Above: Grand Steel Products’ recent purchased assets include two buildings, two slitters and a fleet of trucks and drivers
December, 2024- Grand Steel Products Inc., which processes and distributes hot-rolled, cold-rolled and coated sheet from its headquarters in Wixom, Michigan, has expanded into 100 percent toll processing in Tennessee.
The company, which already operated a processing facility in Clinton, recently purchased two buildings, equalling a more than 126,000- square-foot plant, housing two 72-inch-wide slitters, in Chattanooga.
According to Grand Steel CEO Mike Barnett, the acquired assets are being run as a separate business unit with separate software. “If our other facilities have something they need cut, we will send in an order in just like any other customer. It’s not a direct sales organization,” he says. Staff from Wixom and Clinton went down to Chattanooga to help restart the operation and have hired and trained about 30 people to run it. “It has been nice to get to know them and incorporate them into the company. We are learning their capacities and job responsibilities and we are instituting the things we think we do well,” Barnett says.
One of the two slitters handles light-gauge steels, down to 26 gauge, and the other manages coils up to 0.25 inch thick. These lines complement a 72-inch-wide slitter in Michigan and a 60-inch-wide slitter in Clinton.
APPLICATIONS
“We have a good asset base and geographic diversification. Chattanooga allows us to reach deep into the South,” says Barnett. “We will serve mills and other large service centers.”
The largest end use sectors for toll processed materials is automotive, appliance, commercial construction and infrastructure.
“We have a light direct-sales presence in the South but we do not have direct sales contracts with Tier I stampers and automotive OEMs. Direct sales is not our business model. We are interested in processing that material.”
GSP has a 40-ton crane that can unload barges on the Tennessee River. The coils are then toll processed for service centers and mills.
LOGISTICS
Barnett says the Chattanooga facility was intriguing for a number of reasons. “We have an advantageous location on the Tennessee River. We are 15 miles from Volkswagen’s largest stamping facility, Gestamp. We are performing transloading for certain end users served by mills. One unique thing this acquisition gives us is the ability to unload barges.
We have a 40-ton Demag crane that goes out over the water and brings the coils into the building.
“With that barge service, we are finding almost a 35 percent savings in freight cost compared with rail, and that advantage becomes much larger compared with trucking,” he says. “If you come up from Gulf Coast, this cuts down on transportation and logistics costs to get that far north from a port or a Southern steel mill. The Tennessee River doesn’t freeze. That’s an exciting aspect.”
Mills can sail a barge of coils to GSP, which will perform processing, storage and JIT deliveries. GSP Chattanooga has seven trailer tractors and seven drivers for over-the-road shipping. Both the Clinton and Chattanooga locations have rail lines right into the buildings.
Founder Jim Barnett and President Mike Barnett lead Grand Steel Products.
“We feel confident about this facility. The opportunity remains large,” says Barnett, because the acquisition is more of a startup. He envisions that the value can only grow.
SERVICE IS NO. 1
In Clinton, GSP has developed relationships with end users, Tier I stampers and service centers with high levels of service—“by not saying no and doing whatever it takes,” Barnett says. “With the same formula, we can develop a strong processing business, and take advantage of the freight differential.” He says the company spoke with mills and other customers that offered encouragement and support. “We have earned the trust of those who want to reach their end users who are very close by. They can ship large coils, store it, ship it, process
Employees at GSP’s newest location, Chattanooga, process steel coils and manage logistics.
“There are service centers that service automotive in the region,” Barnett notes. “We expect to talk with them and urge them to consider GSP as a resource.”
The original Wixom facility has been busy, and Clinton has been running three shifts: “two production shifts and one shipping shift.”
“We have such great people, and they drive everything we do. They really care.
“We are focused on nurturing a good culture. We are concerned with the organization’s health and the health of our people.”
Barnett’s father, Jim, started the company in 1995. “When we bought the first building, we had six people. We are about 115 people now. We are trying to keep that nimbleness. With three locations, five facilities and seven slitters, we plan to keep moving in a positive direction.”
MARKET DYNAMICS
Near-term demand prospects are a bit hazy. “We are holding on to the hope that interest rates coming down will spur economic activity, spending. Will it move the needle significantly? Getting past the election will be a positive and that will trickle down to steel. Mills are exhibiting production discipline and taking furnaces down for maintenance this quarter. That’s responsible and helps the market to avoid oversupply.”
The automotive industry has excess inventory to sell but carmakers’ production rate has remained steady. As inventory is sold off production may rise again in second quarter 2025, Barnett suggests. “I hope it’s faster than that. Some predict that all of 2025 will be sluggish, down to 14 or 15 million units, versus 16 million in previous years.
“The automakers have to get past the EV discussions”—whether to invest further in additional capacity or stick more firmly with fossil fuel engines.
“Over and above that, I have sales people having a hard time hitting their numbers,” Barnett says. “Demand has stayed somewhat muted. It has been muted by uncertainty, overspending in some sectors, and others that cannot afford as much and so buy less material. I hope we will springboard out of it.”
Grand Steel Products Inc., 248/960-9200, grandsteel.net
