Moving Metal

good opportunity to tap into the heavy industrial and high technology sectors in the San Francisco Bay area, and so Reliance completed the $3.6 million acquisition in early May 1984. Reliance Manager Jim Falvey took over as President of the newly renamed Tricon Steel Service. After concluding the transaction Reliance moved all of its hot rolled carbon steel bars, structurals, sheet, plate, and tubing, along with the cold rolled and galvanized sheet products from the Santa Clara division, to Tricon, transforming Santa Clara into a non-ferrous specialty metals center. The Tricon acquisition was not without some bumps. Two years afterward, a metals company in Birmingham, Alabama, also called Tricon, challenged Reliance’s right to the name. The Alabama firm claimed nationwide federal trademark protection eventhough itdidvery littlebusiness inCalifornia. BobHenigson sprang into action. In a year-long series of exchanges with the Birmingham company’s attorney, he defended Reliance’s right to keep and use the Tricon name. Henigson claimed prior use as early as 1970, when the Fremont operation was called “Tricon Steel & Pipe,” antedating the Alabama company’s original trademark filing and rendering the complaint moot. In the spirit of good business, Reliance offered to compromise by changing the name if the Alabama Tricon paid for the cost of changing all signage, branding, logos, invoices, and stationery in the Fremont territory; the proposal was rebuffed. Instead, the Alabama firm insisted that Reliance prove the geographical area of claimed prior use, which was prohibitively expensive. In the end, Reliance out-litigated the Alabama adversary and kept the Tricon name. Another 1984 acquisition involved the laminated metal business of Arnold Engineering, a unit of Allegheny Interna- tional Inc., located in Fullerton, California. Reliance bought

it. Within a year, MetalCenter reported market share thirty percent greater than that of both warehouses combined prior to the merger. “When we merged the Carson and Cerritos divisions,” Heuser later told Metal Center News , “we were able to demonstrate a new mathematical principle: one plus one equals three.” The success at MetalCenter provided Gimbel with some- thing that he had long been seeking: an opportunity to replicate the SupraCote spin-off. Reliance spun its Cerritos division off as MetalCenter, Inc. (MCI) in a non-taxable private stock transaction in April 1986. Joe Crider was Chairman and Chief Executive Officer, George Heuser became President and Chief Operating Officer, and Dave Hannah was Chief Financial Officer. The company was one-hundred-percent- owned by Reliance shareholders and its employees were encouraged to participate in a newly established employee stock ownership plan (ESOP) with provisions that they could become principal owners in time through future stock pur- chases at reduced cost. The new firmwas valued at $13 million and sales were projected to reach $62.7 million by 1989, with net pre-tax annual profits of $2.2 million. Reliance showed a reduction in net worth of $3.5 million, representing the initial capitalization of MCI. In the summer of 1983, Klockner, Inc. of New York, the trading arm of the Dusseldorf, West Germany-based Kloeck- ner-Werke A.G., decided to close its carbon steel firm located in Fremont, California, called Tricon Steel & Aluminum Company. Even though he was planning for retirement, Tricon President James W. Rimmer did not want to see the company liquidated. He let Gimbel know that the company would soon be available. Tricon’s plant covered 7.5 acres, with 62,400 square feet of workspace. This looked like a

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