Because of the low gross profit margins, you
can’t afford to pay the guys as much as you used
to. You want to reward them based on what
they’re bringing in, but that’s not as possible as
What’s also changed very significantly is that
when we got into the business, we weren’t looking to see what the world market was doing. We
weren’t looking to see if oil was decoupling from
steel. We weren’t looking to see what the futures
markets were saying. We weren’t worried about
national security issues, Section 232s, or tariffs.
We just bought and sold steel.
Steel has now become political. It’s become
difficult to do certain things, such as engage in
foreign trading or buying foreign steel.
We never had the expression “made and melted in the U.S.A.” before. I’m not saying that’s
wrong at all. I don’t disagree with it. I’m just saying those were none of the circumstances that I
dealt with growing up in my career.
Certainly the last one factor affecting this industry is technology. If you’re not ahead of the
game, you’re losing the race. The internal technology and automation need to be there. None of
that stuff mattered before. Today the most difficult thing is just staying current, keeping the staff
updated on the new technology and having them
understand the impact of what is happening.
Just look at how quickly news travels in our
industry, whether it’s a price increase or some
sort of business deal. The internet has changed
our world all the way from the associations that
serve the industry to the companies that once
used to be involved in gripping and grinning.
The internet has changed the way that we
used to brand ourselves, whether at an industry conference or a trade publication. It’s just
so much easier to send out 200 emails than it
is to spend thousands on traditional media. The
internet really has changed our industry.
FAB: Has the pace of change picked up in recent
Gross: Yes. The last two years have seen accelerated peaks and valleys in this market. The nuances of futures trading have definitely impacted the way people think about how they handle
their business. You also have trade tariffs and
national security issues that never garnered the
amount of attention they do now. The changes
to the industry come so much more quickly and
you have to be thinking about the next move.
FAB: What do you think will be the biggest
challenge for you and your company?
Gross: That’s a very good question. It’s some-
thing I think about every day. I think about how
we will compete with the markets. By that I mean
that the steel industry is basically a cartel that is
controlled by six parties, and they dictate price.
Then you also have the super-big companies,
like the O’Neals, the Ryersons, the Olympics,
and the Worthingtons, all giants of the industry.
They tend to have such a large buy that they can
control the market, which gives them an advan-
tage because even though it costs them more to
operate, they can work on smaller margins be-
cause their volumes are so much bigger.
So we’re a big company, but I start to wonder
to myself, How do we compete with those guys
two years from now? What pieces of equipment
do I need to add? We always have to be figuring
out what we have to do to stay competitive in
this ever-changing market.
So one of the things that we’re doing is taking
our business that operates out of three plants
in Bedford Park, Ill., and consolidating them into
one large plant in Gary, Ind. So the new year for us
is filled with concern about making the company
work in our new location, and the following year
focuses on how to deal with a potential recession,
which seems to be in everyone’s crystal ball.
So there is discomfort right now, but we’re
just going to keep on keeping on and do better
at everything we do.
The other thing that we do is that we are always hiring talent. We never turn away a talented person. That’s one of our philosophies: If
somebody has a talent, we will hire them.
FAB: What are some of the benefits you’re
hoping to gain with the move to Gary?
Gross: We think we’re going to enjoy much better efficiencies. We now spend days moving steel
from plant to plant to plant. Just having that one
plant with one communication system means
we’re going to pick up a lot of efficiencies there.
The second thing is geographically we are going to be located between ArcelorMittal and U.S.
Steel. We will be closer to SDI. As a result, we’ll
be saving money in inbound freight.
We will have increased capacities. We now
have a 60,000-pound maximum coil limit, but
we’re going to a 90,000-pound maximum coil
limit. We also will be able to cut ½-inch-thick
material. We just bought a new Red Bud ½-inch
slitting line to do that.
We also do toll processing, which is an important thing for some of our customers. So things
are really going to be better for us in Indiana.
FAB: How much square footage will you have in
the new facility?
Gross: We will have 250,000 square feet there.
FAB: When do you hope to be moved in?
Gross: We think we’re going to be operational in
there by the end of 2019.
FAB: Do you expect to expand the workforce
after the move?
Gross: We have a little over 100 employees now,
and we expect to pump that up by 15 to 20.
FAB: What sort of advice do you have for
someone entering this business?
Gross: I would say that this is an industry that
you just can’t give up on. You have to keep trying and trying. There’s a story that we tell about
a salesman that was trying to sell one of the big
HVAC manufacturers. It took him four years to
get in, but when he did, that was one of his biggest accounts for years.
So I would say to somebody looking at this industry, one of the really important things is to
do all the jobs. Start from the bottom and learn
how the industry works. Learn to understand
what it means to split and cut metal. Learn to understand purchasing, production, planning, and
selling. That’s one of the keys because if people
don’t understand all that, they’re going to fail.
FAB: What would you say to a young person who
might not have manufacturing or steel distribution on his or her radar for a possible career?
Gross: I think the best part is that the one consistent thing about the business is that it’s never
consistent. You will not get bored in this business as long as you keep pressing forward and
looking for the next opportunity. There’s a lot of
them. And there’s a lot of different ways to butter the bread.
You know sales makes the world go ‘round, but
it doesn’t happen without a backbone of purchasing and administration. We also have all of these
people in technology. All of these places represent different opportunities in our business.
On the fabricating and manufacturing side, it’s
a really interesting world if you’re mechanical at
all or if you have an aptitude for creativity. This is
the new business to become sexy, and we can
make it happen again.
Editor-in-Chief Dan Davis can be reached at dand@
Alliance Steel, www.alliancesteel.net
Association of Steel Distributors, www.fmanet.org/
“As a young guy, my vision was
always to build bigger, better,
and badder. Over the years that
attitude has morphed into a tagline
for our company: Always do the
—Andrew Gross, Alliance Steel