Mill Steel sees opportunity in the construction market
While some companies offering a diverse range of services may have looked to get out of the struggling construction business over the last few years, Mill Steel, Grand Rapids, Mich., has done the opposite. A flat-rolled steel service center since 1959, Mill Steel made its mark in the automotive and furniture industries, but over the last five years building products have come to make up 25 percent of its business.
Mill Steel essentially provides the raw material that is then turned into a metal roofing panel, structural studs or purlins, for instance. The company takes flat-rolled carbon steel from a mill and slits it down based on customer specifications. Mill Steel’s technical team is a bridge between the mill supplying the material and the end-use customer (manufacturers and general contractors), making sure the product is delivered as specified.
“We’ve historically worked hard to organize our systems and our processes to deliver the best value possible to our customers,” says Eric Lambert, CFO and COO of Mill Steel. “We have a full voice with our supplying mill partners; they get the material here in a timely manner and we turn it around for our customers when they want it and where they want it at competitive prices.” The company has 155 employees, including sales and plant labor. Its slitting equipment can cut a variety of different widths and its master coils are 20 to 25 tons each.
Betting on Construction
Last year, Mill Steel acquired the assets of Coated Steel Corp., Birmingham, Ala., to expand into the southeastern United States and Mexico markets, as well as to boost its construction business with painted metal roofing and siding applications. Coat Coated Steel formerly supplied acrylic and pre-painted Galvalume and galvanized flat-rolled steel.
“We believe there is greater opportunity in the construction market,” says Lambert. “We believe it has hit a low. We think 2011 is going to be a year for the dust to settle and in 2012 I would expect permits to be on the rise and there’s greater upside. We’re very much looking forward to the future.”
With the acquisition and the staff already in place, Mill Steel is able to offer painted building products, coating systems, substrates, grades, specialty processes such as embossing, and steel processing. The staff includes in-house metallurgists and paint experts to help with any aspect of product selection or design.
While some look to take an investment position when things are on the rise, Mill Steel sees an opportunity in the midst of a difficult recovery, according to Lambert. He says the company’s foray into the construction industry, primarily focused on purlins and studs, is also combining a team with tremendous experience in painted metal roofing and additional equipment for more robust activity in the southeast market.
“The painted metal roofing side was another product set we had our toe dipped in primarily in HVAC, but we saw more opportunities in painted metal roofing,” Lambert says. “There are other products like structural steel and bar and wire that we haven’t made any decision to get more active in. We like to stick with carbon flat-rolled steel.” Lambert says construction products will continue to grow, even more so than automotive given its current depressed levels.
“Our perspective is that the construction industry has a lot of material that still needs to find a home,” he says. “In terms of the population growth and the growth of people investing back into their homes and residences, we believe there’s greater upside potential than what it seems today. When the financial markets get settled and
employment goes up, the economy finds a footing,
there’s a greater upside.
“We try to be long term about our business. We believe the construction market represents a great opportunity. We didn’t come in during the highs. We think the construction market has been beaten down and will add a bigger portion of our business going forward.”
Mill Steel insulates itself, to an extent, from fluctuating steel prices with contract-based work, but it does make sure to manage inventories closely and avoid having excess material.
Keeping Its Word
Current CEO David Samrick took over the operation of the company from his father, Harry, who had worked in a steel warehouse before starting Mill Steel. The company started in a back room and today it has three plant locations in Grand Rapids, Detroit and Birmingham. Throughout its more than 50 years in existence, the business has been built around accountability and reliability.
“The general business philosophy is we do what we say we’re going to do,” Lambert says. “We’ve built tremendous long-term relationships. We’ve been very transparent and very candid. Our word at the end of the day is what we rely on.
Being very service oriented has afforded us the opportunity to win work and we’ve grown alongside our customers. It’s a fantastic group of professionals that run Mill Steel, from the people organizing the trucks to our CEO David Samrick.”
Just as it has expanded into the construction and building products market, Mill Steel continues to look for acquisitions that make sense, according to Lambert. It’s a company unafraid to take the long view.