How Niche Service Centers Punch Above Their Weight Class
Every once in a while, the collective MetalMiner team takes a field trip to a mill, OEM or service center, just to make sure our virtual world knowledge has some grounding in the real world.
Our most recent trip took us to the industrial park that houses JDM Steel, a specialty flat-rolled carbon steel service center in Chicago Heights, Illinois, just outside of Chicago.
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In procurement school, we are taught to treat suppliers as commodities (OK, they call it procurement and supply chain management at university). However, in all truthfulness, we know that every company must have something special that makes them great.
JDM Steel is no exception.
When asked that specific question, Joe Orendorff, JDM’s vice president of purchasing — who could easily double as a Chicago restaurant tour guide — told us his company’s claim to fame is its ability to stretcher level flat-rolled steel, as well as their ability to clean coils on their SCS Line. The SCS Line is a mechanical brushing system that provides JDM customers with an alternative to pickled and oiled material. JDM also brushes P&O material, which ultimately provides the cost advantages of hot-rolled steel, but with the appearance, along with forming and fabricating characteristics, more closely resembling cold-rolled steel.
Not every company needs to care about surface finish and flatness, but certain industries — including rail car and tank manufacturers, and electricity box makers, among others — require it.
What Orendorff and Account Manager Erin Wright didn’t know on our tour is that we like to probe to better understand how well the service center buys and whether that service center can come to the market from a cost-advantageous position.
Here are a few questions that we covered on our visit:
- What do you consider to be a good CRU discount?
- Do you have the mills quote you in dollars or percentages, and which do you use for contracting purposes?
- From how many mills do you source material? (We always ask how many tons are purchased annually.)
- How do you use scrap prices when making purchasing decisions?
- How does a smaller player buy as well as a larger player? (I will preemptively answer this by stating that JDM Steel joined the North American Steel Alliance as a founding member; thus, JDM aggregates its steel buy with other smaller service centers.)
Of course, we can’t disclose JDM’s responses, but suffice it to say that this company punches above its weight class, so to speak.
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We also typically conduct a rapid fire “what did you learn?” session among ourselves after a field trip. Here is what members of our team had to say after the trip to JDM:
- Belinda Fuller (Forecast Analyst): “It was a great experience to visit JDM in person to watch as commodity grade steel gets metamorphosed into specific steel sheet products as needed for various applications, including getting to see beautiful, application-ready finishes made directly from coil.”
- Marcos Brioni (Principal Data Analyst): “Based upon high-end quality management and conscientious supplier selection, JDM offers high-standard steel products for its customers. JDM’s machinery balances novel and traditional procedures for exceptional, tailor-made offerings.”
- Cassandra Weiler (Client Services Manager): “The staff at JDM are very knowledgable on the industry and metal market trends. They have found a niche market with their HRC scrubbing technology to make beautiful pieces of metal. All this, plus a good sense of humor from every staff member we met!”
- Fouad Egbaria (MetalMiner Editor): “It is always enlightening to see how companies of all kinds leverage their processes to, as Lisa put it, ‘punch above their weight class.’ JDM is certainly an example of just that.”
- Lisa Reisman (Executive Editor): “What in the world was I thinking about wearing white jeans to a service center?”
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