Ranger Steel reworks inventory strategy with new distribution center in Memphis, Tenn.

October 2011 - Since the tumultuous economic landscape of 2008 and 2009, businesses have been forced to revisit and rethink their strategies for viability. In a move that not only has demonstrated its health but also reaffirmed its commitment to delivering steel plate to customers, Houston-based Ranger Steel added its fifth distribution facility in Memphis, Tenn., in August. The 53-year-old company, which supplies steel plate to industries such as shipbuilding and oil and gas, already has a footprint in the South and Southwest United States.

Ron Whitley, president of Ranger, says expansion plans were in the works in 2008. However, the company shelved them when Wall Street began its meltdown. “Ranger, like everyone else in 2008 and 2009, got hammered pretty hard with the recession and the tremendous fall of the price of steel,” he says. “The more steel you had on the ground in inventory, the worse it was for you.”

When Ranger rebounded in 2010, it dusted off expansion plans and leased storage space in a terminal owned by Kinder Morgan, a Houston-based logistics company that transports and stores energy products. The facility is located on Presidents Island in Memphis, which sits on the Mississippi River. Memphis joins Ranger’s existing locations in Houston; Fort Worth, Texas; Tulsa, Okla.; and Fontana, Calif.

Proximity is pivotal
Although Ranger received its first steel shipment in Memphis on Aug. 1, the company has maintained its competitiveness for decades by mastering the steel plate distribution business. Signal Metal Industries, an Irving, Texas, custom job shop and metal fabricator, has sourced Ranger’s steel plate for about 20 years, according to Dave Brown, manager at Signal Metal. In some instances, Signal receives emergency calls after hours or on weekends from mills in a shutdown position, which requires immediate action for rebuild or repair.

Ranger’s Fort Worth facility, being 25 miles away makes material available on short notice, which assists Signal in fast service to its clients. Ranger primarily supplies Signal Metal with A-36 steel plate as well as SA-516 normalized steel plate for oil and gas, mining and steel mill projects.

“With Ranger, they strategically placed those distribution sites throughout the country, and when they opened the Fort Worth facility, it helped to better meet our needs,” he continues. “First and foremost, we can accept an order, knowing that we may not have the material in inventory but we can get it on short notice. Nearly always, within two hours, especially in emergency shutdown situations, we can have material on site and begin cutting and welding product.”

In urgent situations when it requires a quick turnaround, Ranger’s proximity and reliable inventory gives Signal Metal assurance that it can accept such an order. “What a positive to know that you can take an order, purchase the required material and have success because you’ve got the necessary support from your supplier,” Brown says, alluding to the solid relationship the two companies have built.

Transportation options
On a macro level, Ranger’s locations enable it to provide steel plate to nearby industries—for example, oil and gas in Houston, shipbuilding in New Orleans and transmission tower fabrication in Tulsa. Whitley selected Memphis because it is an active transportation hub for rail, has Mississippi River access and boasts a large trucking hub. As Ranger’s easternmost and northernmost location, a more diversified customer base will benefit from the Memphis location, which will stock an array of plate; pressure vessel; high strength, low alloy and regular carbon plate, according to a press release.

Ranger’s presence at Kinder Morgan’s 35-acre site in Memphis emerged partly from a capacity shortage in transportation as well as a rise in trucking costs. Rather than relying on its main inventory at its Houston yard, Ranger studies areas around the country where expansion would make sense for a satellite facility, Whitely says. Some of Ranger’s customer base is in areas further away from existing distribution centers, and assessing those segments of business factor into expansion decisions.

“We were not getting as much business as we like because we were having to bring the steel up from Houston,” he says, clarifying it wasn’t so much customer demand that sparked the move but rather Ranger’s desire to compete in fledgling markets. “It’s opened some new areas that before we could not compete in. We knew they were there, but we could not compete on a regular basis.”

With a new supply center, Ranger not only will serve its established customers better but also will break into evolving markets in Tennessee, Kentucky and beyond, Whitley says. “The customer base up there is quite a wide variety. I was very surprised at the number of customers up there and the facets of energy they’re involved in.”

Economic resilience
After the 2008-2009 recession, Ranger took the following year to rework its original business model. “We came back strong in 2010, stronger than ever,” Whitley says. “We’re very much back in order, and as a matter of fact, we’re better off financially today than we have been, so we’re very pleased with that.”

Ranger has scaled back slightly the amount of plate inventory it carries in each of its supply centers. However, the company is buying more domestic than imported steel, which slashes lead times for delivery and increases inventory turnover, Whitley says. The goal is to slim down its standing inventory to one-third of its 2008 levels while efficiently catering to fresh growth in industries such as oil and gas, rail and wind tower and transmission pole fabrication.

Based on its successful relationship with Ranger, Signal Metal knows Ranger’s localized, inventory-driven approach will save companies lead times and costs. If there’s an emergency with a steel mill, it can cost hundreds of thousands of dollars during a shutdown position. Those downtime losses can be minimized when materials are nearby.

“With Ranger, they understood, and in my opinion, planned for the future, especially with an economic downturn and a market in the condition that it is,” Brown says. “They had great foresight to have expanded and positioned themselves to service the growing needs of their current and future customers.”

Along with the expansion will come updates to Ranger’s products, says Whitley. Ranger is in the beginning stages of enhancing its plate line by adding a heat-treating product, normalized plate, and AR-400 abrasive resistance plate and 514 alloy plate. The stocking and location of these grades “will be dictated by the particular customers’ needs,” he says.

And the best way to address those needs is by moving the plate closer to clients, a move that puts Ranger’s best foot forward and should mitigate the threat of a potential future recession.

“I think we all grew up after ’08 and ’09,” Whitley says. “What happened then was the 500-year flood that would never hit but did, and we all learned a very hard, expensive lesson from that.”

Ranger’s expansion won’t stop in Memphis, Whitley says, as plans are newly slated for another facility about 300 miles upriver. “We are going to open a similar-type facility in the St. Louis area,” he says, citing similar transportation amenities as Memphis. “It will be open for business in March 2012. It makes us much more competitive to go in a circumference of east, west, Indiana, Missouri, up north. It’s something we’ve had steady on the drawing board, and we decided to move forward with it there.” MM

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