Moving Metal

ACQUIRING EMJ As Chapel Steel opened new doors in the East, another opportunity appeared that was too good to pass up. In April 2005, Reliance’s longtime West Coast counterpart Earle M. Jorgensen Company (EMJ) completed its initial public offering, establishing a market value for the company. Based in Lynwood, California, with forty additional service centers, EMJ was one of the largest distributors of metals products in North America. It was a processor and distributor dealing primarily in the specialty “long products” of bar and tubing, which were of higher value and more profitable than many of Reliance’s less expensive commodities such as carbon steel and non-ferrous products. Although Reliance and EMJ had not been competitors for some time because of this divergence in their product lines, the two companies shared common backgrounds and cultures. Founder Earle Jorgensen and Bill Gimbel had liked and respected each other, and Gregg Mollins had worked at EMJ early in his career. Jorgensen had planned to turn the company over to his son, but after John Jorgensen’s unex- pected death, Earle Jorgensen sold his controlling interest to Kelso & Company, a New York private equity firm, in 1990. Kelso merged EMJ with its Kilsby-Roberts Holding Co. but kept the well-respected Earle M. Jorgensen Company name for the consolidated enterprise. Although the merger had resulted in America’s largest independently owned metals distributor, the new EMJ was poorly managed. A catastrophic installation of a comput- erized information system in 1995 disrupted operations and led to nearly $60 million in losses. There was also persistent internal discord between the more conservative “white shirt- and-tie” EMJ staff and the laid-back “colored shirt and open

As this 1960s flyer indicates, the Earle M. Jorgensen Company was among the nation’s largest metals service centers for decades, with warehouses across the country.

collar” Kilsby management team, which ran the company for Kelso. By 1997, EMJ was on the verge of bankruptcy with a debt load of well over $200 million. Kelso brought aboard Maurice “Sandy” Nelson, formerly of the Inland Steel Co., who tapped

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