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February 25, 2016 | by Steve Lawrence

The Future for Service Centers

Higher margins in value-added work, tech efficiencies, and recruiting talent

 

They are successfully positioning themselves in the high growth, higher profit sectors of the aluminum business. They are working harder and smarter to resolve their talent recruitment issues. And they are embracing big data and its analytic potential to improve their services and customer relationships and operate far more efficiently than in the past.

These were four extremely well respected aluminum industry veterans: Keith Harvey, executive vice president of fabricated products at Kaiser Aluminum; Holman Head, president and COO of O’Neal Industries; William Sales, executive vice president of operations at Reliance Steel & Aluminum; and Marc Schupan, CEO of Schupan & Sons, Inc. They spoke on a panel together, moderated by MSCI President and CEO Bob Weidner on the first day of the Aluminum Products Division Conference in November. Their observations about facing the future, and doing business smarter are object lessons for metals industry and service center executives regardless of their product lines.

Each of them said they were doing very well by targeting the higher growth sectors of the industry and providing more essential services to their customers. “Aerospace and defense have been very positive,” Sales said. The medical and office furniture businesses have grown for Schupan. Kaiser is seeing double digit growth in the auto sector. “But it is content that is driving that growth,” Harvey added. “Service centers have an incredible opportunity to innovate in fabrication and assembly and other services they offer. We are constantly looking at what we can do differently for our customers,” Harvey explained.

“We don’t just want to make things, we want to put them together, finish them, customize them. Thirty percent of what we ship is assembled. You need to be going to your customers and asking them what they need and how you can help them,” Harvey said.

“We see our customers looking for more services,” said Sales. “We don’t want to compete with them, but we do want to make it easier for them to do what they do.”

“Our customers are demanding we do more for them,” said Head. “They want a kit, or a sub assembly and it is moving us into new value-added businesses because it is difficult to distribute and manufacture from the same plant.”

Schupan too, said that “agility and service are more and more important. There are things we can do, our customers can’t. We want them to say to us, ‘We need it by tomorrow morning.’ That is the high end of our operations.”

In most cases, the executives said, those higher margin, value-added services can be a product of a new generation of information technology and analytics. “Our salesforce has customer and product information at its fingertips,” said Sales, “and that means we can service those customers, quicker and more exactly to their needs.”

“Our new tech innovations have created real new efficiencies,” said Harvey. “We produce more product today with 3,000 employees than we did years ago with 25,000.”

All four of the aluminum execs said they continually face talent and recruiting issues. “We are doing more training, using MSCI’s training courses,” Sales said. “But we are spending more time on campuses too.”

“We are having more success, not only training younger people,” Harvey said, “but also showing them that this is not the industry they thought it was. When they see one of our modern new facilities, clean, digitally operated, they can see a future.”

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