Metal Center News

JAN 2018

Metal Center services the metal center and toll processor industry.

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our branches does a lot of manufac- turing. Value-added. Our business has just flipped since 2008. 60-40 as far as stock vs. not. Now it's like 35-65. The only thing about that is finding the people to run all this equipment. That's a real problem. We have 200 employees and we have 18 open positions right now. It's hard. N Tenenholtz: We're in the same boat there. Just hiring warehouse help is extremely difficult. N Heneveld: How do we make our- selves more attractive to young talent? There's a sense we're still an antiquated dirty, smoke-stack industry that young people don't want to be involved with. That's just not the case. The technology at the mills, and even the service center side, with lasers and press brakes and robotics – there's some really neat stuff going on. It would be nice to market in a way that we could get more young people attracted to our business. MCN: To the extent you can discuss it, thoughts on price? N Sabel: Too low. The steel business is so cyclical and the support of the industry by gov- ernments makes predicting very dif- ficult. It's like with 232 we were dis- cussing earlier. 232 could be really big for domestic producers or it could be nothing, and everything in between. When is it going to come out? Is the president going to take all 90 days once it's turned to him? Will he be ready to pull the trigger? Who's going to get special treatment and who isn't? I think all of us have been burned by inventory price collapses at least twice in the last nine years. So, people don't want to put in a lot of inventory, be- cause of the fear of getting crushed. It used to be you make a big buy at certain times of the year, and you'd get your money back. Like in Decem- ber when mills are slow and 1Q is usu- ally good. It didn't take a real brilliant mind to figure out. Now, it's just a different world. N Heneveld: The mills won't even make a strategic buy on the scrap side. N Sabel: They forget about winter ev- ery year. N Heneveld: When the price is down, they won't take a strategic position like China or somebody else will. They re- fuse to do it. N Sabel: I think it's the financial boys. There's something about report- ing to the market. Inventory is a no no. They'd rather have it in cash than in- ventory, even facing winter, which who knows if it's going to be tough or nor- mal or light. It always disrupts. N Merlo: The flat-rolled market is going to stay relatively firm. All the indicators we normally see in a down market – cheap steel at the end of the year, a lot of foreign coming in at low numbers—none of that stuff is out there right now. It leads us to believe things will stay pretty steady. The mills seem to have it right where they want it, keeping it at relatively the same level. It doesn't mean if 232 comes into play, they won't try to jack it up. I don't think we're seeing a lot of downside. N Prine: The futures market has flat- rolled up a little. N Blaisdell: We expect it to stay firm, and trickle up at the end of the year. With some other variables, with infra- structure, whether 232 happens. There are a lot of promises out there. What was the infrastructure pledge? A tril- lion? N Sabel: Due to the friendly confines of Washington, and the politicians looking out for the good of all its citi- zens, it undoubtedly will happen in a couple of days. N Bernstein: One other thing, for a flat-rolled buyer, the Ex-Im bank is in limbo. You talk about Big River, it's full of SMS, exported equipment that was guaranteed by the German govern- ment's Ex-Im type program. We need to get back on track for our manufac- turers. The steel industry is pretty well hamstrung. For midsize companies exporting a lot of 20 million process- ing lines, it would be tough without it, without a guarantee. That's all been stymied for six months. MCN: Do you see any acceleration in M&A? N Prine: I think it will continue. I'm not going to say fast, but you're go- ing to continue to see more. Unless you have a niche, you've got to keep growing, and that usually means ac- quisitions. I think it will happen more and more. N Sennett: It's certainly going to grow. We just came off of two pretty good years. I think we'll see an in- crease in activity this year coming up. MCN: What challenges do you face as distributors? NASA Roundtable 20 ❘ Metal Center News — January 2018 " There's a bit of overcapacity, when it starts to pick up. It's driving margins down because people are trying to fill up their equipment. It's not healthy. " Tom Sennett, Samuel, Son & Co.

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