In mid-November, headlines
across the country trumpeted a forecast that would have seemed
ridiculous just a few years ago: The United States could
overtake Saudi Arabia as the worlds top oil producer by
That pronouncement from the
International Energy Agency in Paris immediately stoked
coast-to-coast discussions about U.S. energy
independence, which analysts quickly corrected to
net energy self-sufficiency. What seemed to be
missing was any concrete idea of what that would mean for North
American employment and economics.
Thats where Chicago-based
Maruichi Leavitt Pipe & Tube LLC has seen opportunities
open up. While the company says it always has been
opportunity-driven, it also has been realistic as market cycles
moved through both the steel sector upstream and the end-use
But the key development that let
the company take advantage of the boom in pipe
demandÑparticularly related to the news in the oil and
gas sectorÑcame when Leavitt Tube Co. was acquired by
Osaka, Japan-based Maruichi Steel Tube Ltd. in 2008.
Thanks to the acquisition,
Leavitt was able to put into place an ambitious
multi-million-dollar expansion plan to boost productivity and
improve the quality of its finished goods. The new capabilities
also will allow the company to pursue sales growth in
fragmented markets while not becoming a direct competitor to
the service centers and distributors that are currently its
major sales channel.
Our target is not to
become the largest in terms of tonnage but to become the
highest-quality tubing supplier, said Takabumi Konishi,
chairman and chief executive officer.
Maruichi Leavitt has a
740,000-square-foot manufacturing plant on a 46-acre campus in
Chicago with a capacity of about 300,000 tons per year, and a
256,000-square-foot manufacturing facility in Jackson, Miss.,
which is currently idled.
In January 2012, we
commissioned our new state-of-the-art midsized structural tube
mill, director of sales Pat Knutson said. That mill
replaced two others that were over 40 years old. It was the
biggest investment we have made to date. He declined to
specify exactly how much the new mill cost, but said it was
greater than $15 million. It is far and away the biggest
investment we have made since 1981, and it is long
overdue, Knutson said. Maruichi came in as the new
ownership just before the (global economic) crash, but their
investment approach and their growth strategy have not changed
despite the recession.
The new midsized mill makes
rounds from 1.66 up to 5 inches and squares from 1.5 to 4
inches in gauges from 0.065 to 0.313 inch. Regional sales
manager Mike Conces noted that making everything under the same
roof is efficient, even if it requires a really big roof.
Leavitt decommissioned and
removed one older structural tube mill in December 2011, just
before the new midsized mill came into service, so there has
been slow but steady turnover of space as the production slate
has grown and changed. Another structural tube mill ran until
August 2012 while the kinks were worked out of the new mill.
That second old mill has since been idled but remains in place
as spare capacity, although there are no plans to operate it at
The four tube mills at the
Jackson plant, taken out of commission during the recession,
remain idle, but Maruichi Leavitt has rented out the rest of
the facility to the Fisher & Ludlow division of Charlotte,
N.C.-based Nucor Corp. for bar grating. Previously,
Leavitts biggest upgrade and expansion was at its largest
tube mill, the W80, which makes sizes from 4 to 10 inches
square with wall thicknesses of 0.125 to 0.5 inch. The
biggest enhancement to that mill was the quick-change package
that allows us to cycle sizes much more quickly and with much
tighter tolerances, Knutson said. We put in a
cassette system for forming and sizing that was in operation in
January 2011. That was our largest piece of equipment and the
first substantial investment in the current program.
Leavitt Tube & Metal was
founded in 1956 by Dave Leavitt. The following year it began
making tube with one slitter and two mechanical tube mills,
selling into the furniture and housewares markets. The company
added a structural tube mill to celebrate its first decade in
operation, and a second structural mill was added in 1971. In
its first international arrangement, Leavitt formed a joint
venture with Dutch firm Estel in 1979 to build a large
structural mill; that unit came into service two years later.
The first geographic step was taken in 1985, when the plant at
Jackson was built.
And so things stood for two
decades, until New York-based Sumitomo Corp. of America took a
40-percent interest in Leavitt in 2005. A new milling saw was
installed on the large structural mill the very next year, but
that was just a taste. In 2008, Maruichi Steel Tube, one of the
largest tubing manufacturers worldwide, acquired the 60 percent
of Leavitt not already held by Sumitomo. In July 2012, in
recognition of the investment and expansion, the company was
renamed Maruichi Leavitt Pipe & Tube, and given a new logo
and identity, distinct from Maruichis other global
operations. The company also released plans to produce A53
Grade B tested pipe and API 5L specification pipe after
upgrades to its largest structural tube mill, the W80, are
complete in the first quarter of this year.
For its part, Maruichi Steel
Tube predates Maruichi Leavitt by about a decade, having been
founded in 1947. Maruichi developed a global business model by
establishing manufacturing companies in China, India,
Indonesia, Japan, the United States and Vietnam. With more than
$1.5 billion in sales and total production exceeding 1.5
million tons annually, publicly traded Maruichi is one of the
worlds largest manufacturers of welded steel tube.
In addition to Maruichi Leavitt,
Maruichi has a subsidiary in Santa Fe Springs, Calif., which it
has operated since 1974. Knutson said that the business by its
nature tends to be regional, so the presence on the Pacific Rim
and the Maruichi Leavitt operations in the Midwest and
Southeast are independent each other. They tend to stay
on their side of the Rocky Mountains, mostly due to the
logistics of the marketsÑnot just downstream, but in
terms of raw materials, he said. They buy coil and
substrate from one set of suppliers, and we buy from a
different set of suppliers.
Maruichi Leavitts customer
base tends to be concentrated within 500 miles, Knutson said,
but there is plenty of growth opportunity within that radius.
Our competitive advantage is that we produce a full line
and supply the complete range from small mechanical tubes up
through 10-inch structural, he said. About 90
percent of what most service centers stock, we make, and at
present about 90 percent of our sales go through service
centers. That has been our main channel for the past 20 or 25
If the present growth plans are
realized, Maruichi Leavitt will see that service center ratio
decrease slightly but without any reduction in sales or
volumes. The plan calls for the overall pie to be grown through
more direct sales to large customers who currently buy not from
service centers but directly from competing manufacturers.
We are building our
equipment and our capabilities, Knutson said, and
then we will be able to build our business with sales direct to
industry. I want to stress that we are not going to be
competing with service centers. They have been our partners for
many, many years, and we are going to continue to support them
in every way. There is plenty of business out there that we
have not even sniffed at, accounts we have never even quoted.
Those are the ones we are going for.
That ambition can be seen in the
enhancements to the equipment. Its not just
capacity, Knutson said. We can make quicker turns,
shorter cycles and better quality out of the new mills.
Some of the new, direct markets that the new capabilities will
enable Maruichi Leavitt to pursue include agricultural
equipment and hitches for vehicles.
The companys No. 8 mill,
which produces automotive-grade A-513 mechanical tube, began
operating in the first quarter of 2012. Knutson noted that the
mill is adapted for cold-rolled or hot-rolled pickled feeds.
That will help our entry to the automotive market for
door beams, seat frames and windshield wiper assemblies,
The companys overall
philosophy is that we will make investments for quality
and reply to needs in the market, Knutson said. The
new product lines put us into new industries. That
statement might sound a bit like hubris, but Knutson pointed
out that Maruichi Leavitt competes with the largest tube mills
in the country. I would put us in the top five, he
Maruichi Steel Tubes
ownership is helping Maruichi Leavitt expand, but not
just because of deep pockets, Knutson said. They
are the largest steel tube company in Japan, so they have a
great deal of expertise. They have industry-leading knowledge
of the automotive and oil and gas markets.
And for all the support from
without, Conces noted that the parent company also has
encouraged growth from within, especially fostering internal
promotions. That is extremely important from an employee
standpoint, he said.