CHICAGO Reliance Steel & Aluminum Co. executives see toll processing of carbon and stainless steel, and aluminum, as a growing profit center for the company.
"Toll processing serving the automotive market continues to grow," Reliance chairman and chief executive officer David H. Hannah said Nov. 13 during Cowen & Co.s fourth annual Global Metals, Mining and Materials Conference in New York.
"To put in perspective, Reliance processed more metal through toll processing operations than we sold in the rest of company combined (during 2012)," he said. "We processed 4.5 million tons and sold just a little bit less than that last year. So we touch a lot of metal and do a lot of things to it, and we plan on doing more."
President and chief operating officer Gregg J. Mollins echoed the sentiment. "We are excited about the toll processing operations," he said.
"The shift is definitely taking place from carbon steel to aluminum, and its taking place very rapidly," Mollins said of the materials choice battle, especially for automotive applications.
"Were investing in adding capacity to successfully produce those (nonferrous) products. ... The toll processing business is the most profitable area we have. The revenues dont show it because we dont hold inventory or sell metal. But its the most exciting market we have going forward over the next few years," he said.
"We are blessed that we have two of the largest toll processing companies in North America and we will be growing both of those," Mollins said, referring to Chicago-based Feralloy Corp. and Precision Strip Inc., Minster, Ohio. Feralloy was acquired as part of Los Angeles-based Reliances $1.1-billion purchase of PNA Group Holding Corp., Atlanta, in August 2008. The company performs pickling, slitting, leveling, cut-to-length and blanking of coils in six states, and has three plants in Mexico. Precision Strip has 10 U.S. locations and one in Mexico performing slitting, leveling and blanking services.