Moving Metal

Then, as Europe and Asia built up their economies, global demand for steel surged, causing prices to soar. Mean- while, to counter inflation at home, the Nixon administration imposed price controls and froze domestic steel prices. By 1974, there was a gap of between fifty and one hundred percent in domestic and foreign steel prices. Isolated on the West Coast, Reliance was wholly dependent on expensive foreign steel even as East Coast competitors could purchase inexpensive domestic supplies. Worse yet, the foreign sup- pliers generally required large, fixed-volume commitments up to six months in advance of delivery at fixed prices. During the last quarter of 1974, world demand dropped suddenly and Reliance was caught with high-priced invento- ries on hand and binding purchase commitments extending into June 1975. Many customers started canceling their orders and shopping for lower prices, leaving expensive inventory on Reliance’s hands. Crider traveled to Japan to try and negotiate better purchase agreements but was unsuc- cessful. In the end, Reliance had no choice but to unload 50,000 tons of steel at a $6.5 million loss. The secure sources of funding that Reliance lined up enabled the company to weather the storm. Many lessons were learned from the experience, and Reliance has never reported a loss for any year since. EXPANDING OUTWARD Meanwhile the company had continued to expand through acquisition, with mixed results. In 1970, the company bought Catalina Steel in Los Angeles, its seventh corporate acquisition in ten years. In 1972, Reliance acquired Southern Equipment & Supply Company, San Diego’s oldest metals service center. Reliance invested $1.8 million to double the

the auction. “Bill, being the kind of guy he was,” Crider explained, “wouldn’t argue with the auctioneer, and so we bought that piece of equipment at a premium.” On the way home, Gimbel laughed about it. He said, “You know, Joe, I always told you about that 80/20 rule. You can chalk this one up to the twenty percent.” In time, Crider eclipsed Bob Zurbach both as Reliance spokesman and as Gimbel’s successor-in-waiting. Zurbach was understandably unhappy about it, but he remained a loyal Reliance officer until his retirement in September 1982. In August 1975, Gimbel named Crider Executive Vice President of Reliance and General Manager of Metalcenter Operations. From that point forth, Crider was Reliance’s chief tactician, handling the day-to-day business of running the company, while Gimbel remained the strategist, focusing almost exclu- sively on the big picture. As Gimbel put it, “Joe makes the money, and I spend it.” Ultimately, the duo became what Metal Center News called “the best known management team in the service center industry.” Crider’s ascension came during a critical time for Reliance. The company reported a big operating loss in 1975, the result of a confluence of trends that began in 1972. By then, Reliance typically bought half of its carbon steel from domestic mills owned by Kaiser Steel and Beth- lehem Steel and the rest from foreign mills. However, strict new statewide environmental legislation led Bethlehem Steel to pull out of the West Coast market in 1972. Kaiser Steel, meanwhile, was diverting most of its production to its own subsidiaries. There remained, of course, the largest domestic producer of all, U.S. Steel, but Reliance had long had a strained relationship with the steel giant—so it was effectively left without a domestic supplier.

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