Steel Service Centers & Other Metal Wholesalers
Competitive Landscape
The health of the manufacturing and construction industries drives demand for steel. A distributor’s sales volume determines profitability because many costs are fixed. Large distributors benefit from economies of scale in purchasing, processing, and distribution. Small companies can compete by specializing in particular products or offering special processing services. The industry is capital-intensive: average annual revenue per worker is more than $1.7 million.
Opportunities
Customers Outsource to Distributors - Distributors provide a greater range of value-added services, as more customers have outsourced materials and supply chain functions in recent years. Outsourcing enables customers to...
Business Challenges
Profits Tied to Manufacturing - The volume of steel demand depends on US manufacturing levels, which are cyclical. Since steel distributors operate with fairly low gross margins, they need high...