November, 2002- Multiple acquisitions, capital projects indicate the distribution and processing sector is healthy.
The past three years could be considered rather unique in the metals world’s history. But it’s hard to judge with certainty because the “new normal” is always evolving. What has stayed the same is the careful consideration that comes with making big financial decisions, whether that means spending hard-won profits on an acquisition or to expand space and capacity. Over the past 12 months, Modern Metals has tracked M&A activity and expansion efforts at jumbo, medium and smaller companies alike.
The purposes of these decisions vary from geographic aspirations, to carrying new product lines and developing additional services, to catering to a new customer base. In all cases, these service centers believe strongly in their futures.
Acquisitions in the distribution sector cover carbon and stainless steels, aluminum, copper and brass, in all forms and sizes, and all sorts of processing capabilities.
On Sept. 22, Lapham-Hickey sought a controlling stake in VC Laminations, an electrical steel lamination stamper based in a newly built 65,000-square-foot plant in Queretaro, Mexico. VC Laminations supplies the electrical and power generation markets. It has 10 high-speed progressive stamping presses, in-house annealing capabilities and multiple cut-to-length lines.
“With electric vehicles and the overall push for energy efficiency across all electrical sectors, VC Laminations will be a great partner with any customer using electrical steel laminations,” explains Mike Gibney, director of electrical steel sales at Lapham-Hickey.
Ryerson Holding Corp. acquired Howard Precision Metals Inc., a Milwaukee-based aluminum distributor, in September and bought Apogee Steel Fabrication Inc., a sheet metal fabricator based in Mississauga, Ontario, in March. Both are tuck-in acquisitions with specific capabilities Ryerson sought to fulfill customers’ needs in the broader North American market. (More on Ryerson’s strategies can be found in the October 2022 issue.)
Alro Steel, based in Jackson, Michigan, made three acquisitions since December 2021, most recently purchasing Access Metals just outside Baltimore. Access Metals specializes in small orders to customers in manufacturing, machining and fabricating. This purchase will allow Alro to grow its customer base in the Eastern U.S. while providing improved service for cut-to- size metals. That was preceded by Alro’s acquisition of Ace Steel in Roanoke, Virginia, which is also a move to reach customers in a different region.
In spring, Alro bought certain assets of Klein Steel, which has warehouses in Buffalo, Rochester and Syracuse, New York. It stocks carbon and stainless steels, aluminum, brass, copper and specialty metals. The company also offers value-added processing services, including component manufacturing and kitting.
“Klein Steel has a great reputation in the metals industry for over 50 years and will enable Alro to continue its growth strategy in the Northeast, offering a wider range of products and processing capabilities in the Klein Steel footprint,” said Alro Steel CEO Randy Glick.
GROWING NETWORK
Pennsylvania Steel Co. Inc. recently purchased certain assets of Nivert Metal Supply Inc., Throop, Pennsylvania. With it, Pennsylvania Steel expands its geographic customer base while providing improved service for cut-to‐ size metals in the Northeast. Nivert Metal builds upon Pennsylvania Steel’s network of eight existing service centers, says CEO Joseph Dombrowski. Triple-S Steel Holdings purchased Hillman Brass & Copper, Honey Brook, Pennsylvania, in early September, expanding the Houston-based company’s footprint in nonferrous metals. Founded in 1912, Hillman carries brass, bronze and other copper alloys. Gary Stein, CEO of Triple-S, stated, “With this acquisition, we will be able to offer our customers a more extensive product line.”
WEST COAST VIBE
Industrial Metal Supply Co. (IMS) bought Campbell Metal Supply in San Jose, California, at the end of August. “An expansion to this area has been in the works for several years,” said Neil Sherman, IMS owner and CEO. “Our services, metals and sizes are a great fit for the manufacturing sectors of the region, which includes everything from semiconductors, medical devices and equipment to aerospace, welders, municipalities and do-it-yourselfers.” The acquisition will give northern California customers a “significantly expanded inventory” and permit faster delivery to areas previously unable to secure same-day will call and next-day delivery. IMS President David Pace said this acquisition was “another step in our long-term plans to expand our strong footprint to the San Francisco Bay area and surrounding areas.”
LEVERAGING KNOWLEDGE
In August, Mainline Metals Inc., Conshohocken, Pennsylvania, bought Great South Metals in Acworth, Georgia, which bolsters Mainline Metals’ position as a supplier of prime, excess and secondary steel.
“This partnership presents the perfect opportunity for Great South Metals to leverage Mainline Metals’ robust industry knowledge,” said Mainline President Andrew Geisler. “Great South Metals’ expertise in the prime steel market and supply chain programs enhances Mainline Metals’ [ability to] engage more deeply in the prime market.”
DIVERSE ASSETS
Cleveland-based Majestic Steel USA Inc., which processes flat-rolled steel products, closed two acquisitions in logistics and downstream manufacturing this year. It bought Mercury Transport Inc., Pittsburg, California, and Quicken Steel LLC, a manufacturer of steel buildings and components based in Claxton, Georgia. Mercury Transport will fit in with Majestic’s 2021 acquisition of Merit Steel USA, a distributor with locations in Pittsburg and Fontana, California, and Longview, Washington.
During 2022, Ryerson acquired Howard Precision Metals Inc., an aluminum distributor, and bought Apogee Steel Fabrication Inc
Eastern Metal Supply Inc. (EMS), a distributor of custom and standard aluminum extrusions, bought G&L Materials, Morehead City, which distributes marine extrusions and parts essential to boat manufacturers, fabricators and DIY builders. This acquisition will increase G&L’s product offerings while further strengthening EMS’ presence in the marine market.
“Partnering with G&L is a tremendous growth opportunity that will allow us to further expand our services up the East Coast and provide G&L’s customers with a broadened offering of aluminum products,” EMS President Greg Weekes stated.
STAINLESS PRODUCTS
Early in 2022, Ulbrich Stainless Steels & Special Metals Inc., based in North Haven, Connecticut, purchased a distribution facility in Pico Rivera, California, from ATI Specialty Rolled Products. Under the sale agreement, ATI continues to supply Ulbrich with nickel, titanium and specialty alloy products. “The Ulbrich family is excited to operate a facility once again on the West Coast,” the company said in a statement.
BREAKING GROUND MAKING ROOM TO GROW
Leeco Steel, which stocks and processes steel plate, completed an expansion to its Hamilton, Ontario, distribution center this summer. The project added 30,000 square feet as the service center outgrew its existing 45,000-square-foot warehouse space and needed to accommodate a growing customer base in Canada.
Lock Joint Tube, based in South Bend, Indiana, makes mechanical grade steel tubing at sites in Ohio, Texas, and Tennessee. The company announced a $21 million, 37,500-square-foot addition in Temple, Texas, to service a growing market for solar energy solutions. The new addition should be operational by January 2023. “The growth in solar is great for Lock Joint Tube and our country as we continue to look for clean energy. The new tube mill will increase our capacity and capabilities,” President Kevin Marks stated. (The company also purchased Welded Tubes Inc. in 2020.)
Harbor Steel & Supply Corp., a Muskegon, Michigan-based distributor of fabricated metal products, broke ground in May on an $8 million, 50,000-square-foot manufacturing building in Bowling Green, Kentucky. The company is installing laser machines, press brakes, automated saws and other equipment. Ramp-up of production will occur during the third quarter of 2023. United Performance Metals, Hamilton, Ohio, purchased Slice of Stainless in December 2021. The Cincinnati-based company offers small quantities of stainless steel and nickel alloys, sheared to exact specifications, to such industries as aerospace, medical equipment and general manufacturing.
BIG NAMES
Russel Metals Inc., Mississauga, Ontario, spent $110 million to buy Boyd Metals, which runs five service centers in Arkansas, Missouri, Oklahoma and Texas. Boyd’s product mix and value-added processing services were the main attractions, because Boyd had invested heavily to expand its capabilities over the past several years, which helped grow its revenues.
Late last year, Worthington Industries Inc., Columbus, Ohio, invested $255 million to buy Chicagobased Tempel Steel Co., which manufactures precision motor and transformer laminations for the electrical steel market at five facilities in Chicago, Canada, China, India and Mexico.
“Acquiring Tempel will immediately make us a market leader in the rapidly growing electrical steel market that includes transformers, machine motors and electric vehicle motors,” said Worthington President and CEO Andy Rose. “Worthington’s experience and deep relationships in the automotive sector will position Tempel to further penetrate the growing hybrid and EV market.”
Reliance Steel & Aluminum Co. purchased Admiral Metals Servicecenter Co. Inc., an eight-location distributor of nonferrous metal products sold into the semiconductor, automotive, medical, infrastructure, aerospace and industrial markets. Reliance CEO Jim Hoffman said that Admiral Metals boosts Reliance’s product breadth in specialty nonferrous products.
The company also acquired Nu-Tech Precision Metals Inc., a custom manufacturer of specialty extruded metals, fabricated parts and welded components. Based in Arnprior, Ontario, Nu-Tech serves the nuclear, aerospace and military markets, among others, distributing tube, pipe, engineered shapes and round and flat bar from pure metals and alloys of titanium, zirconium, copper, nickel, hafnium, niobium and steel.
“Nu-Tech’s focus on specialty products with high levels of value-added processing aligns with our business model and strategy of investing in high-quality, high-margin businesses,” Hoffman stated.
Accelerated Manufacturing Broker Inc. (AMB) said it has listings valued at over $100 million in manufacturing companies that are available for acquisition before the end of 2022. Private equity firms are estimated to have $1.86 trillion in dry powder (capital that’s not been spent), AMB President Frances Brunelle says. In other words, opportunities are still out there. -MM
