A fluctuating market makes difficult on-the-spot decisions necessary

May 2013 - “The biggest difference in managing steel plate inventory today versus eight to nine years ago is plate pricing has become very volatile. It’s susceptible to significant price swings on a monthly basis,” says Jeff McPherson, president, Ranger Steel, Houston. “You have to be a lot more nimble these days to avoid getting stuck with potentially high-cost inventory.”

Ranger Steel knows the plate market because it works exclusively with plate products. The company purchases plate in bulk and distributes it to customers who primarily order the material in truckload quantities. During the 1980s, Ranger Steel handled base grades of A36 and A572-50 plate from its yard in Houston. Today, Ranger also inventories Grade ABS-A, A516-70 (both as rolled and normalized), A572-65, A871-65, AR400 and A514. 

“Ranger currently operates five different yards in the U.S.,” McPherson says. “We are constantly looking for new territories to service, getting plate closer to the customer.” Later in 2013, Ranger also will be adding grades API2H-50, A537 Class 1, EH36 and A131. Sizing depends on the grade of plate. For example, if working with A36, Ranger stocks pattern sizes of 3⁄16  inch through 4 inches thick, 96 inches through 120 inches wide and 240 inches through 480 inches long.

The industries Ranger supplies include tank builders, shipyards, railcar, construction equipment, vessel shops, oilfield equipment, bridge builders, power generation and associated infrastructure. “We work with a lot of energy-related manufacturing,” he says. “Plus we also sell a lot of plate to other distributors.”

Ranger’s extensive inventory is complemented by its tailored stocking programs for individual clients. “We also provide advantageous logistical and cost solutions for our customers who have projects requiring specific plate grades and sizes,” McPherson adds.

The company is not looking to reinvent itself, but McPherson says Ranger always is fine tuning its operations as it looks toward future growth. Although its management team has been in place for many years, the company recently announced leadership changes at the helm. “We have been performing our present duties for some years now, but owner Ron Whitley felt the time was right to make some official job title changes,” McPherson says.

In January, McPherson, previously sales vice president, was appointed president. He has spent his entire 33-year career in the steel business at Ranger. Jochen Seeba, formerly operations vice president, was named COO and has been with the company for 21 years. Former president and COO, Ranger owner Ron Whitley, assumed the role of CEO. Annette Richards remains CFO. 

“These management changes reflect the roles and responsibilities that Jeff, Jochen and Annette have held for the last several years,” Whitley said in a statement. “The appointments will help solidify Ranger’s growth mode geographically and in expanded inventory plate grades.”

Adapting to a changing atmosphere

Ranger can buy and leverage more steel since it can price it better than the man on the street, McPherson says. “When I started working in this industry, we learned to start with the premise that all plate is created equal and the deciding factor is price.”

There is imported steel plate in the United States, but over the years, its presence in the market has been declining. “The import is not as attractive as it once was. All of a sudden, this commodity started riding a roller coaster faster than before with drastic ups and downs. The price of steel was a lot higher than it was before,” he says. “Pre-2004, I might have kept 100,000 tons of plate on the ground, which might last me three or four months. Now I’m reluctant to do that because the price is liable to fall before I’m able to sell off that stock.

“In 2008, prices fell out overnight from 50 cents a pound to 25 cents a pound, and everything you had was worth half of what you paid,” he continues.

Prior to 2004, pricing was considerably more stable, says McPherson. It was then that many domestic mills consolidated, leaving fewer mills out in the marketplace. “In the old days, you could stack it high and sell off the same pile for six to 12 months,” he says. That’s not the case in today’s market. 

Ranger’s approach to inventory is an integral part of its success. “We are a bulk distributor. We don’t sell to mom and pop operations,” he says. “We sell whole plates to people in truckload, railcar or barge quantities. We’re not a service center and don’t send someone a finished or semi-finished part. We’re selling whole plates and our niche is to go out and buy in volume.”

Ranger’s sheer tonnage of inventory allows it to keep a substantial amount of steel on the ground, although adjustments have been made to accommodate the changing marketplace. “The days of keeping six to eight months of inventory doesn’t make sense in today’s world, but we still need to have the ability to cover large volumes of plate for immediate delivery,” McPherson explains.

Market outlook

Customers require orders to be filled on time. When a customer needs plate and doesn’t have four to six weeks to wait, Ranger will have that inventory to the customer faster than if they worked with the mill. “I’ll have it on the ground, and I’ll start shipping the order right away,” McPherson says. “The material will be on a railcar the next day and to the customer in a couple of weeks or on a truck to deliver same/next day.” 

The company can complete these kinds of orders because it has a large presence with plate mills around the country. “I’ve always got tonnage booked at the mill, and if a customer comes along and needs something from the mills faster than what it is currently quoting, we can go in and juggle our tons to accommodate the customer’s delivery requirements.”

Customer feedback is a vital component to a company’s success. When a Ranger customer has a problem, the team works to fix it as quickly as possible. “If a customer has an issue, we address it,” McPherson says. “Our business is extremely competitive, and the best way to differentiate yourself from the competition is by handling any customer’s problem quickly and fairly.”

The company is independently owned, which Ranger believes gives its customers a little more personal service and faster turnaround than some of the larger chain stores, McPherson says. “We have good one-on-one relationships with our customers. We can set up our inventories and style of business to accommodate each one of our customers.

“We are a very tight-knit group with a lot of experience working together,” he continues. “We can always just walk across the hall, put our heads together and make a decision on the spot.”

Looking ahead, McPherson says the railcar and energy industries are robust at the moment. “Energy is really strong for us right now—anything having to do with the energy business, shale projects, especially being down here in Houston,” he says. “Railcar is bustling because they don’t have the pipelines laid down to move it so they need plate to build railcars. Same thing with barge—barge guys are moving product up and down waterways, and being in Texas, we’ve always benefited from the oil industry.

“The problem with the plate business and pretty much anyone in the steel business—I don’t care what they’re selling—the volume is OK, the work is there, but the margins are just too tight,” he continues. “No one is really making any money. We’re all working hard these days but are just treading water. I think the same can be said for the mills.” MM

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