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Article Excerpt
After an up-and-down 84-year history in the steel market, one of the service center industry's oldest names, Steel Manufacturing & Warehouse Co., is "new again," says President Charles Donnelly.
The Kansas City firm was established in 1921 as a "steel jobber" and service center by the Kramer family and partners. After the primary owner-operator died in 1974, the general manager, Herb Ferney, purchased the company.
In 1988, Donnelly and three other investors purchased the company from Ferney and operated it successfully as a full-line service center until 1998, which Donnelly calls "the mistake year."
That was the year Steel Manufacturing's investors decided to cash in. The company was ripe for sale, having just relocated to an expanded facility with rail access, where a new Red Bud cut-to-length line was being installed. Plus, one of the partners wished to retire.
"There was a lot of consolidation going on at the time and prices were good. So we decided to sell," Donnelly recalls. Steel Manufacturing became part of Metals USA Inc. Donnelly and his partners received a combination of stock and cash, and Donnelly stayed on as manager. It was a decision they would all come to regret.
"One thing you can tell your readers is, never believe anyone who says, 'You're the entrepreneur. Your company will stay the same. We're just going to leverage the synergies,'" he warns. "We lost our identity under Metals USA, and it did not help us at all. When they [acquirers] mess with the chemistries of companies, it can be devastating."
The change that bothered Donnelly most was the directive to lay off some personnel. "All of a sudden, the love relationship you have with your employees--they are the key in any business--is gone. They...
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