner of McNeilus Steel Inc., doesn’t like to sit still. While many businesses had to cut back in recent years, his service center has been charging ahead at full steam. Since 2003, the Dodge Center, Minn.-based company has added capabilities with multiple coil-processing lines, expanded its facilities and launched an in-house fabrication center.

“[Pat McNeilus’] goal was to reinvest back into the business, to continue to grow the business and look for opportunity where our customers were in need of service or a new process,” says Chad Gossard, sales manager at McNeilus Steel.

That goal has remained steady throughout the economic downturn, during which McNeilus continued to reinvest in the company. “We added a location. We added on to every other one of our locations, added equipment so that when the market turned around, we were ready to go,” says Paul Blaisdell, general manager of fabrication. “We never really slowed down. In that way, Pat’s commitment to growing the business and reinvesting in the business is key to our success.”

The explosive growth during the last decade is helping ensure McNeilus will be around in the long term. “You really have to grow to stick around. You can’t just remain idle,” says Blaisdell.

Harry McNeilus started the service center in 1948. It grew from a scrap business based in his garage to a steel supplier with more than 1 million square feet of warehouse and production space. McNeilus maintains a large stock of coil inventory in a variety of grades and widths up to 72 inches wide, including HSLAS, AR200, HRPO, hot rolled, floor plate, cold rolled, stainless, aluminum and galvanized. More than 5,000 different ferrous and nonferrous products are stocked at the company’s three facilities.

In 2003, the McNeilus expansion began in earnest with the installation of a Red Bud Industries stretcher leveling line in Dodge Center. The company added a second Red Bud line at the facility in 2005. The two stretcher levelers provide a gauge range from 0.029 inch to 0.5 inch with blanking capacity up to 0.134 inch and 72 inches wide.

McNeilus opened its Fargo, N.D., facility in 1997 and added a third Red Bud line there, which was operational in 2010, says Gossard. The most-recent stretcher-leveler addition can process up to 0.5-inch high-strength material up to 72 inches wide. To accommodate the line, the Fargo facility expanded in 2010 with the purchase of an additional building.

The company’s newest facility in Fond du Lac, Wis., opened in 2009. McNeilus still is working in the original space and has not expanded yet, “but we’re busting at the seams,” says Gossard.

Not every company is able to grow so rapidly. Being lean and keeping management involved in day-to-day business helped enable the company’s growth and quick succession of expansions and purchases, notes Gossard. “Any decisions that need to get made get made. We don’t have to go through five levels of management to figure out what we need to do,” he says. “The people on the floor are allowed to make decisions and get things done.”

Fabrication center
The McNeilus fabrication center opened in Dodge Center in 2007, says Gossard. “It started out with a couple of lasers and a plasma and a press brake—about 45,000 square feet. Since then, the fabrication part of the business has grown to over 250,000 square feet with multiple lasers and plasma and blasting capabilities as well as some brake forming and different fabrication capabilities,” he says.

The decision to open a fabrication division was not taken lightly, says Blaisdell. “Obviously, a lot of our customers are fabricators, so for years and years we stayed away. We didn’t want to get into the game of competing with our customers for business.”

However, McNeilus knew the time was right to add fabrication capabilities when the lack of them began affecting steel sales negatively.

Many of the company’s large OEM customers, particularly in the truck and agriculture markets, began requesting first- or second-step process parts rather than simply raw material, says Blaisdell. “We really had no choice but to expand to fabricating,” he says.

To avoid direct competition with its fabricator customers, McNeilus invested in large equipment. “For example, bigger lasers, bigger press brakes so we are able to make parts that maybe they can’t make. We can work with them and not against them,” Blaisdell says. The fabrication center currently has eight flat lasers, five plasma tables, one tube laser, five press brakes and one plate roll.

Although the center opened only five years ago, McNeilus already has expanded the fabrication facility four times to gain additional capacity, says Blaisdell.

“A lot of companies will take four years to make a decision to make one addition,” says Steve Klomps, operation manager. “We decided in five years we’ll make four additions and continue to grow this portion of our business.”

A focus on service
Customer service is central to the company’s philosophy and, in large part, it contributes to its success, says Gossard. McNeilus prides itself on providing service to customers with its own delivery fleet. “In that way, we control where the trucks go and when and how they get there. We don’t rely on third-party logistics to manage that part of our business,” he says.

The company selected its three locations strategically based on market need as well as delivery capabilities. “We did our due diligence in breaking down the markets, trying to find a geography for us that made sense based on where our main location was,” says Blaisdell.

All McNeilus drivers come back every night; the model is out and back in the same day, notes Klomps. “As we started to expand out and get further from the Dodge Center location, our trucks couldn’t get back here in a timely manner and couldn’t get back that same night,” he says. “All of a sudden, we’re having overnights and losing efficiencies. Part of [the choice of locations] was to gain efficiencies and to get closer to our customer base.”

The ability to keep deliveries efficient and in-house is an important part of the business, notes Blaisdell. “There isn’t anybody in our business that sees our customers more than our truck drivers, and that part of the relationship is really important.”

Every aspect of McNeilus—the service center locations, fabrication center and delivery business—is managed from the Dodge Center facility, and each is a valued part of the company.

“The fab department isn’t different from our cut-to-length department, which isn’t different from our Fargo department. We’re all one big conglomerate that makes McNeilus Steel,” says Blaisdell. “That’s why our drivers work with our salespeople so much because we’re all one family. It’s not different departments working to different goals; it’s all one goal and everyone working together.” MM

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