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Customer-centric and primed to climb the value chain

Aug 03, 2017 | 07:00 PM | Myra Pinkham


Klein Steel Service Inc. has come a long way since purchasing its first three truckloads of steel in 1971. Last year, the Rochester, N.Y.-based, regional carbon steel, stainless steel, aluminum and specialty metals service center counted some 2,500 customers, and logged a 19-percent jump in shipments. 

A $40-million gain in new business charted in 2016 alone, the anticipation of 10- to 15-percent annual growth going forward—powered by further geographical expansion, marketing initiatives, and a deeper push into multi-stage processing and first-stage fabrication kits—have combined to earn Klein Steel AMM’s 2017 Excellence Award for Service Center of the Year.

Klein Steel’s roots date back to the 1960s and a small scrap yard established and operated by Arnold Klein—the father of the company’s current president and chief executive officer Joe Klein—with his brother. When the elder Klein couldn’t secure a steel piece needed to repair the yard’s only truck from any of the five service centers operating in the Rochester area in 1969, he took matters into his own hands.

Klein Steel purchased its first processing equipment in 1986, the same year it severed formal ties with the scrap yard. The investment underwrote the addition of burning and sawing capabilities and was the first of several, which saw the installation of increasingly sophisticated processing equipment, including laser and waterjet cutting and eventually machining capabilities.

Over the years, Klein Steel has embraced a business philosophy anchored in taking care of the customer and pushing beyond simply supplying commodity products. Both are key drivers behind the service center’s most recent push into multi-stage processing and kit building, Joe Klein, company president, said.

Klein readily acknowledges that in pursuing such a path, the company must avoid competing against its own customers. At the same time, he points out that performing multi-stage processing for customers with older, underutilized equipment and who are looking to simply assemble certain components rather than do processing and/or fabrication in house has honed Klein Steel’s competitive edge.

“Not only is it an opportunity for us to escape from ‘Commodity Land’, but a lot of our competitors aren’t able to participate in that space,” Klein pointed out. “They just don’t have the equipment, training or inventory to do so.”

The willingness to invest in new equipment and inventories—even when the business environment is challenging—counts as another distinguishing characteristic. That willingness was evident back in 2004 when Klein Steel moved from a much less efficient facility to its current 142,000-square-foot headquarters, where it could capitalize on more sophisticated processing equipment including a Kasto automatic storage system.

Last year Klein Steel opened a 40,000-square-foot hub facility, which is located adjacent to its headquarters and equipped with some of the most advanced processing equipment available, to meet the requirements of one of its newest, and largest, customers, Greene, N.Y.,-based Raymond Corp, the North American producer of Toyota forklift trucks.

“It is run almost entirely digitally, similar to what you see in an automotive plant, with everything monitored and controlled very carefully,” Klein said.

While the hub is dedicated solely to Raymond, at some point Klein Steel will likely incorporate a number of the technologies in use there into the company’s main facility, Klein says, noting that the service center has become increasingly sophisticated in its use of data.

Although the company has used activity-based costing for “a long time,” Klein said, it is looking to go a step further by allocating specific costs to every one of its orders. The challenge is a steep one, he concedes given that orders can vary from about one pound to 100 tons, that each item the company sells has a different cost, and it is difficult to place a specific cost on the various types of processing and fabrication Klein Steel performs.

Klein Steel is equally committed to growth. The company is currently looking at three additional areas of interest, although it is too early to identify the locations, Klein said. Over the years, the service center has expanded its geographical reach west to Buffalo, N.Y., and east, first to Syracuse, N.Y. and more recently to Albany, N.Y., and even into New England.

As Klein Steel plans and preps for the future, one of the major challenges it faces is maintaining the company’s “family” culture.

“We hire people who are passionate and who really care about both the company and want to do whatever they can to take care of our customers,” Klein commented. “We try to create a culture where our workers enjoy coming to work. We do what we can to make them feel valued. We try to treat them fairly, to compensate them well and to make them feel that their voices are heard. We want to make sure that this entrepreneurial spirit isn’t dampened as we grow.”



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