Steel Products
A.M. Castle Announces Restructuring Plans
Written by John Packard
January 18, 2013
Written by: Sophia Fain
A. M. Castle & Co. announced restructuring plans to improve annual operating profit by $33 million once fully implemented in 2013. Changes to its metals business include an organizational restructuring, warehouse realignments and performance improvement programs.
“This broad, performance-enhancing plan will enable us to better serve our customers by organizing our operations around them and their needs,” said Scott Dolan, president and CEO. “Our goals are to simplify how we do business, optimize inventory levels, reduce waste, and improve on-time performance, which we expect will help us increase revenue while reducing costs.”
The organizational restructuring means moving from the current decentralized commercial unit structure to a centralized approach with support functions and three vertical sales teams. Those sales teams will each be led by a vice president and will provide specialized expertise to customers in Castle Metals’ Aerospace, Oil & Gas, and Industrial markets. Castle Metals is also adding a new sales incentive program, under a new position of Chief Commercial Officer.
The company reports, “As part of its branch fulfillment network realignment, the Company plans to consolidate five warehouse facilities into the existing network. The Company currently operates 30 metals segment branches in North America, Europe and Asia, which include warehousing, sales, product processing and other operations. Castle will maintain local sales offices to continue serving customers in the markets in which it plans to close warehouses.”
Performance improvement efforts will include implementing a continuous performance improvement program focused on direct and indirect sourcing, transportation, strategic pricing initiatives, back office functions, and optimizing inventory investment.
However, the restructuring will reduce the Company’s workforce by about 10 percent.
The company also wants to reduce Days Sales Inventory to less than 150 by the end of 2013 and 120 by the end of 2014.
Dolan added, “In terms of sales activity and recent market trends, we experienced softness in demand that was greater than anticipated during the fourth quarter, as well as lower activity levels due to extended seasonal shutdowns. In addition, the monthly Purchasing Managers Index trends for the fourth quarter were consistent with third quarter levels, including a November 2012 reading that was below the 50.0 expansion level.”
Dolan concluded, “We are forecasting that the overall business conditions we experienced in the fourth quarter will continue, and we believe strongly that the actions we are taking will position the Company to operate successfully through all market cycles.” (Source: A. M. Castle & Co.)
John Packard
Read more from John PackardLatest in Steel Products
SMU Community Chat replay now available
The latest SMU Community Chat webinar reply is now available on our website to all members. After logging in at steelmarketupdate.com, visit the community tab and look under the “previous webinars” section of the dropdown menu. All past Community Chat webinars are also available under that selection. If you need help accessing the webinar replay, or if your company […]
SSAB announces $74M expansion in Alabama
The project will expand heat treat capacity at its Axis, Alabama plant
Service centers: Mill orders retreat in March
SMU’s Mill Order Index declined in March after repeated gains at the start of the year, according to our latest service center inventories data.
Nucor maintains plate prices
Nucor aims to keep plate prices flat with the opening of its June order book.
US rig count up, Canada declines
Oil and gas drilling activity was mixed this week, according to Baker Hughes. US rig counts expanded for a second straight week, while Canadian activity continued its seasonal slowdown of eight consecutive weeks.