1/3/2011 — CHICAGO — Launched quietly seven months ago, service center Flack Steel Ltd. expects to expand current revenues fivefold in two years, shipping flatrolled products throughout the North American Free Trade Agreement (NAFTA) region and guiding customers through treacherous waters.

Since May, Flack Steel has gone from revenues of zero to $20 million and from one employee to 14. In October, it moved into its warehouse and office space in Cleveland.

The company distributes hot-rolled, cold-rolled, galvanized and painted sheet product but sends the material to toll processors for shearing, slitting, blanking and other services, president Jeremy Flack told AMM in an exclusive interview. Flack was president, treasurer and 50-percent owner of Lawson Steel Inc. in Cleveland, which he joined in 1998 but has since closed.

“We view our business as helping customers make good decisions,” Flack said. “Steel is a commodity, but it is how you bring it to market that helps customers, and we help them navigate what has become an extremely volatile market. We will help them save money, not on the daily spot price but with the timing of their buys. When do you go long, when do you go short? That’s how we can make money and help our customers make money.”

Flack said he wants to protect steel buyers. “It’s getting dangerous out there. Look what happened in the past month. We were begging our customers to buy in November. Some took our advice, saving massive amounts of money in the first quarter, paying as little as $530 per ton. Now, we’re telling them not to buy past March.”

Flack said his goal for the company is to reach $60 million in sales by the end of 2011 and $100 million in sales by the end of 2012. “In five years, we’ll be up to $200 million,” he said. The company is well capitalized, both with an infusion of Flack’s own equity and a $15-million senior secured revolving loan agreement from Huntington National Bank, he said.

The company is not servicing the automotive or appliance industries. “We’re in the rest of the market,” Flack said. Areas of focus include residential and industrial construction—including metal roofs and siding, as well as sheet piling manufacturing—material handling equipment, railcar manufacturing, tubing and other end-users.

He started Flack Steel with the support of some former Lawson customers and is expanding by hiring additional sales people. Flack already has sales staff in Chicago, Mobile, Ala., and New Jersey, and is looking to establish representatives in Houston and Nashville, Tenn.

Flack Steel’s shipments stretch from Mexico to Canada and are extending westward to Arizona and Utah. “We’re working on a deal on the West Coast,” Flack said.

The company expects to stock about 15,000 tons during the first quarter, not including material in process at toll processors. “The goal is not to hold more than two months’ supply, and we are trying to turn inventory very quickly,” he said.

Flack Steel’s leadership includes Brian Williams, director of business development, who has 15 years’ experience in sales and purchasing, most recently at Lawson Steel. Another Lawson alumnus, Danna DeCarlo, vice president of finance, has 30 years’ experience, including as controller, human resources director and senior buyer of steel for a Tier II automotive supplier. Customer service manager Shari Maouri has 20 years’ experience in logistics and supply chain management in the steel industry, having held the same position at Lawson after working at an intermodal freight company.

(via AMM.com)

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