Investment from 2005-2007
Primary Steel was a leading distributor and processor of steel products serving customers across the United States from strategically located facilities (seven at closing, eight at time of sale) in close proximity to the country's major steel producers and customers. The Company's plate products ranged from basic carbon steel to high-end alloys and its coil products included hot rolled, cold rolled, galvanized, pickled and oiled, and strip mill products. The Company utilized state-of-the-art processing equipment for precision slitting, cut-to-length blanking, shearing and edging, and shape cutting. Primary's customers operate across a wide range of industries, including construction, transportation, industrial equipment and shipbuilding.
During the Investment
- Primary prepared and implemented a strategic plan - the first ever for the Company - emphasizing growth iniatives and establishing a lean business system.
- The growth initiatives resulted in product line extensions, new master agreements with key customers, and the August 2006 acquisition of JIT, a Tulare, California-based service center previously owned by Mitsui.
- Lean initiatives included: hiring an executive with lean experience from the Wiremold Company; training much of the workforce to use lean process management tools; and running dozens of kaizen events in all of Primary's operating locations that implemented an operating practice. Inventory turnover improved by despite aggressive buying to take advantage of some very low cost imported steel opportunities. Capacity was increased without major capital in the high margin processed steel product lines. Organic unit growth of 18% was achieved with essentially a flat headcount.
- The management team was augmented by recruiting the executive mentioned above as the new plant manager at the Company's Delaware plant and a Human Resource executive, and by creating a Supplier Relationship function with a dedicated executive.
Sale of Investment
Consolidation in steel distribution and Primary's strong performance caused it to attract the attention of potential buyers, and management recommended that a sale be explored. In April 2007, Ironwood Manufacturing Fund, LP sold Primary Steel to the Namasco subsidiary of Klöckner & Co Aktiengesellschaft, returning 7.3x invested equity capital.