Service Centers
Lehner lauds Ryerson's entry into aerospace with Production Metals buy
Written by Ethan Bernard
November 4, 2024
Ryerson President and CEO Eddie Lehner touted the company’s buy of Monroe, Conn.-based Production Metals as heralding the company’s entry into aerospace.
The Chicago-based service center group announced the buy of the aluminum, stainless, and specialty steel distributor in August for an undisclosed sum.
In a third-quarter earnings call with analysts on Oct. 30, Lehner said the company had been targeting an entry into aerospace since 2015.
He said that at that time, he conducted a SWOT (strengths, weaknesses, opportunities, and threats) analysis. The company identified “digitalization, being a digitally enabled enterprise, 3D printing, and additive manufacturing” as areas of focus.
“We also identified finding an entry point into aerospace, defense, and semiconductor,” he said.
He noted that if you look at valuations of companies since the middle of 2022, “The ones that had more exposure to non-residential construction, more exposure to aerospace—defense, and semiconductor, for example — they have tended to perform better.”
The buy will allow Ryerson to expand Production Metals’ expertise by utilizing Ryerson’s network of 110 service centers.
“We found a really good entry point with Production Metals; really happy to have them on board,” Lehner commented. With the acquisition, “We’ve made really, really good inroads into turning those maybe threats and weaknesses into opportunities and strengths,” he noted.
In 2023, Ryerson bought four metals processors and distributors: BLP Holdings, Norlen Inc., TSA Processing, and Hudson Tool.
Current steel environment
Lehner also gave his opinion on the current balance between US steel mill supply and market demand.
“When you see operating rates in the low 70s, there’s a lot of capacity. We don’t find capacity to be short anywhere right now,” he said.
In the week ended Oct. 26, the capacity utilization rate across US steel mills was 74.7%, according to the latest figures from the American Iron and Steel Institute (AISI).
He noted, “Mills are taking outages because they have the time to make outages.”
“Before I got to Ryerson, I spent a good bulk of my career on the mill side. So I haven’t forgotten all those learnings,” Lehner quipped.
However, he said as the current cycle improves, “as we move off the bottom and through this counter-cycle and we inflect to an upturn, lead times will go out.”
Inventories are “definitely getting to the point of – I think they’re at the point of equilibrium now,” he said.
“Until you move to utilization rates above 80%, you don’t start to see tension come back into the supply side,” Lehner added.
Ethan Bernard
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