Service Centers
Wednesday | 01 August, 2007 | 2:57 am

Keep it simple

By Lauren Duensing

August 2007- One hundred years (specifically the years between 1907 and 2007) can be measured in 19 U.S. Presidents, 25 Summer Olympics and only one occurrence of Halley's Comet. Calculate 100 years in business time, however, and you get mergers, acquisitions, closings and more lean years than you ever plan for. Marmon/Keystone Corp., Butler, Pa., has survived all the ups and downs of the market and, as a result, is celebrating its 100th anniversary this year.

The company started out with three men and a name: Keystone Pipe & Supply. Founder William Horwitz and his two partners began by selling used pipe and quickly expanded into oil well supplies. Growth years in the 1920s were stalled by the Great Depression, but by 1950, inventory had expanded to a full range of heavy wall sizes, including products imported from Italy.

As the years passed, the company continued to grow by purchasing Tubular Service Corp. in 1967. The acquisition gave Keystone Pipe locations in Denver, Salt Lake City, Kansas City, Mo.; and Birmingham, Ala., as well as a new name--Keystone Tubular Service Corp.

Full-throttle growth
Becoming a member of the Marmon Group, Chicago, an international conglomerate of more than 125 business units, set the stage for 37 years of skyrocketing growth. In 1972 the company, whose name was changed to Marmon/Keystone in 1978, posted annual sales of $23 million and had 319 employees. In 2006, annual revenues were more than $800 million.

"It's like working for a new company every few years," says Ken Sichelski, vice president, sales and marketing. "I've been here 33 years and the growth has been constant. Presently, we're planning to add two satellite warehouses per year."

This continuous growth has made the company one of the world's largest distributors of specialty tubing. Its inventory consists of more than 15,000 sizes and grades of carbon steel, alloy steel, aluminum and stainless steel pipe and tubing, in addition to bar products in chrome and stainless. Sizes range from 1/8 inch outside diameter to 48 inches outside diameter. All that tube is traveling to a wide variety of markets. Sichelski notes that the company's largest customers consist of construction machinery and equipment, industrial machinery, truck and bus bodies, railroad equipment, farm machinery and fluid power, with oil, gas and energy representing a growth market.

To house its vast inventory, Marmon/Keystone and its subsidiaries have more than 40 locations worldwide. Managing all those locations might be a logistical nightmare to some, but the company employs a simple, straightforward strategy to avoid confusion.

Branches inventory all the key items, notes Sichelski. "We're an 80/20 company. Twenty percent of the items that give us 80 percent of our business are stocked at every location. Larger facilities stock the balance of the items that feed the smaller branches. For instance, Chicago is a central distribution point that feeds Kansas City, Denver and Houston, along with their own satellites (Minneapolis; Little Chute, Wis.; and Temperance, Mich.). A major success story has also been the addition of a break bulk facility in Bucyrus, Ohio, which transfers larger quantities to all branches. "

Another key to the company's success is having everyone on the same page. "Our strategic sales and marketing plan helps keep us focused, and within that plan, there are action items developed to help serve our customers better in the long-term,"?says Sichelski.

"All of our branches have their own sales plan that connects with the corporate plan. Our branch managers meet with their sales staffs to review each sales territory and develop their own local strategies. All sales plans are entered into our customer information database and are updated constantly."

A network of processes
Like many other service centers, Marmon/Keystone is also developing its value-added services. However, the company isn't expanding locations and shopping for new equipment.

"It's a virtual program," says Sichelski, which helps the company avoid stepping on its customer's toes. "We deal with machine shops, fabricators, tube benders, laser cutters and others that do this work for us. Other service centers choose to do their own fabrication, machining and laser cutting in house. All of our work, except for the standard cutting is done through our customers. Again, it's a virtual manufacturing situation where we offer overall cost savings to our customers."

This model has been very successful for the company, Sichelski says. "Fifteen percent of our business now comes from value-added and it's grown tremendously. We've nearly tripled our value-added business over the past few years, and we see that continuing for a long time. Many customers are moving to assembly-only, having more of their metals processing done outside their plants. We're there to help them coordinate their processes."

The cyclical nature of the market also contributes to the company's growth in the value-added arena. "Some manufacturing plants have experienced major layoffs in bad times," notes Sichelski. "Then, when business is better, they try to gear up again and rehire experienced workers. Many companies, depending on location, have a difficult time getting those people back. That's where we come in to support what they cannot do in-house any longer or choose to do outside their plants."

When a company reaches its 100-year mark, it gets to enjoy some benefits of being a centenarian. One of those is name recognition. "People really recognize the name; it's well respected among our peers and our customers," Sichelski notes.

The recognition comes with an ever-expanding network of locations, as well as a product that boasts unlimited possibilities. The National Aquarium in Baltimore has more than 5,000 feet of electrical weld pipe from the Butler branch, the Atlanta branch provided several thousand feet of stainless steel pipe for the launch pad of the Space Shuttle Columbia and the Salt Lake City branch supplied material for the 2002 Winter Olympics. A wide variety of potential uses and a solid business strategy means that it's looking good for Marmon/Keystone to see the next 36,525 rotations of the Earth's axis. MM

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
















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