NEW YORK A group of U.S.
and Canadian independent steel reinforcing bar fabricators has
launched a steel purchasing cooperative aimed at leveraging
purchases from steel suppliers and keeping small market players
more competitive along the cost curve.
"What (fabricators) gain is the
understanding that theywith their volumecan extract
a better relationship with their suppliers," Chris Casey,
executive director of the group, told AMM. "We give
them an extra tool and an extra piece of leverage to affect
their bottom line."
The co-op, called the
Independent Steel Alliance (ISA), was formally incorporated in
May and officially launched Jan. 1. Its members account for
more than $500 million in purchases, including rebar, wire mesh
and bar supports, the group said.
Fabricators make an initial
equity investment in the ISA to become members and then buy
from suppliers in the ISA network. Once the group of buyers
reaches a certain purchasing threshold, the group will earn a
rebate on its purchases. The ISA will aggregate total
purchasing and send each member a rebate based on the volumes
and types of purchases each member made.
Casey said that suppliers and
fabricators both win: steel suppliers will get better volumes
from a reliable group of preferred customers they have
established relationships with through the ISA, and fabricators
will receive a rebate for buying from the suppliers in larger
"We offer an opportunity to
suppliers to have access to a very highly motivated group of
buyers," Casey said. As for the fabricators, "at the end of the
year they get one check that is representative of all the
rebates theyve participated in."
Casey declined to disclose the
price of joining the ISA, but said it was significant enough to
encourage fabricators to target a healthy rebate to match their
The ISA is seeking a wide range
of suppliers and fabricators, Casey said, declining to list
specific companies that are involved but noting that
independent rebar fabricators represent more than 45 percent of
the rebar market.
Now that its been
officially launched, the ISAs next goal it to leverage
its fabricators purchasing power and continue attracting
members and suppliers, Casey said. "Its sort of that
field of dreams: build it and they will come. Do we have to
build a supply network before members will join, or is it the
inverse? Or do we have to get the members on board before the
suppliers will join? We think its both."