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Reliance investment focus stays on N. America

Keywords: Tags  Reliance Steel & Aluminum, David H. Hannah, Metals USA Holdings, Continental Alloys, Feralloy, Acero Prime, U.S. Steel, Mitsui & Co. oil and gas

CHICAGO — Reliance Steel & Aluminum Co. will continue to spend the majority of its investment dollars in North America, according to chairman and chief executive officer David H. Hannah.

"What we found is that going to a foreign country is expensive. The risk levels are higher and returns are lower than we would get here, especially in the U.S. As long as there are growth opportunities in North America, we will focus on that," he told AMM.

Less than 2 percent of Los Angeles-based Reliance’s revenue comes from branches outside North America.

The region’s largest service center chain is appreciating—with the help of acquisitions such as Fort Lauderdale, Fla.-based Metals USA Holdings Corp. (2013) and Spring, Texas-based Continental Alloys & Services Inc. (2011)—the metals consumption it is experiencing in the oil patch and the auto industry.

"Our presence in Canada is related to the energy side of our business. EMJ (subsidiary Earle M. Jorgensen Co.) has a presence, (as does) the old Encore Metals and Team Tube businesses. We like that presence up there. Although (energy-related metals) demand is cyclical, long term it has legs," Hannah said, noting that the oil patch tends to consume more higher-value bar and tube products.

Further expansion in Canada "depends on the opportunity. We don’t have a goal of acquiring a pre-set amount of business in Canada," Hannah said.

Reliance’s exposure to Mexico is through Acero Prime SRL de CV, a joint venture with Pittsburgh-based U.S. Steel Corp. and New York-based Mitsui & Co. (USA) Inc. Acero Prime, operated by Chicago-based Feralloy Corp., which Reliance acquired with PNA Group in 2008, has three flat-rolled toll processing plants.

"It’s mostly automotive-related, with some appliance manufacturing sales," Hannah said. "That’s our biggest business in Mexico. With the auto industry taking off there, Acero Prime is well positioned to take advantage of it. Continental Alloys also has a business in Mexico serving the energy business, but it is small so far."

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