Ryerson Competition
Now Viewing Ryerson's competition in: Steel Distribution (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How many customers does the company serve? - Most distributors have a large number of customers who place small orders.
What industries are these customers in? - Machinery, auto parts, and construction are common industries.
How large an area does the company serve? - A radius of 250 miles is common.
How does the company find new customers? - Most have an in-house sales staff that visits potential customers.
How many of the distributor's contracts are long-term? - AK Steel, the nation's fourth-largest steelmaker, sells a majority of its annual production through long-term contracts.
Who are the major competitors? -
Who is the local price leader? -
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.
Business Challenges
CRITICAL ISSUES
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 sales volume to be profitable. During a recession, US manufacturing activity typically declines and, as a result, production of primary metals drops.
Volatile Prices Affect Inventory Values - Because distributors may hold substantial inventories, they're exposed to changes in the price of steel products. Although most distributors use the "last in first out" (LIFO) method of inventory accounting, in which the most recently acquired items are assumed to be the first sold, future profitability can be affected if prices are volatile. Steel prices can change more than 10 percent per year.
Industries Where Ryerson Competes
- Metals & Mining
- Steel Service Centers(primary)
