“What I’ve advised people in the company to do is that, opposed to just writing checks, we need to look at it with a little different philosophy—getting involved. There are ways you can give and be involved without writing checks and running up expenses. That’s going to be our approach in 2009. Last year we gave the Junior Juvenile Diabetes Foundation a $1,000 check. This year we gave $500 but will be putting a group together to walk in their walkathon. That’s one small thing.”

Debt and Pressures

In those good times of the 1960s, many service center companies assumed excessive debt to finance growth. This balance sheet excess, little known in the past in the conservative industry, sparked a wave of industry consolidation that continues today. Like many trends, consolidation of the service center industry was apparent early on the West Coast.

William T. Gimbel, whose uncle had started Reliance Steel Products Co. in 1939, took control of the Los Angeles-based company in 1957. Gimbel was one of the first entrepreneurs in the industry to pursue a strategy of aggressive growth through acquisitions. Under Gimbel’s leadership, the former supplier of reinforcing bars for southern California extended its product line and its reach.

Size mattered a great deal on the West Coast, in part because service centers from Vancouver to San Diego were buying off of boats. “There was not much difference between the Canadian and U.S. business,” Duncan Thomas, former chief executive officer of service center A.J. Forsyth & Co. in British Columbia, says. “We would buy steel from all over the world. When you got ocean freight, you’d have to order larger quantities.”

At the same time, domestic steel distributors faced pressures from foreign mills, which set up distributorships in North America, especially at West Coast ports, to move their products. In 1977, Purchasing World magazine estimated as much as 15% of the U.S. steel service center industry was controlled by non-U.S. mills, prompting one observer to tell the magazine, “Substantial foreignowned service centers on the East and Gulf Coasts are causing havoc in the marketplace.” Moreover, independent steel brokers sold metal off the docks, without the overhead expense of warehouses.

The end of the 1970s, marred by high inflation and anemic economic growth, ushered in a challenging decade for metals service centers. Domestic steel mills swooned under the pressure of low-cost imported steel and ill-advised capital investments that bore little relation to customer demand. In 1977 in Ohio, Youngstown Sheet and Tube collapsed into a merger with Republic Steel. More companies disappeared after a steep recession that began in 1981 and lasted through 1982.

“From 1981 to 1993, we made two acquisitions or more a year on average,” David H. Hannah, current board chairman and chief executive of Reliance Steel & Aluminum, recalls. Hannah had been the company’s outside auditor when he was offered the job of chief financial officer in 1981. “The owners [the Gimbel family of California] had a nice attitude toward growth,” Hannah says. “That was one of the real attractive things to me when I was trying to decide whether I should leave public accounting. In those days, the types of companies to be acquired were primarily small, troubled companies” with management shortcomings and financial problems.

“We would acquire them when we thought we could figure out how to make it work,” Hannah says. Often new management was installed or the assets of the company were merged with another Reliance unit.

The aluminum industry suffered as well in the late 1970s and early 1980s. “As we look at the evolution of our industry from 1960 to 1977, a generation of nurturing and building, and compare it to the generation that has passed between 1977 and today, we appear to have given back in the last 15 years the progress we had achieved in the mid- 1970s in making our industry an effective and profitable supplier of aluminum products,” Michael J. FitzSimons, president of the National Association of Aluminum Distributors, told the organization’s members in 1991.

As recessionary conditions abated in late 1982, three developments pointed the way to better times in the decade ahead for the North American service center industry. First, computers found their way into even the most tradition-laden companies in the metals industry. From sales order-entry systems to inventory controls to computer-assisted metal processing tools, information technology promised lower costs, higher inventory turnover and better customer-supplier relationships.

“There is an incredible amount of information feedback to our customers and suppliers,” says Bill Jones of O’Neal Steel, which installed its first computerized order entry system in the early 1970s. Today, one of O’Neal’s subsidiaries sells material demand aggregation software as a separate profit center.

A second development, the Canadian- United States Free Trade Agreement, enacted in 1988, enhanced the flow of commerce between the two nations. “The Canadian mills, if they were just to dwell on activity in Canada, would have sunk in overcapacity,” recalls Gerry Hudson, a former vice president for Algoma Steel. “Canadian mills could seek out service centers in the United States.”

At the same time, several Canadian service centers began to develop operations in the United States. “In the late 1980s, there were a lot of manufacturing plants [in Canada] that were branches of American companies,” recalls Peter Baines of Samuel, Son & Co. “There was a fear that [as a consequence of free trade agreements] they would bring the manufacturing back to the United States and just distribute in Canada.”

The third development, in the view of many business historians, had an odd name: W. Edwards Deming.

“First Time, Every Time”

When General MacArthur assumed control of Japan’s destiny after the war, he brought with him a 40-something, bespectacled statistician named William Edwards Deming to help take a census of the population. Deming, a sensible native of Iowa, did more than count heads. Consulting with Japanese business leaders, he conveyed process control techniques that established what might have seemed a contradictory premise: improved quality lowered costs.

To the extent that he relied on price measurement of variations in industrial functions, Deming seemed like a new version of Frederick Taylor. In fact, Deming would have been an intellectual nemesis of Taylor, who favored topdown, my-way-or-the-highway shop floor discipline. Deming insisted, “The basic cause of sickness in American industry and resulting unemployment is the failure of top management to manage.”

Shortly before he retired, Lynn Williams, president of the United Steelworkers of America from 1983 to 1994, told the Harvard Business Review: “Finally we are starting to move away from Taylorist models, which divided work into its simplest constituent parts. In the new models, workers’ brains are valued and used.”

In 1950, the Japanese Union of Scientists and Engineers created the Deming Prize to recognize achievements in quality management. But his concepts would not fully flower in North America until 30 years later, when the Ford Motor Co. employed them in the 1980s to boost profitability. Once Deming’s ideas took hold, often through the teachings of management consultants and trade associations, business mission statements of thousands of companies took on a new tone.

“Today, we are putting a renewed emphasis on quality,” Joe D. Crider, executive vice president of Reliance Steel & Aluminum, told the National Association of Aluminum Distributors in 1986.

“We are learning that we can no longer inspect quality into the product. Now, we must control the process. Quality must be built in first time, every time, if we are to remain competitive. We have to somehow convince management and employees that quality results in profits, not costs. And we should measure quality from a customer’s perspective rather than what is acceptable to our companies.”

Invocations of “quality” as a solution to a host of business problems are as common today as 20 years ago in the metals service center business. The Deming way seemed to fit perfectly the industrial identity that service centers had been struggling for decades to practice and convey to their suppliers and customers.

But first, the message had to be sent internally. In an interview, Robert Siskin, whose grandfather founded Siskin Steel and Supply Co. in Chattanooga, recalls the time his company was bitten by the quality bug: “One thing I particularly got involved in after we sold our scrap metals business [in 1990] was a quality program with the remainder of our company. The purpose was to try to correct mistakes and prevent mistakes from happening.

“We ended up forming corrective action teams. We would involve more of the employees in some of the decision-making. When we discovered that mistakes were made, instead of getting angry and firing people, as might have been the case in the past, what we tried to find out was what was causing the problem.

“We had a problem in one shift in one particular warehouse when we were shipping the wrong size material. We put together a corrective action team, including most of the people from that warehouse. We found out that we had a couple of employees on the second shift who did not know how to measure. They did not understand fractions. They were guessing, and we did not detect that in our hiring. No one ever thought to ask the question, Do you know how to measure?

“We gave them some remedial education on how to measure,” Siskin says. “They were good, hardworking people. They simply didn’t know how to measure and were afraid to mention it to anyone for fear they would be fired.”

Attitude for Quality

In a related story, Siskin recalls: “I was trying to make a point about how to react to people when things went wrong. I was telling them that when you talk to people about wanting them to do something, the one thing that you don’t want to do is tell them to do this because I’m telling you to do this. You’ve got to convince them that they need to change their attitude.

“I put together a scenario where I was talking to a particular foreman. I said, I want you to do this and, remember, my name is on the building. Everybody sort of shrunk down in their chairs. But one of the foreman said, ‘Your name is also on the mud flaps.’ I thought that was a most courageous statement from someone who really knew how to communicate with people or how not to communicate with people.”

The sales force presented another hurdle to instilling a quality mindset. Nothing in the service center industry is more embedded and more frequently asserted than the idea that “it’s a relationship business.” But the meaning of that phrase sometimes has been troubling.

In his candid memoir, Kirkman O’Neal recalled one incident in the early days of his company, when an “expeditor” for a potential customer would bring him inquiries regarding steel orders but repeatedly give his orders to O’Neal’s competition.

“One day the man told me he had been here for two months and not had a decent drink of whiskey,” O’Neal wrote. “I told him I thought I could take care of the situation and gave him a quart of corn whiskey, which I had aged in a keg. From then on we received orders …. The expeditor reversed his procedure. From then on he would get [the competitor’s] bid, bring it to me and then get our bid. Naturally we were always just under.”

Preserving customer intimacy while promoting professional practices is well under way, Chicago Tube’s McNeeley says. “We have purged the environment of all non-technical sales people,” he says. “The superficial, generic salesman is now gone from our industry.” Incentive compensation programs, including profit sharing and phantom stock, helped closely held companies link pay with performance.

Yet consultant Michael E. Workman insists forced quality innovations, including technology upgrades, do not bring nirvana to selling, processing or warehousing. Some service centers “overtechnologize” without solving more basic problems first, he says.

“If you already have a system or a process that is effective, technology can enhance that process; but if you expect technology to come and give you an answer you are going to be extremely disappointed,” he says. “A computer takes a bad manual system and makes it faster.”

Breakthroughs and New Strategies

The quality imperative has altered the way service centers think about their two major business functions: inventory control and first-stage metal processing.

In terms of inventory control, real estate, especially at service centers that were close to urban customers, has become a quality issue. In a conference room in Central Steel & Wire Co.’s two-million- square-foot Chicago facility, a framed reminder from company founder James R. Lowenstein reads, “Let your business push you out of space, not let your space push you out of business.”

One quality innovation in warehousing occurred when service centers began measuring sales per cubic foot, rather than per square foot. Sisken Steel and Supply’s Chattanooga plant is located near the Tennessee River and highways. To handle expansion of its steel bar inventory, the company in the mid-1990s erected towers containing an automated storage and retrieval system that was twice as high as its existing 25-foot racking system space. “We had to go up instead of out,” Robert Siskin explains.

In 1951, George Raymond Sr. and Christian D. Gibson, at Lyon-Raymond Corp. in Greene, New York, obtained a patent for an electrical lift truck with a simple design breakthrough. Instead of balancing the weight of material being lifted with a counterbalancing weight on the chassis, as forklift trucks do, balance was maintained more compactly by extending legs horizontally out from the chassis.

The result was the sideloader truck for storing and picking metal inventories in narrower aisles than forklift trucks permitted, significantly increasing the sales per cubic foot.

Metal processing also has altered warehousing strategies. In the simplest sense, a warehouse that operates cutting tools reduces the expense of maintaining multiple lengths of metal in inventory racks because metal can be cut to order as needed. “To that extent, your value-added capabilities are accentuating your wholesaling activities,” says Michael Hoffman of Macsteel Service Centers USA.

On the flip side, warehousing and inventory control innovations can be value-added services on behalf of metal preprocessing.

“The saw came first,” reasons Werner Rankenhohn, president of the U.S. operations of German-based Kasto GmbH, which makes industrial saws and automated storage and retrieval systems. “When everybody started to make the saw faster-cutting, we thought if the saw is sitting idle because people have to get the material from somewhere to the saw or take material away from the saw after being cut, it really doesn’t matter how fast you cut if the saw isn’t doing anything while the operators are running around organizing and handling the material.”

Service center companies quickly discovered that improving quality in warehousing and metal processing is not a straight-line problem. Necessary calculations may result in a service center taking a pass on technological innovations.

For example, state-of-the-art automated storage and retrieval systems promise distinct advantages: improved safety, labor savings, precision and accountability. But the cost is high and the financial and operational risks can’t be ignored.

In the late 1980s, Kasto began selling automated storage and retrieval systems in North America to major manufacturers such as Caterpillar Inc. “We were thinking about going after the steel distribution industry, but the systems were not reliable enough to even offer them,” Rankenhohn recalls.

“If a system in Caterpillar doesn’t work, Caterpillar can circumvent that by going to a Ryerson or an EMJ [two metals service centers] or somebody else to get material. But if the same system were to fail at a Ryerson or an EMJ, where do they go? It took us another 10 years, to 1994, before systems had matured enough to be relied on in service centers.”

Raul Saucedo, plant manager for Chicago Tube & Iron, says the decision to further automate warehouse operations represents a classic tradeoff between labor and capital. “Do we want to invest in people or equipment?” he asks. Well-trained sideloader operators navigating racking systems may be faster and more flexible than automated systems, he adds.

Another issue is the amount of labor and capital a service center devotes to metal processing functions that might compete with its customers. The identity “service center” came into vogue in the early 1960s, when steel and aluminum mills were actively encouraging their distributors to engage in greater metal processing.

Reliance’s Gimbel was one of the first metal distributors to diversify into preprocessing services for customers. In the 1960s, Reliance began cutting and shaping metal. The process was known as “semi-manufacturing,” a term that was not well received by customers who ran small fabricating shops and it fell out of use. With the profits that could be made though first-stage processing for customers, “it’s gotten to the point that we’re almost giving the metal away in some cases,” Gimbel told the Los Angeles Times in 1970.

Service centers were being urged by their biggest customers to invest in metal preprocessing equipment because such equipment often sat idle in the customers’ manufacturing plants, and manufacturers sought to reduce their raw material inventories.

“In the 1980s, some large metal users, like aerospace and the metal office furniture industry and some appliance makers, used to buy metal directly from the mills,” Reliance’s Hannah recalls. “They had machine shops to process metals, [but they] started to realize the cost involved in having large [metal processing] facilities that were underutilized because they didn’t keep them going 24 hours a day. They were paying manufacturing wages to people to process metals.”

By contrast, an efficiently run service center could make maximum use of costly cutting and shaping equipment by matching its sales efforts with its inventory controls.

In the early 1980s, Red Bud Industries in Red Bud, Illinois, a maker of equipment that blanks, slits, levels and stretches metals from coils, sold most of its equipment to large original equipment manufacturers, or OEMs, says Dean Linders, the company’s vice president for sales and marketing. But OEMs usually purchased equipment that was lighter duty, as these machines were typically run just one shift a day. The machines also required fewer options and capabilities as they were designed to supply specific product lines, he says.

“When I got there in 1984, we started recognizing the service center market as being a market we wanted to focus on,” he said. “They were selling a much broader range of products, and they needed a lot of capabilities and capacity because they were typically selling to many OEMs, with a wide range of requirements.”

Today, 95% of Red Bud’s coil processing equipment is sold to service centers, Linders says. What’s more, smaller, more entrepreneurial service centers seem more comfortable with the latest versions of multimillion-dollar metal processing equipment than some of their larger competitors and customers, he adds.

“I find that, in some large companies, there’s not as much incentive for them to take a risk with new technologies. The smaller service centers are often at a disadvantage and will consequently embrace and accept new technologies more readily and much quicker. They are trying to look for that edge against the big guys: ‘I can’t beat them on price. Maybe I can beat them by being more efficient or by adding some value to the products or services I offer.’”

Adequate Compensation

But there is another side to the story. Since the inception of the service center concept, the industry has been aware that the core business of a substantial number of its smaller customers is cutting, bending and shaping metal. Service centers are reluctant to compete with their customers.

Moreover, heavy investment in metal processing equipment may put undue pressure on the service center to overstock inventory, just to feed the new equipment.

“I wonder whether we, as an industry, are realizing a true return on our investment in new equipment,” N.E. Smith, president of the National Association of Aluminum Distributors, told his group’s annual convention in 1993. “We all know it isn’t because the cost of equipment is so high. But it’s the additional inventory that’s required to support more sales and the additional receivables we’ll experience. New equipment, instead of helping, can hurt and cause a cash problem.”

“The dilemma for metals distribution is getting compensated adequately for services required and successfully performed,” Lee Feiereisen, vice president of Independent Metals Co. in Seattle, told his peers 10 years ago. “Even before compensation can be agreed upon, our industry must be able to identify the service components, delineate the service variables, develop an accurate cost for those services, communicate the process professionally and gain consensus from multiple buying influences.”

One solution may be what Norman Gottschalk of Marmon/Keystone calls “virtual manufacturing.” “We use our customers to serve customers,” he says. “When you buy a piece of tubing, we know you’re going to make something out of it. We say, let me make it for you. Then we will go down the street to one of the machine shops that buys from us anyway and say, ‘Would you like to bid on this part?’We don’t want to compete with our customers in producing things, so we use our customers to produce whatever we need produced. That builds loyalty, so they give us a second look when they are buying something. In addition, we don’t have to go out and buy a lot of equipment …. We have a network of machine shops. So, we can expand and contract immediately.”

It seems more than the metal needs to be unbundled in the service center industry. Balancing these and other trade-offs in enhancing quality continues to enliven the industry. In an otherwise mature business of metals wholesaling and distribution, challenges of quality improvement and cost-cutting have helped separate winners from losers in the still highly fragmented industry.

Another indicator of maturity is a new playbook for industry consolidation, which picked up steam after the recession of 2001 and likely will grow even more intense as a result of the current economic downturn.

In 1994, Reliance Steel & Aluminum issued its first public shares because the company realized that growth through acquisitions would have a larger ticket price as successful service centers became more valuable. Just buying small, troubled companies was no longer a viable approach, Hannah says.

“We saw larger, well run, multi-location service centers. We knew to participate in that we would need some capital,” he says.

Bill Jones of O’Neal Steel says his company’s acquisition strategy has focused on successful companies, often dealing in highly specialized metals and focused markets. “We are not turnaround artists. We do not bottom feed,” he says.

Industrial consultant Workman says the service center business undergoes a perpetual cycle of consolidation and start-up emergence, as large companies lose their nimbleness and new companies enter local markets.

Consolidation

Since the service center industry entered the current century, the cycle Workman describes is driven by globalization. Looking back 100 years, service center operators might well wonder how a new set of giant metals producers will work with independent distributors.

A recession in 2001 depressed the steel and aluminum industries and prompted a major wave of consolidation of production companies. In 2002, investor Wilbur Ross began to roll up troubled U.S. steelmakers into his International Steel Group Inc. By 2005, Ross had sold the group, which comprised such names as Bethlehem, LTV, Weirton and Acme, to Lakshmi Mittal and his Mittal Steel, a global steel conglomerate based in Rotterdam, the Netherlands.

French steel giant Arcelor acquired Dofasco in Canada and then merged, after a protracted struggle, into Mittal, forming the world’s largest steel maker, ArcelorMittal. Essar Steel group of India acquired Algoma Steel. U.S. Steel acquired Canada’s Stelco.

In aluminum, Alcoa completed its acquisition of Reynolds Metals in 2000. A year later, three Chinese companies merged to form Aluminum Corp. of China Ltd. (Chalco).

In this wave of consolidation, the two trade associations representing North American and Canadian steel and aluminum distributors merged in 2002. For 51 years, NAAD membership had served a vital purpose for its members. As the handful of aluminum producers considered working with independent distributorships, NAAD membership was a sort of stamp of approval, recalls Michael F. Petersen of Petersen Aluminum Corp. in Elk Grove Village, Illinois.

But by the late 1990s, many members who started their businesses post-World War II were reaching the end of their careers, he says. “A significant percentage of our membership had been consolidated. We also had consolidation at the supplier end.”

Membership in the North American Aluminum Distributors had been dwindling from a peak of 110 in the late 1980s to about 80 in 2001.

“I kind of saw the handwriting on the wall when I was president of the association in 1997 to 1999,” Petersen recalls. Joining forces with the Metals Service Center Institute brought one instant advantage, he said. MSCI members who dealt in aluminum often declined to pay for two association memberships. As a result of the merger, attendance at meetings aimed at aluminum distributors has swelled, despite stagnant membership growth, Petersen says. Elbert Gary would have been pleased.

“Something like 80 percent of all mergers fail,” Petersen adds. “This is one that succeeded.” In particular, he notes, monthly data on steel and aluminum inventories and shipments, compiled by MSCI, has become a vital evaluation metric and forecasting tool for member companies.

By mid-decade, the merger trend in the metals industry jumped into high gear, prompted by three developments:

• A worldwide boom in commodity prices that reflected economic growth in China, India and other emerging economies
• A rush to control access to raw materials and production power sources, notably electricity in aluminum- making
• A continuing urge, initiated to a great degree by Wilbur Ross, to consolidate and rationalize metal production for greater profitability.

In 2007, a Russian aluminum giant, United Company RusAl, arose from the merger of three companies. Later that year, Australian mining giant Rio Tinto and Alcan Inc. of Montreal agreed to merge. The deal, valued at $38.1 billion, defeated a proposed hostile takeover of Alcan by its former sister company, Alcoa.

By all accounts, the metals industry emerged from the previous recession and subsequent flurry of consolidation in stronger condition. Indeed, Bob Weidner, president and chief executive officer of Metals Service Center Institute, told a membership meeting in January, the dramatic reorganization of the metals industry since the last recession could be a model for other North American industries as they emerge from the current recession.

“I don’t think there’s a better industry out there to weather this storm than the [metals] supply channel,” he said. “The automotive industry could learn a lot from us.”

Of more immediate concern to service centers is whether their role as major buyers from mills will survive the global concentration of metal production capacity.

In a 2007 speech, ArcelorMittal chief executive officer Lakshmi Mittal spoke of the unprecedented scale of his business, which produces more than 100 million tons of steel annually. Diversification, as well as scale, are the keys to sustainable profitability, he said. He praised the “benefits of an integrated business model, one where steel companies would run an integrated manufacturing process right from mining through steel production and distribution.

“Now we have to concentrate on building a steel industry for the modern age, one which is quality driven in terms of product, process and supply chain …. We have to think more like a service company, which [is] customer-demand led and innovative, rather than supply driven.”

In a similar vein, Sergey Belsky, sales director of United Company RUSAL, in a speech last year, highlighted his company’s quest for a “balance portfolio” and “vertical integration.”

The current recession, including major reversals in the economies of the United States, Europe and China, may have stalled such ambitions. But the possible re-emergence of mill-owned service centers bears watching.

Richard J. Greaves, president and chief operating officer of ThyssenKrupp Materials NA, the North America service center arm of German steel giant ThyssenKrupp Services, sees more global consolidation ahead.

“We’re still out there looking every moment to see what fits geographically or from a product mix perspective,” he says. “With the economy starting to falter, there will be quite some opportunities. My marching orders out of Germany are that we want to continue to grow [in North America] through this cycle.”

Greaves says he and his parent company view service center operations as a separate business, not a part of a vertically integrated mill operation. “This is a totally independent distribution concept. We don’t look at us as being owned by a mill. We certainly buy from them, but we also buy from everybody else.”

Michael Hoffman of Macsteel Service Centers USA agrees: “The development of the industry is, largely speaking, driven by what the customer base is in that geographic area and aided and abetted by the product range of the various producers that supply steel into the chain in that area. The service centers will nurture and grow around that environment.”

If service centers big and small are buying from the same set of mill suppliers, as Greaves and Hoffman suggest, the quality of the base product becomes harder to differentiate. Therefore, the key to success becomes value creation for customers at the service center level. As manufacturers relocate, strategically locating service centers—in Mexico, Europe and Asia as well as the United States and Canada—likely will be the basis of competing against global giants.

In late 2007, Ryerson, a business, civic and cultural icon in Chicago, said it would close its Chicago area distribution and processing facilities, while maintaining its corporate headquarters in that city. In turn, the company announced plans to open new facilities in China, Utah and Texas. The company’s goal: get closer to the customers.

Last September, farm equipment maker Deere & Co. said it would close its plant in Welland, Ontario, and move the operations to Wisconsin and Mexico. Samuel plans to set up shop in Wisconsin rather than lose the business, Peter Baines says.

“If you can’t go big and follow your customers, your customers will leave you,” he says.

To “service” and “quality,” the metals service center industry entering its second century may need to add a new watch word—“mobility.” But as the economy struggles to rebound from recession, other lessons from history are foremost on the minds of service center entrepreneurs.

“The thing that has equipped us best for emerging from this, assuming that we do emerge from this, because it’s not over yet, is the mentality of our founder, my father, who was a child of the Depression,” Mike Petersen of Petersen Aluminum says. “He followed one mantra that he made very clear to me. That was, pay down your debt, pay down your debt, pay down your debt.”

Richard A. Robinson, president of Norfolk Iron and Metal Co. of Norfolk, Nebraska, cites another lesson: Never under-react but don’t over-react. Family-owned Norfolk, now grooming its fourth generation of management, celebrated its 100th anniversary last fall.

On Sept. 11, 2008, Robinson announced a new cut-to-length temper line and a 120,000-square foot plant expansion in Norfolk, following expansions in Iowa and Kansas earlier in the decade. Four days later, Wall Street powerhouse Lehman Brothers Holding Inc. filed for protection under the bankruptcy law, sparking the current global credit crisis and precipitous economic downturn. But there’s been no change in Robinson’s plan for the Norfolk expansion.

“You’ve got to think that your business is a longterm business. You don’t want to cut so much that you hurt your long term,” he says.

Still, the current recession is different, says Norman Gottschalk, Jr., MSCI chairman. “It was just like we hit a wall. Not just us, but everybody in the industry has just tanked.” He and many economists and industry leaders see an L-shaped economic growth curve that won’t rebound until the housing market rallies.

Even then, “nobody is going to emerge from this recession the same way they went in,” Gottschalk said. “You’re going to look different. Your competitors are going to look different. Your suppliers are going to look different, and your customers are going to look different.” This is another lesson from history, he says.

“When you stick your head up out of the hole because the nuclear bombs stopped going off, the landscape is totally different.”

Maybe so, but no industry in its history has prevailed over more challenges and still remained indispensable. Over the last century, metal merchants have been scrap peddlers, jobbers, warehousemen, inventory managers, value-added service providers, pre-processors and computer-aided consultants to industrial buyers—under each term, an essential link in the chain.

With each link, metals distributors prove themselves absolutely central and core to the manufacturing sector. The more things change, the more that fact remains the same.