Metal Service Centers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 6,500 metal service centers in the US process, store, and distribute metals for end use in a variety of industries. Companies may specialize in a particular type of metal or serve a specific industry. Service centers offer finished products in many forms, including sheets, plates, beams, bars, angles, and tubes.
Volatile Commodity Markets
Unpredictability in the metals commodity markets can affect costs, profitability, and product availability.
Developing Retail Opportunities
Some metal service centers are combining wholesale operations with retail to generate incremental revenue.
Industry size & Structure
A typical metal service center or distributor operates out of a single location, employs 23 workers, and generates about $22 million annually.
- The metal service center and distributor industry consists of about 6,500 companies which employ about 148,700 workers and generate about $142 billion annually.
- Most companies are small, independent operators - about 74% have a single location and 77% employ less than 20 workers.
- Customer industries include manufacturing, fabrication, construction, transportation, agriculture, energy, automotive, appliance/HVAC, architecture, heavy equipment, defense, and machinery.
- Large companies include Reliance Steel & Aluminum, Metals USA, MRC Global, Ryerson, ThyssenKrupp Materials, and Samuel, Son & Co.
Industry Forecast
Metal Service Centers Industry Growth
Recent Developments
Mar 23, 2024 - Price Hikes Outpaced Rising Payroll Costs in 2023
- Employment by metal service centers grew 2.6% in December compared to a year ago after rising 3.2% in the previous annual comparison, according to the US Bureau of Labor Statistics. While industry employment in 2023 surpassed levels just before the pandemic hit it remains below that of 2015. Average wages at metal service centers were $28.98 per hour in December, a 1.2% year-over-year change but down $0.60 from their peak in April. The producer price index for metal and mineral wholesalers surged 25.7% in December compared to a year ago, far outpacing 2023’s rise in industry wages.
- Aluminum service centers could benefit from legislation introduced in Congress in January that would hold aluminum producers accountable for charging a tariffed price on non-tariffed metal, according to a press release from the office of its sponsor Rep. Ken Buck of Colorado. The False Claims Enhancement Act (H.R. 7078) clarifies that it is a violation of the False Claims Act for a party – such as an aluminum producer – to falsely charge a tariff in a private contract where no tariff is owed and the proceeds are not paid to the government. Prices charged by producers of aluminum sheet, plate, and foil have eased after spiking in 2022 when high energy prices vastly increased the costs of manufacturing aluminum.
- Less is more when it comes to material handling, according to Metal Center News’ (MCN) Materials Handling Report. The movement of metal through a modern metal service center relies increasingly on automation, the benefits of which include moving products faster and more efficiently, decreasing opportunities for damage to occur, improving safety, and reducing reliance on hard-to-find labor. “The less frequently you have to touch it, the faster it gets out the door to your customers,” says Jason Clark, president of Canrack Storage Systems, adding “There’s a lot less likelihood you’ll make mistakes or have damage to the product,” MCN notes that material handling equipment providers are stepping up by creating equipment that handles much of the load for the operators, including the need to handle longer and wider material. Automated storage, racking, and retrieval systems are the next step in the evolution of material handling, per the MCN report.
- While primed for long-term growth, heating, ventilation, and air conditioning (HVAC) firms – an important customer market for some metal service centers – face near-term uncertainty, Metal Center News (MCN) reported in November. Near term, the series of interest rate hikes by the Federal Reserve is a source of uncertainty for HVAC system providers. On the commercial side, warehouses and distribution centers have been sources of growth, while the residential market has been slow as interest rate hikes have made mortgages prohibitively expensive for borrowers, according to MCN. “There’s no question, the higher rates have negatively impacted the HVAC building and construction industry, " says Aaron Baldridge, VP of business development and aluminum sales at Wieland Metal Services adding, “That said, we are optimistic for the future; especially with new technologies on the horizon.” The decline in aluminum prices, down sharply from their peak in Q1 2022, also favors HVAC and metals service centers.
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