Moving Metal

among the company’s four California service centers, includ- ing “uncommon, hard to find, slow-moving items” that were otherwise too expensive to stock. PDM then moved into Nevada, Utah, and Washington, and it brought its new distribution system with it. In 1997, it had acquired General Steel Corporation, a carbon steel service center based in Washington state. By 2001, PDM was operating seven metals service centers located in Stockton, Fresno, and Santa Clara, California; Sparks, Nevada; Spanish Fork, Utah; Cedar Rapids, Iowa; and Woodland, Washington. All specialized in processing and distributing carbon steel products for the capital goods and construction industries and were linked by the unique PDM inventory distribution system. General Steel was later merged into PDM. The July 2001 acquisition was advantageous for two reasons. First, it took Reliance into a total of twenty-five states. Second, Reliance and PDM shared not only a common product mix—structural steel, heavy wall tubing and beams, and carbon plate products—but also a common culture. Said PDM President Derek Halecky, “Our operating strategies are quite compatible and fit well strategically with Reliance’s existing operations and plans for future growth.” Reliance followed up that same month with a new public offering of common stock worth about $150 million. The proceeds went to pay down the debt incurred for the PDM purchase as well as other acquisitions and left Reliance in good financial shape to continue its acquisition drive. DEALING WITH THE DOWNTURN As Reliance experienced declining volume and pricing during the first nine months of 2001, the one bright spot, with rising revenues, was the aerospace industry. But the

would come over for a job interview,” said Karla Lewis, “who, once they saw the place, kept on driving by without stopping because they did not want to work in such a gritty industrial environment.” For a time, the general sentiment was, “If they can’t put up with Vernon, then they are not the right people to work for us,” but there was no denying the fact that the Vernon headquarters were simply out of space.  In order to keep growing, Reliance was going to have to attract good people and it was going to need much more office space.  So in February 2001, Reliance signed an eleven-year sublease for 44,847 square feet of office space at Two California Plaza. Completed in 1992, the shiny fifty-two-story skyscraper was located in the Bunker Hill financial district of downtown Los Angeles. Reliance moved its headquarters into a series of well-lit, well-furnished suites on the fifty-first and fifty-second floors, capitalizing on the misfortune of the prior tenants with a below-market lease.  “It was just time for a change,” Lewis concluded, “so why not go straight to the top?” Following the move, Reliance acquired the assets of the PDM Steel Service Centers Division of Pitt-Des Moines, Inc. through its newly-formed subsidiary, which was subsequently named PDM Steel Service Centers, Inc. It was the company’s largest acquisition to date and perhaps the most logistically advanced as well. Founded in 1954, Pitt-Des Moines, Inc. was originally in the business of building bridges and added the PDM division as a support for its primary business.  Subse- quently, the PDM division became a metals service center serving central and Northern California. After building new facilities in Fresno and Stockton, however, it adopted a rev- olutionary inventory management and distribution concept. A “hub” facility in Stockton quickly distributed inventory

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