Above: A welder, left, works on a component at Apogee Steel, a Mississauga, Ontariobased fabrication shop. A worker, right, measures sawn bar at Ryerson’s Dekalb, Illinois, branch.

October, 2022- Since the 1990s, the service center sector has seen spasms of consolidation. After the Great Recession, it seems companies have been more selective, more deliberate about how they choose candidates for acquisition. Most recently, the valuations might have thrown buyers off because revenues reflected high commodity prices, which in turn reflected short supply of some materials.

Ryerson, around since 1842, has weathered every storm, and its leaders are very deliberate about finding the right niche players to fill out its deep roster of distribution, processing and fabrication operations. 

In the past 13 months, Ryerson bought Specialty Metals Processing, Stow, Ohio; Apogee Steel in Mississauga, Ontario; Ford Tool Steels Inc., St. Louis; and Howard Precision Metals Inc., Milwaukee. The company invested in a startup additive manufacturing company and began construction on a 900,000-square-foot campus in University Park, Illinois, for one of its team leaders: Central Steel & Wire Co. (CS&W).

Ryerson executives, including COO Mike Burbach, CS&W President Jack Barger, Ryerson EVP and CFO Jim Claussen and Frank Williams, general manager for e-commerce, marketing and communication, talked with Modern Metals about its growth spurt.

“We have made 16 acquisitions since 2010, with a bit of a flurry in the last year or so,” says Burbach. “We have a pipeline of candidates and a process to review them. We look for good companies, good brands and which will be accretive to earnings.” Acquired companies “must fit into our culture and help us with our strategy, which is to improve the customer experience. What makes a company a good fit?” The price has to be right and the company’s capabilities must add value to what Ryerson’s already doing. It’s also of interest if located in a part of North America that is underserved, Burbach says.

FITTING IN

Howard Precision Metals “is a great brand, in business 80 years,” he says. “We have known the company for years. It specializes in processing aluminum plate and bars. [Howard] fits in nicely in the Upper Midwest, serving a variety of industries—hydraulic and pneumatic cylinders, tool and die, aerospace, transportation equipment. It has a good reputation and a strong customer base.”

Ford Tool Steels Inc., acquired in June 2022, is a 75-year-old company that is focused on serving tool and die shops. It performs sawing and other processes with bar and plate. “We acquired Southern Tool Steel in Tennessee in 2015. Ford Steel’s capabilities complement those of Southern Tool Steel,” Burbach says.

Ryerson had outsourced work to Specialty Metals Processing in the past, then purchased the toll processor in September 2021. SMP performs slitting, cut to length, buffing, grinding and polishing of aluminum, stainless steel, titanium and nickel sheet and plate. “It has a lot of capabilities and is a nice niche player. A good chunk of the customer base is service centers and mills,” Burbach notes.

Apogee Steel is a full-line fabricator with a diverse clientele. The company performs shearing, punching, forming and laser cutting, among other services. Ryerson has invested in downstream fabrication companies in the past, such as LaserFlex (Ohio, South Carolina) and Fanello Industries (Georgia). “They take on work that many end customers don’t want to do themselves and make parts that go to any number of industries,” Burbach explains.

M&A VERSUS GREENFIELD

More and more customers want to streamline their supply chains and they want each supplier to add more value, according to Burbach.

“The addition of all these companies allows Ryerson to fulfill that need. We have about 100 locations in North America, all of which are connected by technology and logistics. We go to market and take our capabilities to anyone in the region. It opens up the possibilities for our customers. It’s a strategic advantage. It helps us become more efficient. We don’t need to have the same capabilities in every city. And we can make the experience better without an outsized investment.”

Claussen notes that, as one thinks about any investment, “it’s based on expected return and an ability to produce a great experience for the customer. The build-versus-buy decision comes with the customer base, cost expectations, etc.,” he says. “We also do capital investments inside the existing organization. It’s not one size fits all.”

It’s one thing to buy a piece of equipment, and it’s another to use it efficiently and effectively and build a customer base, Burbach says. “These companies already have expertise and an established base. So when buying [equipment] assets versus making an acquisition, there are a lot of variables to consider. We do want candidates with an established brand and that gets us into areas more efficiently.”

ORGANIC GROWTH

Central Steel & Wire, which Ryerson acquired in 2018, has proved to be “a fantastic fit,” says Barger. “We are in similar space and product mix but we have different brands. Our strength is in the Midwest with carbon, aluminum and stainless in all product forms. Central Steel serves a wide range of customers from Fortune 100 OEMs down to small machine shops. We support heavy agricultural equipment, transportation, medical equipment and many fabricators.

“Customers rely on us to manage their supply chains, especially with difficulties around the pandemic,” Barger continues. “We have a strong history of relationships. This leads to where we are headed: We are making a tremendous investment in CS&W’s flagship Chicago location That is headed: We are making a tremendous investment in CS&W s flagship Chicago location. That is important due to our geographic proximity with mill partners and customers.”

The new facility, to open during the second half of 2023, will be “modern and efficient,” and will continue to employ Chicago-area team members, Barger says.

“We are going to focus on our core strengths and leverage that across Ryerson.” The new megasized service center “will support the customer base for many brands throughout the network. We are cost conscious. We want to have materials and equipment close by and be able to deliver just in time. We are automating the facility, trying out newer technologies, such as with material handling and inventory management. We expect that to help us reduce costs and be more efficient,” says Barger.

Ryerson has just finished building a new branch in Centralia, Washington, to serve customers in the Pacific Northwest. “We invested in technology and new capabilities and are providing quicker service to local clients,” says Burbach. The customer base in the region is very diverse: transportation, food processing, agriculture, marine equipment. “There is a nice book of business. We have shipped to the region for a number of years.”

3D PRINTING

Ryerson made an investment in FreeFORM Technologies, located in St. Marys, Pennsylvania, this past May. Started up in 2020, Burbach describes it as an additive manufacturing and engineering company. “We try to anticipate what our customers might need from us in years to come. Additive manufacturing is newer compared to much of what are doing now. It represents exciting, cuttingedge technologies that are still developing.” According to Williams, “We want to increase the customer experience, as with prototyping, where we can work with our customers’ engineers.”

                   An engineer at FreeFORM Technologies views a design for a 3D printed part

All of Ryerson’s investments, says Williams, are “about the customer experience. We are looking to plug into pre-existing service centers and introduce the capabilities to the customers, and the customers to the capabilities.

We want to be part of our customers’ success.” It is also about employee experience, Barger says. “We have these new facilities and want to attract and retain employees and continue to invest in them.” MM