3400 North Wolf Road
Franklin Park, Illinois 60131-1319
Telephone: (847) 455-7111
Fax: (847) 455-7136
Sales: $754.9 million (1997)
Stock Exchanges: American
Ticker Symbol: CAS
SICs: 5051 Metal Service Centers & Offices
A.M. Castle & Co. is one of North America's largest independent operators of metals distribution centers, offering quick delivery of specialty metals to a large variety of industrial companies. These metals come in many forms, including round and flat bars, plates, tubing, sheets, and coils. The company also distributes a wide variety of industrial plastics.
The First 85 Years: 1890-1975
The company was founded in Chicago in 1890 by A.M. Castle, as a distributor and jobber of steel manufactured products, including plates, rivets, beams, and similar structural materials. By 1920, when W.B. Simpson was its president and the founder's descendant A.C. Castle a vice-president, the company was reporting assets of $2.6 million. Its Chicago plant consisted of a fabricating factory, two fireproof warehouses, and two office buildings. Net sales reached $7.2 million in 1927, and net earnings a pre-Depression peak of $987,042 in 1929. By then the company was active on the Pacific Coast as well as in the Middle West, with steel warehouses in San Francisco, Los Angeles, and Seattle, as well as in Chicago. During this time, Simpson moved up to the position of chairman, and A.C. Castle became the company's president.
Although profits were leaner in the 1930s, A.M. Castle lost money only in 1932 and suspended its dividend only in 1932 and 1933. The company had a record net profit of $1 million on net sales of $12.8 million in 1941. Net profit reached a peak of $1.6 million in 1946, on sales of $14.8 million. A.M. Castle purchased Biggs Steel Co. of Milwaukee in 1945. By 1950 the company had added steel warehouses in Berkeley, California, and North Kansas City, Missouri, as well as in Milwaukee, to its roster. It had net profit of $1.3 million on net sales of $18.7 million in that year.
During the 1950s business surged and contracted according to the vagaries of the national economy, with A.M. Castle's net sales climbing from a low of $18.5 million in 1954 to a high of $44.2 million in 1959 and net profit from a low of $547,520 in the former year to $1.8 million in 1956. During this time, the company moved its headquarters and main warehouse to Franklin Park, a suburb of Chicago and also added warehouses in Rockford, Illinois, and Baltimore--its first location in the East--and began distributing aluminum and plastic pipe as well as steel products. In 1958 the company acquired Nottingham Steel & Aluminum Co. for about $1.5 million, thereby adding warehouses in Cleveland and Galion, Ohio.
By the mid-1960s A.M. Castle, along with other companies in its field, preferred to call its warehouses "service centers." Each of its ten service centers (now including one in Salt Lake City) carried an inventory specially tailored to the needs of its customers in that area. The company also provided financial counseling to its smaller customers, introducing some of them to banks. About 20 percent of all steel from U.S. mills was finding its way to users via companies like A.M. Castle, and only the auto manufacturers were taking a larger volume.
In 1965 A.M. Castle purchased the West Coast metals-distributing businesses of Pacific Metals Co., a subsidiary of Bangor Punta Alegre Sugar Corp. At the same time Bangor Punta acquired a substantial interest and managerial responsibility in Amcodnye Corp., an Ohio subsidiary of Castle that was fabricating sewage systems and steel swimming pools. In 1967 A.M. Castle had some 20,000 sizes, shapes, and grades of metals stockpiled, mainly in steel but also in aluminum, copper, brass, bronze, and many specialized alloys and exotic metals. Orders ranged from a few pounds of high-temperature alloys for jet aircraft to carloads of plate for ship repair. Castle was processing some 75 percent of its shipments for its customers through such operations as flame-cutting, shearing, sawing, grinding, and slitting.
A.M. Castle's net sales reached $109.2 million in 1969, when its net income was $1.5 million. By the end of 1970 its roster included service centers in Phoenix, Sacramento, and Fresno, California. In addition to metals, the company was stocking and distributing abrasives, saw blades, wire rope, and industrial tapes. John M. Simpson, company chairman, owned 19 percent of the shares, and trustees for the benefit of the Simpson family members owned another 20 percent. Hy-Alloy Steels Co. was acquired in 1973 for $3.45 million and made a subsidiary.
Transition to Specialty Product Lines: 1976-90
In 1976, as the nation's heartland began turning into the "Rust Belt," A.M. Castle initiated an effort to become less dependent on basic carbon steel. "We were trying to be all things to all people and weren't doing a very good job on any of them," Michael Simpson, who had succeeded to the chairmanship, later recalled. The company decided to concentrate on products in which it could be competitive by building its inventory of specialty lines of steel such as stainless and co-finished bars and alloy plates. It also resolved to diversify into some metal products with higher profit margins than steel, such as nickel and titanium.
In 1978 A.M. Castle's sales increased 17 percent in volume, to 288,000 tons. The following year was even better, with net sales surging to $306.2 million and net income to $6.4 million. Between 1970 and 1980, the company cut low-margin carbon steel's share of its sales from 58 to 43 percent, while volume of higher-margin carbon alloy steel rose from three percent in 1971 to 18 percent in 1980. The company's 21 warehouses in 1980 included recent additions in Santa Clara, California; Pocatello, Idaho; Davenport, Iowa; Wichita, Kansas; Tulsa, Oklahoma; and Erie, Pennsylvania.
A.M. Castle closed its Baltimore service center in 1979 but established one in Seattle in the early 1980s. (The earlier Seattle warehouse was shuttered in the 1960s.) The company continued to seek sales for high-technology metals such as nickel alloys and duplex stainless steels in place of garden-variety carbon-steel product lines. It was adopting "just in time" inventory management to combat the rising cost of borrowing money in order to carry inventory, developing a customer database that it considered a first in the metals-distribution industry, and becoming more active in cutting and shaping parts for its customers. In 1983 A.M. Castle acquired George F. Blake Inc. of Worcester, Massachusetts, a major New England steel and aluminum service center. All told, the company's service centers were now reaching into markets accounting for more than 80 percent of the metals used in the United States.
A.M. Castle boosted its sales volume in 1984 by 30 percent, to $325 million. Although the Blake acquisition accounted for some of this gain, the company also benefited in part by carrying more metals with high temperature tolerances and light weights that were useful to, for example, the aerospace and electronics industries. It became one of the few national service centers to carry titanium after making a distribution deal with RMI, a large producer, in 1984. To service new markets, Castle had spent more than $10 million on new equipment for preheating, annealing (softening), and precisely cutting metals. After having established its metal-usage database in the early 1980s, the company opened service centers in Philadelphia; Worcester, Massachusetts; Charlotte, North Carolina; and the Rochester, New York metropolitan area during 1983-86.
A.M. Castle's expansion ended in 1985, when unfavorable conditions nationally in its field led to a revenues slump to $307.2 million, down from the previous year's $328.4 million. Net earnings fell 48 percent to $3.7 million. Castle responded by curbing inventory still further to contain costs. Performance goals, tied to Castle's overall return-on-investment objective, required managers at every level to focus on cost control and asset management as well as sales and margin. A resurgence of business brought net income to $13.7 million in 1988 on net sales of $499.3 million. In 1990 the company purchased Norton Steel Co., Ltd. of Canada for $9.3 million, thereby adding four distribution centers in Quebec, Ontario, and Manitoba.
A.M. Castle in the 1990s
Richard Mork, a 33-year veteran of the company, became president and chief executive officer in 1990, A.M. Castle's centennial year. He was the company's seventh president, all of whom had risen through the ranks. With profits having slumped from 1988's peak, and revenues beginning to fall from 1989's record of $501.1 million, there was little to celebrate at the time, however. The outlook became even worse as the national economy fell into recession, and in 1991 Castle earned only $200,000 on revenues of $436 million. By 1993, however, sales and profits had begun to recover. Castle was first, second, or third in most of its product lines, and its Hy-Alloy Steels division in 1992 became the first major U.S. broad-line metals distributor to attain the coveted ISO 9002 international standard of quality assurance.
The 1994-96 period was outstanding for A.M. Castle, with revenues rising from $537 million in 1994 (a $63-million gain from 1993) to $673 million in 1996. Net income, a record $15.4 million in 1994, rose to $26.8 million in 1995 and was $26.1 million in 1996. A share of common stock, still hovering at about $10 in early 1995, reached $30 in the summer of 1996. Hundreds of customers, including Du Pont, Boeing, Ingersoll Rand, and Raytheon, were allowing the company to manage their metal inventories, making Castle, in effect, a raw-materials consultant as well as a distributor.
Buoyed by these results, A.M. Castle entered a new field in 1996, purchasing Total Plastics Inc. of Kalamazoo, Michigan, a company engaged in preprocessing, fabricating, and distributing plastics in four states. Castle decided to add plastics to its products because some of its customers were having corrosion problems with steel. Total Plastics was doing about $25 million a year in sales, as was Cutter Precision Metals, Inc., a Pacific Northwest-based high-technology metals processor and distributor that Castle also acquired in 1996. Also in 1996, A.M. Castle, in a joint venture with a Swiss partner, acquired a one-third interest in Chicago-based Kreher Steel Co., a distributor with $110 million in annual sales. The company founded a joint-venture operation, Castle de Mexico, in Monterrey, Mexico, in 1994 and established a British subsidiary in 1996.
In 1997 A.M. Castle purchased Keystone Tube Inc., a specialty distributor of tubular products and processor of mechanical tubing and chrome-plated bars based in Titusville, Pennsylvania. This company had sales of about $60 million in 1996. Castle reported sales of $754.9 million in 1997 and net income of $23.8 million. Its Chicago, Los Angeles, and Cleveland distribution centers combined accounted, in 1997, for about half of all its sales, which consisted 73 percent of carbon and stainless steel and 27 percent of nonferrous metals. The company's long-term debt was $90.7 million at the end of the year.
At the end of 1997, Castle Metals was maintaining 17 service centers with nearly 2.2 million square feet in floor area. The Hy-Alloy Steels division had its facility in Bedford Park, Illinois, and the H-A Industries bar-processing center, opened in 1993, was in Hammond, Indiana. Cutter Precision Metals had two service centers. A.M. Castle's Canadian subsidiary had five service centers and the British subsidiary one, in Manchester, England. Keystone Tube had three facilities, and Total Plastics had six. Michael Simpson was still chairman of A.M. Castle in 1997. The Simpson family owned 35 percent of the company's common stock that year&mdashout the same as it had in 1965.
Principal Divisions: Cutter Precision Metals; H-A Industries; Hy-Alloy Steels Co.
Principal Subsidiaries: A.M. Castle & Co. (Canada), Inc.; A.M. Castle & Co. Limited (United Kingdom); Keystone Tube Company; Total Plastics, Inc.
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Source: International Directory of Company Histories, Vol. 25. St. James Press, 1999.