Distributors rewarded for staying nimble during downturn

Feb 29, 2012 | 07:00 PM | Corinna Petry

Tags  North American metal shipments, service center shipments, service center outlook, steel buyers, Institute for Supply Management, Corinna Petry

Being agile is important in any business, but agility has been the watchword that many say has gotten service centers through the challenges of recent downtimes and set them up for success when the economic climate is stronger.

Whether it was through inventory control, managing credit, expanding via acquisition, or looking for new efficiencies and practices, service centers pursued various paths to weather the rough economic environment. Now, many believe, it’s paying off.

“Everything seems to be OK,” said the president of a Midwest service center that specializes in coated coil product. “We’re still busy with automotive and appliance contracts.” Spot prices rose $30 to $40 per ton in January from the previous month, a sign that business was picking up at the start of the year. “Customers still don’t know what they need; they just call us and say, ‘We need more.’ But business is a little more stable. Some of our customers are even buying beyond the first quarter, so we have positioned ourselves (to meet that demand).”

He expects a traditional first quarter, but “I’m a little more confident now than in the previous six months,” adding that mill price increases look to continue. “Lead times have moved out at several mills, so there is more strength there. We are able to get what we need, but we must plan accordingly.”

At the start of the economic downturn, service centers learned fast how to cut inventory, keep it trimmed and conserve cash—especially because banks were particularly unfriendly to the industrial community at large—and are now using those savings to control their destinies.....