Moving Metal

point B.” Reliance covered more regional markets than most of its competitors, but there was one conspicuous absence— the Midwest, which was still, as Hannah put it, “the largest metal-consuming part of the country.” In March 1999, Liebovich Bros., Inc., headquartered in Rockford, Illinois, became available. Founded in 1939, Liebo- vich Bros. specialized in carbon steel products, with sales of $130 million and an excellent reputation in the industry. After some quick negotiations, Reliance brought Liebovich Bros. into its family as a subsidiary. The acquisition included a full- line metals service center and two metal fabricating facilities in Rockford, and a metals service center near Grand Rapids, Michigan. Now with a foothold in the vast upper Midwest market, Hannah believed Reliance could “continue to grow with access to new customers and an expanded product base.” Later that year, Reliance established a presence in the Ohio Valley by acquiring Pittsburgh-based Allegheny Steel Distributors, Inc., which specialized in cutting to length and blanking carbon-steel flat rolled products. While Reliance was implementing its increasingly ambi- tious acquisition strategy, it also worked to ensure that all of its facilities maintained their competitive advantage through continual improvements in technology. In May 1999, Reliance purchased a Red Bud seventy-two-inch, high-speed multi-cut blanking line for its Los Angeles metals service center. It was a $2 million machine, one of only seven, and the only one west of the Mississippi River. Jim MacBeth told Modern Metals that “a growing disparity between the quality of products being produced by mills and the quality requirements of our customers” led to the upgrade. The high-tech blanking line produced precision blanks to “some of the tightest dimensional tolerance capabilities in the industry.” Another

One of the first challenges that the management team faced was a series of ups, downs, and opportunities at Valex, the company’s subsidiary that specialized in manufactur- ing electropolished stainless steel tubing and fittings for the semiconductor and electronics industry. The up came in February 1999, when Valex acquired the assets of Ohio- based Advanced MicroFinish Incorporated and integrated them into its Ventura, California headquarters facility. The down occurred a short time later, when Valex President and COO Dan Mangan paid a visit to Dave Hannah. Valex had a problem, he explained. Forecasts indicated that with the demise of the domestic electronics industry, the compa- ny’s U.S. customer base would soon dry up. But, Mangan continued, there was a potentially lucrative solution: while electronics stalled in the United States, the South Korean industry was exploding—Valex could establish a business there. Indeed, there were some indications that the South Korean government would look favorably on a new Reliance venture. Valex was already in the European market with Valex S.A.R.L. based in France, so a precedent was already set. In November 1999, Valex Korea Co. Ltd. was established in Seoul. Construction of the Valex Korea facility near Seoul was completed in the second half of 2000. Valex Korea was the only high-purity stainless steel tubing and fittings manu- facturing plant in South Korea. As important as expanding internationally, Hannah believed, was taking advantage of the “truly regional econ- omies here in the United States.” The metals service center industry was, by nature, a local business. “No matter what we think, no matter how big we are, most of the time the metal that we sell doesn’t travel well,” Hannah explained. “It’s heavy and big and bulky and it costs a lot to ship it from point A to

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