Moving Metal

ing and distribution of carbon steel plate, bar, and structural elements, and recorded sales of $6.6 million in 2000. Con- tinuing the trend of combining new, smaller acquisitions with larger Reliance subsidiaries, East Tennessee Steel Supply was merged into Siskin Steel & Supply Company. By then, the Southeast had become a source of strength for Reliance: revenues from the region totaledmore than $500 million—thir- ty-two percent of the 2000 corporate total—helping Reliance chalk up eight consecutive years of record net earnings. This earnings achievement was all the more impressive because the economy had cooled during the second half of the year— another recession appeared to be on the way. Steeled by years of experience in all phases of the business cycle, Reliance was ready. The company had learned long ago that warehouse space was expensive, and that keeping inven- tory to a minimum and turning it quickly was a necessity. By then, the same lesson had been learned throughout the broader American economy and “just-in-time” delivery had become standard procedure for most manufacturers. Aggressive inventory control was one of the central operating tenets that Reliance stressed in keeping its operations trim—its turnover was twenty-five percent better than the industry average. “No doubt about it,” said Dave Hannah, “if you ask our people what we stress they’d tell you gross profit margins and inven- tory turns,” he told American Metal Market . And not only was floor space expensive, but prices were unpredictable. “What’s down twenty dollars a ton today could be down fifty dollars a ton tomorrow so you’ve just got to move it,” Mollins explained. Preparations for tough times did not mean a slackening of the acquisition efforts, though. On the contrary, the silver lining in the cloud of recession was that a number of new opportunities became available, and Reliance was ready and able to acquire.

difficult decision to cut the staff from 140 to ninety. The move worked, saving the company and keeping Reliance’s Midwest operations strong. In June 2000, Reliance moved east into Pennsylvania by purchasing Johnstown-based Toma Metals, Inc. Toma Metals bought, processed, and sold secondary and excess prime stainless steel and had attained revenues of just under $10 million the year before. Toma had abundant opportunity but was short on capital. Reliance enabled Toma to expand and the acquisition gave the parent company new diversity. “It’s a niche like no other niche that we have,” Hannah explained to American Metal Market . Reliance moved into yet another niche market in August 2000 when it acquired the Aircraft Division of United Alloys Inc., a twenty-nine-year-old Southern California company that specialized in titanium products for the aerospace industry. The acquisition was made by forming a new subsidiary of Reli- ance’s Tacoma, Washington-based subsidiary Service Steel Aerospace Corp., named United Alloys Aircraft Metals, Inc., to acquire the assets of the Aircraft Division. The acquisition ensured the place of Service Steel as one of the top suppliers of aircraft-quality metals of all types. Another Reliance sub- sidiary, AMI Metals, Inc., was having a banner year in the same business. For four years, AMI Metals had provided stainless steel and aluminum sheet and plate products to Boeing. In 2000, Boeing granted a five-year contract extension which put the total value of AMI’s work for Boeing over the life of the contract at $100 million. Reliance resumed its geographic expansion late in the year with the November 2000 acquisition of East Tennes- see Steel Supply, Inc. The twenty-two-year-old company, based in Morristown, Tennessee, specialized in the process-

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