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JDM sees SCS as future; Rich Merlo and JDM Steel have hitched their wagon to a pioneering new steel processing technology.

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JDM STEEL SERVICE INC,, Chicago Heights, Ill., and its President and CEO Rich Merlo have joined the small but growing ranks of those pioneering the new SCS coil brushing process. Pioneers, as the saying goes, are often recognizable by the arrows in their back--yet Merlo sees SCS as a bulletproof vest for his business.

With about $50 million in annual revenues, JDM Steel Service is a relatively small, flat-rolled distributor in south suburban Chicago. Merlo admits that JDM has "gone out on a limb" by investing $5 million in an SCS processing line, which is still a very young, emerging technology. But he feels confident this move will result in the growth of both the company's service center and toll processing businesses.

"I can't put a number on it, but SCS has a lot of upside potential. It's going to increase slowly, taking a good year or two before we see anything approaching full capacity. But there is a lot of buzz about the SCS technology. We are getting a lot of inquiries and we are doing a lot of trials. You never know when some of them are going to pop," says Merlo.

In anticipation of this new business, the company is in the process of adding 26,000 square feet of coil storage space to its 83,000-square-foot leased building--a 30 percent expansion to be completed in about six months.

Merlo sees SCS as a means for JDM to specialize and capture a promising niche in a consolidating steel market increasingly dominated by larger players. "Our goal is to slowly and steadily increase our business while maintaining our profitability," says Merlo. "We are not looking to put in five locations in five different places. We want to stay a small, midwestern service center with small, sustainable, profitable growth of perhaps 5 percent a year."

SCS (short for smooth, clean surface) is an environmentally...

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