Moving Metal

Although the increasing sales were good news, Reliance was becoming a victim of its own success. Gimbel called the amount of metal moving through the warehouses “consid- erably over our physical handling capability.” The crowding situation had become so acute that Reliance had to ask sup- pliers to withhold shipment. When the new bay was ready in April 1959, in fact, Reliance’s employees were so busy filling orders that they did not have time to move in. Sales continued to climb through the spring and summer, even in the midst of a long national steel strike, which allowed the company to sell much of its slower-moving inventory, including items that had been slated for the scrap barrel. Aluminum and magnesium lagged due to a decline in aircraft industry requirements but steel was still hot. As 1959 drew to a close, Gimbel informed the Board that “the year was our biggest in sales and profits.” With sales just over $15 million, “it was a good year,” he said, expressing satisfaction that the company had weathered the worst. Gimbel was now ready to embark upon a new course, one informed by the frustrations and financial pain of the past. Henceforth, Reliance would not only grow internally but also expand externally through targeted acquisitions. This would require new sources of capital and sophisticated financing, but Gimbel believed that Reliance could get it. He was sure that before long Reliance would be second to none in the metals service center industry.

First, though, Gimbel needed to resolve Reliance’s chronic space problem. The issue had become critical, con- sidering the recent expansion of Reliance’s competitors U.S. Steel Supply, Reynolds Supply, Howard Supply, and A.M. Castle Co., which were building new warehouses themselves. The costs of operating two warehouses and Plant #2 were also becoming prohibitive. Gimbel therefore began considering a consolidation all of the existing operations into an entirely new warehouse. The Board had already authorized $225,000 for construction of the new bay at the 26th Street warehouse, but Gimbel wanted more. He proposed that Reliance allow its 37th Street lease to expire, sell the two cranes there to the landlord for $32,500, buy two more acres of adjoining land on East 26th Street at an upcoming auction for approximately $90,000, build a 7,500-square-foot office building for another $90,000, and add 36,000 square feet of warehouse space for $120,000. The Board approved these ambitious and expen- sive plans. In May 1959 Gimbel and Hiemenz bought the 26th Street property for $94,000. In July, Reliance hired the architecture firm Albert C. Martin & Associates to design and build the new office building. A bronze plaque and photograph of Neilan was placed in the reception area to commemorate his status as company founder. Meanwhile, the business was thriving under Gimbel’s dynamic leadership, reaching record monthly sales of $1.4 million in April 1959. This was due in part to the expansion of sales territory to cover the area from Santa Maria in the north, San Diego and Chula Vista to the south, and Riverside and Banning to the east. Twenty-four salesmen now worked the southern California region, and Reliance applied to do business in Arizona.

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