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232 may 'hurt' or be 'nonevent': Bull Moose

Jun 15, 2017 | 08:47 AM | Dom Yanchunas

Tags  Bull Moose Tube, Jim Charmley, structural tubing, hollow structural sections, HSS, sprinkler pipe, mechanical tubing, Section 232 Dom Yanchunas

NEW YORK — The new boss at Bull Moose Tube Co. said prospective remedies under a Section 232 order won't necessarily aid U.S. steel tube mills, even though they suffer from stiff competition from imports. 

President Donald Trump's potential Section 232 actions may end up being insignificant or could even put stress on tube mills' customers, Bull Moose president and chief executive officer Jim Charmley said in an interview. 

Charmley said demand for welded tubing has been somewhat disappointing this year, and the domestic industry suffers from overcapacity. After acquiring two sprinkler pipe mill lines in the summer of 2016, the Chesterfield, Mo.-based company has installed only one of them.

Charmley was promoted to president and CEO in April, replacing Michael Blatz. Charmley was vice president of operations at Bull Moose for about two years after a two-decade career at Timken Co. He said Bull Moose is competing well and is poised to take advantage of secular growth, especially in commercial construction.

"The company is a strong company with strong private backing," Charmley told AMM on June 9. "Overall, our company has been doing pretty well. We try to survive in an overcapacitized market with a lot of imports that threaten us." 

Trump's Section 232 effort, possibly ready for public release next week, may provide protection from imports—and maybe not. 

"It's very possible that this turns into a nonevent, depending on what they do ... if there are small tariffs," Charmley said. "Some of our customers who make products out of mechanical tubing, if they are not covered by the 232, may be hurt."

Hollow structural sections (HSS) are Bull Moose's largest market, followed by fire-control products, principally sprinkler pipe. The company's third-largest segment, mechanical tubing, is picking up share. Charmley calls that part of the business "steady, maybe up a little bit" and said further, "We've added a few new customers and accounts." 

Bull Moose had forecast mid-single-digit percentage sales growth as of July 2016, when it acquired two sprinkler pipe mills and announced plans to move that equipment into its existing facilities in Trenton, Ga., and Casa Grande, Ariz. As of this month, the company has fully installed the mill line at Trenton and plans to begin selling product from that mill this fall. The other mill is at Casa Grande but will not be installed until the capacity is needed.

Mechanical tubing is more dependent on growth in gross domestic product and industrial production. President Trump has promised a focus on infrastructure and other policies that may stimulate investment in commercial construction. If ultimately there is follow-through, demand should grow healthier for steel tubing. 

"It should help out the HSS and particularly our sprinkler market, but there's a lot of capacity out there, and we have not seen as big of a pickup in our business as we would have hoped," Charmley said. 

The complexion of structural-tubing domestic competition in the United States has changed as a result of consolidation in the segment. After acquiring three tubing makers, steel giant Nucor Corp. is suddenly one of the largest players. Atlas Tube Co. owner Zekelman Industries Inc. responded by buying two smaller rivals in an effort to maintain its position as the largest provider. Over the years, Atlas has tended to hold sway on setting the market pricing for structural tubing. Charmley said that may be changing. 

"Nucor came in and put in a new management team. From our perspective, Atlas is still the leader," Charmley said. "With (Nucor's) focus seeming to be on HSS, that changes the dynamic" and by the end of this year, the market may look more like an Atlas-vs.-Nucor head-to-head battle at the top, he said.

"We tend to follow the big guys," Charmley noted. 

That word "follow" had a sort of second meaning among competitors, as Bull Moose was well-known for following other mills' price-increase letters but waiting a month, thereby inhibiting the full effects of the price increases for the rest of the mills. In February 2017, Bull Moose announced that it would no longer employ the 30-day notice, citing competition and margin compression. Its policy now is to put in its price increases effective immediately. 

Charmley said the company is happy with that decision. It can now focus on serving customers instead of always having to explain why it was the outlier.

Dom Yanchunas

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