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May 1, 2009

BUILDING BETTER BUSINESSES

Formed a century ago as the American Iron, Steel & Heavy Hardware Association, the Metals Service Center Institute (MSCI)

To mark MSCI’s 100th anniversary, a three-dimensional retrospective collage by Lawrence Romorini of One of a Kind Inc. Art Studio in Silver Spring, Maryland, was commissioned. The 153-pound piece, using different types of metals, measures 66 inches wide by 49 inches high by six and a half inches deep. It was designed “to tell not just the story of MSCI,” the artist says, “but also how important metal has been to North America.”
© 2009 One of a Kind, Inc. Art Studio

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To mark MSCI’s 100th anniversary, a three-dimensional retrospective collage by Lawrence Romorini of One of a Kind Inc. Art Studio in Silver Spring, Maryland, was commissioned. The 153-pound piece, using different types of metals, measures 66 inches wide by 49 inches high by six and a half inches deep. It was designed “to tell not just the story of MSCI,” the artist says, “but also how important metal has been to North America.”
© 2009 One of a Kind, Inc. Art Studio

has experienced name changes, mergers and myriad economic swings. But during its first 100 years it has remained an important advocate for metals distributors and the broader industrial metals industry and customer base.

Over the years, the institute transformed itself “from a traditional old-line trade association business model into a much more progressive—almost consulting—business model,” says MSCI President and CEO M. Robert Weidner III. That transformation today includes research and data products as well as sales, operations and leadership training, the Strategic Metals Management executive education program for senior leadership, a network of active local and regional chapters, business-oriented conferences and, in the past four years, Forward magazine.

Such a wide-ranging mission wasn’t the case in the early days, as unity and what some generations later would call “networking” were the primary goals.

“We were organized for the benefit of all the heavy hardware jobbers in the country, and not for any one section or state, ‘and nailed our colors to the mast’ with this object in view: not even ‘The greatest good for the greatest number,’ but ‘All for one, one for all,’ and that each member must have the benefit of these improved conditions in all sections of the country,” said president E.P. Sanderson at the third-annual American Iron, Steel & Heavy Hardware Association convention in 1912. “We were organized … to create and preserve more friendly relations with each other, more true brotherly love toward each other, in a business and social sense; for the interchange of trade ideas and business methods, and to make the condition of business on the high plane which our standing in the business world would warrant us in demanding: to arrange for better business customs and a more satisfactory method of distributing the products of our manufacturing friends ….”

As World War I began, the War Industries Board selected the American Iron, Steel & Heavy Hardware Association’s Washington, D.C., representative, Andrew Wheeler, as chief of Warehouse Distribution, a post he held until that conflict’s conclusion. Wheeler later became the association’s chairman. By 1919, the outlook for members, many of them government wartime suppliers, was strong. As then-chairman F.H. Butts said, “…never in the history of this association have we been in as splendid financial condition as we are today.”

Worker demands and perceived government intervention were among the more serious challenges in those post-war years. Distributors became an increasingly important link in the supply chain with the rise of sheet mills and structural mills in the 1920s. Metal was mostly sold “as is.”

Through the 1930s, the group represented the industry before President Franklin D. Roosevelt’s National Recovery Administration for fair trade and labor standards, and in 1934 it reorganized to become the American Steel Warehouse Association Inc. The incorporation was “to represent the steel warehouse distributors of the country,” say minutes from a special reorganization meeting held in November that year, and the association adopted a new constitution and by-laws that recognized local chapters, established active and associate members, and based annual dues on gross sales.

By the late 1930s, there was growing concern over increasing amounts of foreign imports of all commodities, “chiefly of raw materials required in the manufacture of finished products,” noted former U.S. Steel President James Farrell at the American Steel Warehouse Association’s 1937 annual meeting, and talk about how it would affect production and trade policy.

As war in Europe again spread to the rest of the world, association member H.L. Edgcomb of Edgcomb Metals (today part of Macsteel Service Centers USA) addressed the executive board: “This business of ours is a critically essential factor in winning this war …. Who knows, except us, the effect on the schedules of the steel mills, were they obliged to produce the thousands upon thousands of orders in the quantities which we furnish to this all-out program daily.”

By the ’50s, with the war in Europe and the Pacific concluded, the outlook was brighter for warehouses, as the American Steel Warehouse Association established new education programs, and the industry modernized in terms of financial management, accounting systems, market research and in other areas. At the decade’s close, the group again changed its name, to the Steel Service Center Institute, as many member companies had adopted the phrase “steel service centers” rather than “warehouse,” “jobber” or “distributor”— terms frequently associated with the past.

Throughout its history, the organization has helped its members to be better informed on policy and business. “We are being bombarded by economic changes …. We have a ‘learning gap’ that needs to be filled,” the institute’s president, Bob Welch, said in 1964. Thus, an Executive Development Program, through partnership with Michigan State University, was established that year to refine and expand technical sessions at regional and national meetings.

“In spite of increased shipments throughout the year, service centers ended 1977 with inventories that were too high for the volume of business we experienced,” Welch told Metal Center News in January 1978. But in the 1980s, the situation improved, and service centers were filling 80% of the nation’s steel orders.

In 1984, SSCI celebrated 75 years and measured the success of the strategic plan it had implemented a year earlier—the launch of an effective in-plant video seminar and local middlemanagement training courses, among others.

The institute expanded in 1993 when it incorporated the Canadian Steel Service Centre Institute. More growth came as the 51-year-old National Association of Aluminum Distributors merged with SSCI in 2002. The institute changed its name just before the merger to the Metals Service Center Institute.

At year-end 2008, MSCI had 434 member companies—59% of which had not been members at year-end 2001. Institute revenue reached a record $9.4 million last year. Moreover, in 2008 the institute provided $300,000 to support scholarships issued by chapters for 154 children of MSCI member-company employees.

Today’s MSCI operates on a value-platform dubbed NEAR, for networking, education, advocacy and research. Conferences have been shortened in length and bolstered with robust business agendas. Education offerings have been updated and expanded. Advocacy programs have been invigorated, and research, including the closely watched Metals Activity Report on aluminum and steel shipments and inventories, have been modernized and streamlined to make the data easier to collect and understand.

MSCI’s 31 chapters in the United States, Canada and Mexico continue to provide local networking opportunities and support local versions of the institute’s education programs.

“Right now, we are in some uncharted waters with the new administration and Congress as it relates to signaling of a different environment for the business community,” Weidner says, “and I think a different environment for the association world.”

But, he says, “If there is anything the history of our institute shows, it is that there is tremendous, long-term value in a trade association for companies and individuals. No matter what the name, no matter how difficult or good the times, our members thrive on the chance to discuss issues, hear new ideas, receive metals-oriented training and executive education, generate and use valuable data and engage in public policy advocacy. All of this works for the industry only if it helps to build better businesses, and our century of history shows that, decade in and decade out, we do.”