Service center reaches 100 percent capacity at one location, makes decision to expand

January 2013 - Steel distribution is a relationship-based business. Successful companies focus on their customers, providing them with a consistent source for material and a straightforward attitude. “In this day and age, everyone has great equipment, everyone is buying from the same mills, everyone is around the same price,” says Steve Gottlieb, general manager/CFO, Ratner Steel Supply Co., Roseville, Minn. “The only way that we can differentiate ourselves is through relationships,” going beyond the point of sale and creating partnerships with customers.

From its inception, Ratner Steel has focused on several basic principles—reinvestment in the company (both in capital for equipment and in people), relationships with customers and suppliers, and a reliable product. Its headquarters consists of a 140,000-square-foot facility that houses two Red Bud stretcher-leveling lines, a 1⁄4-inch slitting line, three shears, a packaging line, rail siding and seven truck loading bays. 

“During 2012, we basically hit 100 percent capacity in Minnesota,” Gottlieb says. “We were then faced with a decision: What do we do next?” After taking a look at all the options, “we said, ‘let’s grow,’” Gottlieb says.

Indiana expansion

Ratner Steel’s new facility is located at the Ports of Indiana, Portage, Ind., and is modeled after the company’s Minnesota operations. The building is 102,000 square feet with “everything we’ll need in a warehouse,” Gottlieb says, including storage space, room for six trucks in the bays at one time, rail access and four 30-ton cranes for loading sheets and coils. 

“We’re also bringing in a Red Bud stretcher leveler that has all the bells and whistles,” he notes. “It’s a $9 million piece of machinery and will be installed at the end of the first quarter.”

Dean Linders, vice president of sales and marketing at Red Bud Industries, Red Bud, Ill., says the new machine is a combination of the “latest and greatest features and new technology that has been developed over the last several years.”

The line is a hybrid system that can run in looping mode to process lighter material and start/stop mode to process thicker material, improving production and throughput by “as much as 80 percent when running the thinner material,” he notes. 

In addition, it features several new advancements in stretching, Linders says, incorporating rapid-stretch technology to reduce cycle time and advanced controls “that automatically recommend the proper stretch for the material being processed as well as a monitoring system that alerts the operator if the material has not been stretched beyond its yield, which is essential to eliminate spring back during subsequent processing such as laser cutting.”

The Indiana location will place Ratner Steel closer to both mills and new customers in Indiana, Illinois, Ohio, Michigan and Iowa. In the Ports of Indiana alone, there are 30 companies, 16 of which are steel-related operations. 

“This port is home to the who’s who of steel companies, and Ratner Steel is a great addition,” said Rich Cooper, CEO for the Ports of Indiana, in a press release announcing the expansion. “Ratner will not only benefit from synergies with existing port companies but also from being able to access our railroad, highway and waterway connections, which can significantly reduce transportation costs.”

Once fully operational, the Indiana location will employ approximately 30 people, Gottlieb says. “Our goal is to do more than 100,000 tons a year there,” he says, adding to the more than 200,000 tons the company handles in Minnesota. “We believe we can be a 300,000-ton-per-year company and still provide the relationships that our customers have grown to expect from us. At the end of the day, we wouldn’t choose to grow and open up new facilities if we weren’t able to replicate that.”

Consistent and customer focused

Ratner Steel never wants to let a customer down, so both Ratner and Gottlieb prioritize reliability and consistency. “Starting with the steel, we’re typically buying from the same sources, so our customers are comfortable with what we’re giving them,” Gottlieb says. “We’re also consistent with our pricing. We try to be transparent and seamless, available for our customers at all times with short lead times and reliability. We can’t lose sight of that as we grow. We want our customers to concentrate on making their business better and not having to worry about our business.”

Gottlieb says he sees some service centers adding lasers, press brakes, waterjets and other fabricating equipment. “A lot of our fabricator customers are competing with service centers,” he notes. “We don’t ever want to compete with our customers. We want to forge a partnership. Right now, there is plenty of work for everyone, but that won’t always be the case. There will be a time when there is a slowdown and you will see the service centers and fabricators competing a lot more.”

He says it’s important to focus on the company’s strengths. “We don’t want to take our eye off the ball. We’ve spent a lot of time working on quality. We don’t want to sell ourselves short and spread ourselves too thin, so we’re going to do one thing as best as we possibly can.”

Whether it’s Minnesota or Indiana, Ratner Steel focuses on truckload quantities to one customer. “We’re not good at 5,000 pounds and 10 sizes and hold steel on the floor. That’s really for a more retail-oriented or smaller type of service center or someone who has a tremendous amount of warehouse space. We have neither,” Gottlieb says. “We devote ourselves to customers who have significant buying potential. You know the old rule of 20 percent of your customers are 80 percent of your business. We fall in those lines, give or take. Because of that, Mark and I can devote a lot of time to these customers.”

Backing up Gottlieb and Ratner is their team, and they want to hire people that will move the company forward. “Our staff is a reflection on our company,” Gottlieb says. “We’re not going to shortchange in that area because it will reflect on our company down the line with bad customer service.”

From top-notch people to state-of-the-art equipment, “we’ve always kept our profits in the business and because of that, we’ve been able to do expansions as necessary,” Gottlieb says. For Ratner Steel, every capital expenditure is an investment in the company’s customers as well as its future. 

A clear vision for growth helps mitigate the initial shock of a big investment, which “can be scary,” Gottlieb notes. “At the beginning, we sat down with the accountants, the banks, the insurance. There’s so much to do with people to hire and arranging the finances and traveling all the time. But at the end of the day, it’s unbelievably exciting. Our employees are excited to know they’ve been a part of our success, and it’s because of the success of the company that we’re able to grow.” MM

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