Banner
Service Centers
Tuesday | 03 September, 2013 | 9:06 am

Making moves

By Nick Wright

By adding a fittings supplier, Superior Supply is opening new markets while readying for rebounding customers

August 2013 - In the service center world, there’s no shortage of activity in Houston. Superior Supply and Steel is one of the service center juggernauts firmly ensconced in the Houston area’s primary markets—petrochemical and energy—as well as their ancillary businesses. With  plate operations canvassing Chicago to Mexico, plus six service centers and a one-year-old fittings division, Superior is well-positioned for customers to tap its assets.

But the brass at Superior isn’t known to sit on its hands. Earlier this year, Superior announced the acquisition of Southern Steel & Supply, a 13-year-old distributor of pipe, valves, fittings, flanges, steel and other piping-related materials. It serves the oil and gas, petrochemical, and shipbuilding industries. Southern brings its Rolodex of construction/fabrication, energy, engineering, procurement and construction, as well as refinery and petrochemical companies into the fold at Superior.

“This will be a great addition to our marketing on pipe valves and fittings. It is what they did and did very well,” says Scott Sandifer, vice president at Superior. “They created a customer base beyond ours. Now we get to offer those same customers a much better mix with the four divisions of Superior.”

From Superior’s first days as Sentry Supply, which current Superior president Steve Mitchell founded out of one truck, the company has expanded through its own facilities and private acquisitions. It has more or less created its own identity with new greenfield sites, starting with its Sulphur, La., facility, but has absorbed other companies to cultivate the fittings side.

The Southern acquisition is no doubt the biggest news coming out of Superior these days. And its flat-roll business is healthy, particularly in ship and barge, energy, tank storage, and rail car manufacturing.

MM-0813-service-image1

“It’s not the sales that are the problem in today’s world. It’s that most important element called margin,” Sandifer says. Superior, however, is expanding some of its inner workings behind-the-scenes in an effort to stay abreast of current and anticipated demand.

Perfect fitting

Superior had Louisiana-based Southern Steel on its radar for the last year and formally purchased the company over the last six months. In today’s world of large conglomerates and private equity firms that give high valuations on earnings before interest, taxes and amortization, companies search for ways to create growth however they can. In Superior’s case, the diversification of its product portfolio makes the company tick.

When Superior sees opportunities, it tends to look at companies that fit into its product mix and footprint. By acquiring Southern, Superior will grow it. Founded in 1999, Southern has locations in the Louisiana cities of Broussard, Colfax, Harvey and Shreveport, and facilities in the Texas locations of Houston, Corpus Christi, Carrizo Springs and Nederland. Combined with the location overlap, Southern’s pipe, valves and fittings business in domestic energy and drilling applications complements areas where Superior might have lacked. Location-wise, it’s a bit too early to tell if there will be any facility consolidation. For example, Southern’s pipe,  valves and fittings fill palleted warehouse-type structures as opposed to Superior’s overhead crane-equipped steel service centers, which could make logistic consolidation challenging. But these are all issues in the works that will be ironed out over time.

Across Superior’s divisions, the company has more than 200 trucks that run routes and deliveries. Houston is a pivotal distribution point that feeds service centers material they don’t receive directly from a mill. There may be some consolidation with those service centers, as long as it benefits the energy- and offshore-related markets, Sandifer explains. “Anywhere to the south or west of us, where Southern has a bigger footprint than us, would certainly be attractive locations to expand.”

MM-0813-service-image2

Superior is mindful of the personnel coming on board because people are what counts in the end as two corporate families are meshed. “We pride ourselves on service, which our employees provide. The company is merely the vehicle we use to get the job done.”

Ready for return business

Aside from the Southern deal, Superior is making changes at some of its other service centers and operations. For example, at its Sulphur, La., plate processing facility (Lake Charles), it’s investing in a complete upgrade with equipment, such as a blast and coat painting system that will improve Superior’s in-line painting process.

With regard to its flat-roll plate sector, Superior finds growth in challenging markets by looking for industries or items that aren’t so easy. Economically, the supply side is paying the price for shrinking global markets. “Take a good look at producers and service center returns. That is a direct reflection on weak world markets,” Sandifer adds. What he says isn’t surprising. In its May report, the most recent, the Metals Service Center Institute says U.S. service center shipments of steel products in May 2013 decreased 4.8 percent from May 2012. 

Still, in the last five years, Superior has successfully targeted the monopole and above-ground storage tank sectors, which use 96-inch-wide product, all while trying to be a well-rounded supplier in both plate and leveled coil products. At each of its four flat-roll processors, it has coil leveling technology to deliver quality quickly. The four locations’ proximity to customers is a cost-control mechanism to reduce freight.

MM-0813-service-image3In its general service center business, growth is good. The new in-line painting process will give Superior a productivity boost of about 50 percent. It’s something the company has been looking to do for a while and committed to the investment once it saw comfortable, long-term market stability. That processing is geared for ship, barge and storage tank markets. The storage tanks are massive; they can be 150 feet in diameter and are quickly popping up in oil/gas-rich Oklahoma, Texas, North Dakota and Colorado. In terms of factors separating Superior from other service centers in its region, Sandifer says he sees others duplicating Superior’s efforts. “In some ways, we look to duplicate others that are successful and involved in market sectors that fit. I don’t think there are any secrets out there.” In one way, partnering with its vendors distinguishes Superior. In another, it’s the people and services the company offers.

The fittings division, Superior’s youngest, is following the lead of the plate division. Before buying Southern, Superior stocked fitting products in 1⁄8 inch up to more than 36 inches. Much how the plate division has supported all of Superior’s market sectors by becoming one of the largest private plate distributors in the United States with four stocking locations in excess of 60,000 tons of product, Superior hopes to see similar trends in fittings. Geographically, its fittings will benefit from Southern’s resources and infrastructure that just entered the game. Superior already sells in 12 states and has an export position in Houston, where it has deep water access on 25 acres about one mile from its stocking location.

Superior has projected strong growth in the next five years for the industries currently thriving—the ship, barge, rail car and storage tanks—however one industry that has been down is commercial fabrication. Before 2009, it made up as much as 35 percent to 40 percent of the company’s business. But Superior had to get creative and look at sourcing other types of customers to fill that gap.

“That’s a positive because now that we have rebuilt our sales levels into newer, higher-margin type products, when we do see the commercial fabrication come back into play, which has to happen, we’ll benefit from that and experience immediate growth to recover some of that 25 to 30 percent of our sales that have not been there for the last few years,” Sandifer says.

Nevertheless, the company is growing back to pre-2009 sales levels. As orders trickle in, Superior looks poised for those customers to come back. “So when that day comes, fortunately, that’ll mean we have to have even more growth and expansion to accommodate our old, returning existing business.”

By flexing its muscle in acquiring Southern, Superior has shown it’s ready for more than just rebounding orders—it’s nosing its way into creating new ones. MM

Interested in purchasing reprints of this article? Click here

 

Current Issue

MM-Cover-9-14-current

September 2014

ON THE COVER: 
Tense trade
Reaching a tipping point in volume, steel imports face the weight of politics.

MM-Digital-button-current1

Subscribe: PRINT/DIGITAL MAGAZINE - eNEWSLETTERS

Midwest-MM-home-ad-5

Advertisement

Modern Metals on Twitter

White Papers

More White Papers >
Banner

Industry Partners

Aluminum

Coil Processing

Rolled and Extruded Aluminum Products

Stainless, Nickel, Aluminum, Pipe, Tube & Bar

Sapa Extrusions North America Braner USA Aleris Rolled Products Prudential Stainless & Alloys, L.P.

Bar

Butech Bliss

Sawing Technology

Steel

Gerdau Special Steel North America Machine Concepts KMT Saw Parker Steel Co.

CNC Cutting (Plasma, Waterjet, Laser, Router)

Red Bud Industries Metlsaw Systems Summit Steel Corporation
Multicam Inc. Tishken Sawblade.com

Thickness Gauges

CNC Solutions

Laser Cutting Machines

Service Centers

Advanced Gauging Technologies
FastCAM Inc. Trumpf Admiral Steel

Tube & Pipe

Coated Coil

Lubrication Systems

United Performance Metals Independence Tube Corp.
Centria Coating Services Unist, Inc.

Software

Turnkey Finishing System

Double Globus Inc.

Machining Centers

Enmark Systems, Inc. Intellifinishing
Dura Coat Products, Inc. Handtmann CNC

Specialty Roller Coverings and Coatings

Waterjet

Metal Coaters

Metal Alloy Analysis & Verification

American Roller Company OMAX Corporation

Coil Coating

Thermo Scientific Niton Analyzers

Stainless Steel

TECHNI Waterjet
Chemcoaters

Metal Finishing & Deburring

Straub Metal International

Welding

 

Supermax Tools Ta Chen International, Inc. Koike Aronson

 

Plate

 

 

 

Artco Group

 

 

TrendPublishing

twitter facebook linkedin rss