Service Centers
Thursday | 01 February, 2007 | 5:05 am

Far from an endangered species

By Lauren Duensing

February 2007- In today's rapidly consolidating economy, the number of companies owned by families is dwindling. In Birmingham, Ala., however, O'Neal Steel is thriving on 80-plus years of family experience, which has made it the largest family-owned, full-line service center in the United States. Today the company has more than 70 locations in North America, Europe and Asia, and its mission is to consistently provide the best possible value to its customers.

"Kirkman O'Neal, my grandfather and founder of the company, and Emmet O'Neal, my father, established and operated the business with a family-oriented corporate culture based on honesty and integrity, respect for the individual, entrepreneurial spirit and determination to satisfy customers," says Craft O'Neal, chairman. "These values enabled O'Neal Steel to grow and develop an enviable reputation within and outside the industry. Staying family owned ensures this reputation continues and that our culture and values are never compromised. In addition, major decisions can be made quickly with long-term results in mind, rather than a short-term perspective to satisfy analysts and outside shareholders."

Meet the family
The company's growth has allowed it to maintain a diverse portfolio of services and capabilities. "As the demand for heavy manufactured goods in the United States has grown, our business has grown," says Bill Jones, president and CEO. "More recently, several of our acquisitions have gotten us into the aerospace and special alloys business. That's been a big change for us." He notes that the rise in business from heavy equipment manufacturers has led to more value-added processing, "certainly more than we used to do and more than any other large service center."

To provide the best possible service to its customers, O'Neal has a network of metal service center companies, with each bringing unique capabilities to the table. Metalwest, headquartered in Brighton, Colo., with 10 stocking locations, distributes and processes stainless, aluminum, cold-rolled, and coated sheet and coil.

Aerodyne Alloys, headquartered in Windsor, Conn., with a second facility in Los Angeles, distributes and processes specialized alloys, including nickel, cobalt and titanium, worldwide.

Leeco Steel, headquartered in Chicago, with three additional facilities in Oshkosh, Wis., Pittsburgh and Monterrey, Mexico, distributes and processes abrasion-resistant, extra high-strength and weathering plate, sheet and coil on a just-in-time basis throughout North America.

Exton, Pa.-based TW Metals has 20 U.S. facilities and additional stocking locations in the United Kingdom, France, Poland and India. TW distributes and processes pipe, tube, bar and rod in stainless, aluminum, alloy and carbon, as well as a variety of high alloys and aluminum sheet and plate.

Timberline Steel, headquartered in Commerce City, Colo., with additional facilities in Grand Junction and Pueblo, Colo. and Farmington, N.M., is a full-line service center with one of the largest and most comprehensive processing facilities in the Rocky Mountain region.

Ferguson Metals, Hamilton, Ohio, rounds out the group as a leading supplier of specialty stainless steel and high-temperature alloys with comprehensive in-house slitting, leveling, edging and shearing capabilities. Ferguson features a comprehensive inventory of hard-to-find grades and gauges that are ordered to specific decimal thicknesses from leading mill sources.

"All of our companies are continually looking at new markets," says O'Neal. "Any geography that is not yet serviced holds potential for expansion."

Growth strategy
"Several factors drive our expansion plans, including customer needs, strategic plans, our vision of being the recognized industry leader, growth-minded owners, benefits of economies of scale, industry dynamics and diversification," notes O'Neal.

And the diversity in facilities is all carefully planned. When O'Neal makes an acquisition, it tends to look for a company with "strong management; an employee-oriented and entrepreneurial culture; good relations with customers and suppliers; strong profit potential; and geographic, product and customer segments that fit with current or expansion plans," says Mary Valenta, CFO. "We created a strategic plan with criteria in what we're looking for in an acquisition."

The company then is able to look for opportunities that match its needs. "One of the first criteria was some diversification from our traditional service center, although we continue to grow that business also. Diversification led us into the aerospace and other special alloys industries," she says.

After finding a company that fits and closing the deal, O'Neal takes a "barbell approach" to integrating an acquisition into its operations, says Valenta. "Strategic planning is meshed with O'Neal's strategy by the executive teams; sales, purchasing, operations, systems and processes remain autonomous at the subsidiary level; and administrative functions are assimilated by a cross-functional acquisition team responsible for areas such as risk management, cash management, employee benefits, income taxes, financial reporting, payroll, employee benefits and internal audits."

As part of this process, "many ongoing, functional communications and meetings are held across companies to share best practices, to ensure basic consistency and to provide guidance and resources," she says.

Managing all this growth isn't easy however, says Jones. "First of all, the acquisitions we have made in the past few years have remained independent." He notes that the companies have their own management and O'Neal hasn't had to devote a large amount of time to these acquisitions, as it would have if it simply rolled them into the O'Neal umbrella. "They are successful companies, and we just nurture them and help them grow," Jones says.

Another strategy O'Neal employs to help manage its growth is changing its structure. "We've gone to a more regional structure, whereas in years past, we didn't have to do that." Jones says that this has helped the company manage its growth. "You just have to delegate and we do that."

Branching out
To stay competitive, the company places a focus on maintaining relationships with suppliers, worldwide sourcing, excellent supply chain management and outstanding purchasing employees, says Jones.

"Many of the new industries we're in, such as aerospace and energy, have provided additional opportunities to expand internationally. O'Neal has one plant in Mexico, and now its subsidiaries have locations and sales reps all over the world, so the challenges are keeping up with the growth," says Valenta.

In addition, more customers are expecting service centers to provide them with various types of value-added processing. Jones notes that first customers asked O'Neal to cut metal, then requested secondary processes and finally asked the company to kit the cut parts so they could go directly into assembly.

"It has been more of a migration," he says. "Through our sales force we go to the manufacturers and ask what they want from a supplier. It may not be a typical answer but that hasn't kept us from doing what they would like done."

The company does laser cutting; oxy-fuel and plasma arc cutting; coil processing, including cut-to-length, slitting and blanking; shearing; sawing; rolling of plate, angles, structurals, bars, tubing and pipe; forming, welding (as well as a weldment division); punching; drilling, notching, machining and painting.

By having these capabilities O'Neal is able to reduce investment costs for its customers, as well as differentiate itself from other service centers in the industry. "We offer a much broader range of capabilities to our customers than any other large service center in the country," says Jones. "Our company's roots were in fabrication so we've always been a service center that did a significant amount of processing for our customer."

Family values
The company's values extend to the relationships it has with its employees. "Another challenge that any service center, or any business, faces today is attracting and retaining people," says Jones.

"Our employees are of utmost importance to us," says O'Neal. "In order to achieve our vision of being the industry leader, we must attract, develop, fully engage and retain the best people."

To accomplish this goal, O'Neal makes sure it is competitive with compensation and benefits, says Jones. In addition, the company puts emphasis on training. "We have internship programs and we try to remain attractive to young people by offering numerous opportunities and training," says Jones. "We're also very visible in the communities where we have operations, and we stay involved with civic organizations, as well as being very active in our trade association."

Serving customers well requires companies to devote time and attention to their needs. O'Neal finds that being privately owned helps it focus on the customer rather than on Wall Street. Being family owned allows the company to have a "continued focus on customers and employees," says Jones. "The family has been supportive of growth, involved and continues to invest in the company's future."

"We take our values very seriously at O'Neal," says Valenta. She notes that O'Neal's values, as listed on their business cards, are "honesty and integrity, customer driven, entrepreneurial spirit, high-performance expectations and concern for employees."

These values start with the O'Neal family, she notes, and "extend to all employees so we feel like we are part of a team that is well-respected within the industry. Treating the employees with trust and respect makes it a great place to work."MM

1921 Kirkman O'Neal starts a small steel fabricating business.
1935 O'Neal Steel becomes one of the South's first metal service centers.
1946 Emmet O'Neal, Kirkman's son, joins the company.
1952 O'Neal opens its first satellite district in Jackson, Miss.
1984 Craft O'Neal, Emmet's son, joins the company. He represents the third generation of family involvement.
1997 O'Neal purchases Metalwest, a specialist in light-gauge, flat-rolled metals.
1998 O'Neal's Weldment Division opens. It provides OEMs with a reliable resource for large-scale and labor-intensive jobs that require specialized facilities, efficiency and expertise.
2000 O'Neal opens a tube processing center in Lebanon, Tenn.,as an answer to the region's need for a high-quality tube processor.
2004 The company acquires Aerodyne Alloys LLC, a distributor and processor of specialized alloys.
2005 O'Neal acquires Leeco Steel, a supplier of extra-high-strength and abrasion-resistant steels.
O'Neal acquires TW Metals, a source for custom and off-the-shelf long products.
2006 O'Neal acquires Timberline Steel, a full-line service center.
O'Neal acquires Ohio-based Ferguson Metals, a supplier of specialty stainless steel and high-temperature alloys.
Late 2006
Aerospace International Materials Inc. (AIM), Cincinnati, Ohio, becomes one of the newest members of the O'Neal family. Also acquired was Supply Dynamics, a professional services company, which is the leading provider for raw material consolidation solutions called "Material Demand Aggregation."

By Lauren Duensing, from the Februay 2007 issue of Modern Metals.






























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