CHICAGO Processor and
distributor A.M. Castle & Co. plans to focus on two key
areas in the year ahead: integrating its legacy Castle Metals
Oil & Gas business with Tube Supply Inc., and realigning
its Castle Metals Aerospace unit.
There was little overlap between
Houston-based Tube Supplywhich it acquired in December
2011 for $165 millionand Castle Metals Oil & Gas,
president and chief executive officer Scott Dolan told
AMM Feb. 26. "The beauty (of integrating the two) is
to provide customers with one-stop shopping for the full array
of oil and gas needs, both transactional and program business,"
Oak Brook, Ill.-based Castle has
long focused on program business, supplying contract volumes of
heavy nickel alloy and stainless steel bar products to such
major oilfield services companies as Baker Hughes Inc.,
Halliburton Co., National Oilwell Varco Inc. and Schlumberger
Ltd. Tube Supply, a highly transactional business that sells
heavy-wall mechanical tubing, stocking a lot of inventory for
fluid control, downhole and numerous other applications.
Oil and gas accounted for 25
percent of Castles revenues after the Tube Supply
acquisition, up from 12 percent previously, Dolan said,
conceding that the energy industrys demand cycles are
uneven. "Its had some wild swings ... but long term,
its a great end market to be in and will have great
growth," he said. "Tube Supply leverages us better to meet
customer needs in any cycle and take out some volatility."
By creating a new structure
under one commercial leader, Castle will leverage its sales
force to "cast a wider net, up toward the Bakken (shale)
region," for example. "Thats exciting. It also opens up
international opportunities. We are doing some (energy-related)
business in the U.K., leveraging our industrial facility there
by stocking oil and gas products," he said.
Asked why the integration
didnt happen last year, Dolan said Castle brought the
sales teams together but they lost some focus on the legacy
business while focusing on Tube Supply. "We are now trying to
get back to balance"integrating systems, warehouses,
internal business processes and the sales approach, he
The companys aerospace
business also represents 25 percent of total revenues. It has
long supplied heat-treated aluminum plate to the aerospace
sector, but over time "we have been trying to focus on complex
subsystems using nickel alloys for (such aircraft components
as) engines and landing gears," Dolan said.
Castle still sells heat-treated
plate, but the company has become a supplier to the F-35 Joint
Strike Fighter program. Its Trafford Park plant in northwest
England performs complex machining for BAE Systems Plc and
supplies Eurofighter GmbHs Typhoon plane, a special
project that became operational in the fourth quarter of 2012,
Although Castle will close its
Kent, Wash., plant this year, it will continue to service its
aerospace customers from other warehouses.
"The build rates and growth for
aerospace continue to look good. We havent gotten our
fair share, probably, but we are doing our best to deliver
better product on time while staying lean," Dolan said.