Small manufacturer, big output

Tales of a victorious underdog have captured imaginations for millennia. Among the oldest is that of David and Goliath, the biblical tale of a young shepherd winning a one-on-one battle against a much larger and more experienced foe.

As the story is remembered by most, David was merely a shepherd boy with no apparent advantages other than his faith. However, a closer look at the Book of Samuel reveals a somewhat different background to this story. Although David’s offer to fight is initially rebuffed, he countered that he had killed lions and bears to protect father’s flock. Also, although he was young, he was an adult (specifically, “little more than a boy”). He wasn’t the young teenager most imagine he was.

Second, Goliath is dressed for battle, heavily armored, and therefore not as mobile or flexible as his unencumbered foe. Finally, David’s weapon and ammunition, the sling and stones, are an early version of artillery, capable of striking from well beyond the range of an infantryman.

James Steel & Tube Co., Madison Heights, Mich., a small company long on experience and manufacturing savvy, is akin to the plucky shepherd. A manufacturer of ASTM A-500 and ASTM A-513, James is a contender in a field crowded with many larger competitors, making rounds up to 6.625 inches outside diameter (OD) and shapes that include square, rectangular, and oval in associated sizes. Its core alloy is carbon steel, but it also has some experience in making products from high-strength, low-alloy materials.

Despite its small size, James has survived, and even thrived, for decades.

Small, Flexible, and Capable

At first glance, it’s hard to imagine how this company competes against its many large rivals.

It’s equipped with two mills, which sounds like a liability, but James has turned this into an advantage. Unlike a big, lumbering Goliath, James is streamlined and flexible. The company has minimal overhead, and no bureaucracy to speak of, and scheduling is a breeze compared to larger companies that have a dozen or more mills. Having been in business since 1961, one of its key elements is its versatility.

“The company has reinvented itself several times,” said Jim Petkus, president since 2008 and one of the drivers behind the company’s latest transformation. He joined the firm just as the banking industry collapsed under the weight of the subprime mortgage crisis, taking the entire U.S. economy down with it. Before that crisis set in, the company had used its expertise in various shapes and alloys to serve three main markets: automotive material handling, recreational

vehicles, and commercial waste containers (commonly known as dumpsters). These aren’t high-margin applications, Petkus said, and as James Steel & Tube struggled through the recession, its executive team took the opportunity to do a market assessment.

“We’re still heavily involved in making material handling racks for automotive, but we have expanded into other areas,” Petkus said. “We make components for a big variety of trailers, from small tow-behinds to 18-wheeler trailers,” he said. The company also makes parts for car haulers and framing systems for solar panel arrays (see Figure 1). It also has plans to diversify into construction, but for that market, the company needs to replace one of its mills; hollow structural section sizes go up to 28 in. OD.

Decades of Experience

The quality-service-price triad is alive and well at James. A former mill operator who worked his way up to the president’s office, Petkus knows that the triad starts with quality, and the primary ingredient in making quality tube is proper mill setup. A tube mill can be an unforgiving beast and isn’t likely to respond well, if at all, to shortcuts, tricks, work-arounds, and sleight-of-hand. Good tube doesn’t come from hocus-pocus; good tube comes from following basic setup instructions. This is a mantra that Petkus passes along to James’ mill operators, many of whom have just a year or so of experience.

Figure 1
. Solar power is a small but growing energy source in the U.S.; framing systems for solar arrays is a small but growing market for James Steel & Tube.

“When you have a forming problem, you might make a small adjustment in one area, and if it doesn’t solve the problem, it’s tempting to make another adjustment somewhere else,” he said. “Then you make another, and another, and if you finally solve the problem, you can’t replicate it later because you don’t really know the step that solved the problem.”

Troubleshooting a forming problem on a tube mill is like taking more than a few steps off of a well-worn path into a dense forest; it’s easy to get lost and difficult to find your way back. However, every mill operator is equipped with a proverbial map. Following the instructions to return the mill to the original setup is the only way get back to bona fide troubleshooting—by making one adjustment at a time—and making good tube.

“Ninety percent of problems come from setup,” he said. “Each station has a job to do, and each station has just a little latitude in how much it can do. If you set up one station so it does too much or too little, the system doesn’t work,” he said.

For all that, Petkus acknowledges that making a quality product is only one of the two critical elements necessary for success in the tube industry. The other is beyond every tubemakers’ control. “You can make money in this business only when you have good material prices and good processes,” he said.

Steel prices always are subject to some seasonal volatility, falling midyear during automotive model changeovers and at year end, when most manufacturers buy less steel to deplete inventories. Lately other factors are making steel prices difficult to predict, which has been wreaking havoc in manufacturing.

“The steel market was down 50 percent from June to December 2015. It climbed 50 percent from January to June in 2016,” Petkus said.

The price drop in 2015 led to buyers holding off on steel purchases.

“Purchasing agents were buying just 10 to 30 days’ worth of supply,” he said. Normally they buy enough for 60 to 90 days of operations, he added.

How does James deal with price volatility? First, it has been doing more demand forecasting lately, which allows it to do more contract purchasing rather than spot buying. Second, it adjusts its prices frequently.

“We revalue every month,” Petkus said.

Petkus regards tooling maintenance with a similar straightforward manner.

“Maintaining tooling isn’t difficult, but you need to have a plan,” he said. “You need to track how much mileage is on each set of tooling.” This doesn’t mean running tooling to the last minute, however. This would be a matter of operating on the thin edge of disaster, and Petkus doesn’t go that route.

“We send tooling out when it still has 30 to 40 percent of its service life left.” He doesn’t see it as a matter of wasting 30 to 40 percent of the cost of a reconditioning; he sees it as an investment in customer confidence.

“We need to ship a quality product every time,” he said. A guideline at James: “Make it only if you’d buy it.”

“It Can’t Be Done”

Nearly everyone has asked a supplier or a service provider for something unusual on occasion; nearly everyone has heard “It can’t be done.” In some cases, it’s a true statement; in others, the supplier really means, “It can’t be done by us.” James Steel & Tube has proven the “It can’t be done” camp wrong on more than a couple of occasions, Petkus said.

“One of our key products is a 7 by 1-1⁄4-in. tube,” Petkus said. “That’s a 5-1⁄2-to-1 ratio. Nobody else makes this ratio in welded tube. When the ratio gets more extreme than 3-to-1, it becomes increasingly difficult to roll it and keep it straight.” Products in extreme ratios are available as drawn-over-mandrel products, but as-welded products are less expensive and therefore preferred. “Spacing between the tool stands is critical, as is tooling setup,” he said.

Another James niche is square or rectangular tubing with an off-center weld seam.

“We got a request for this, and the annual volume was enough to make it worth doing, but still, we had to cover the cost of the tooling, so we needed a commitment,” Petkus said. In other words, Petkus wasn’t worried about the technical aspects of making the tube to the customer’s satisfaction; his concern was in the accounting, and recovering the tooling investment. Meanwhile, many other tubers want nothing to do with such a product.

“Most other producers won’t quote something like that,” he said.

Another unusual product is a 4-in. square made from 14-gauge steel, which has a diameter-to-thickness (D/t) ratio of 51 to 1. “The edges tend to wave on such a wide, thin strip,” Petkus said. “When the tooling does too much work, waves and buckles appear, but they rarely show up where the tooling is overworking the material. Usually they show up elsewhere.” Setup and troubleshooting are challenging, so most tube producers don’t deal with D/t ratios much more than 30-to-1, Petkus said.

Need some unusual galvanizing? In a galvanizing bath, the zinc base usually has a silicon content from 0.15 to 0.25 percent.

“You can galvanize with less silicon, down to 0.04 percent, but as the silicon content drops, it becomes increasingly difficult to do”, he said. “It actually can be done, but the process requires special handling and processing steps. You might have to make the part from a different alloy, but it can be done.”

“Working on a coating line was good experience,” he said, referring to his years at another tubing manufacturer.

“We coated mechanical tube for weathering exposure using an inline galvanizing process between welding and sizing.” The line speed left little room for any process deviations. “It ran at 800 feet per minute,” he said.

“James isn’t much different from a small fabrication shop,” Petkus said. “We have a lot of flexibility and some open capacity. When a customer has a need, we do what we can to fulfill it.”

Although some of the mill operators have less than a year of experience, the company overall has a substantial amount of tube and pipe production experience, not to mention good connections with prominent tube mill builders and tooling makers. Petkus cites all of these as the ingredients necessary for turning unusual customer ideas into successful projects. It also takes time and dedication to do the necessary trial-and-error work.

“To make a change, you try a new process and see if it’s successful,” Petkus said.

A Road Untraveled

Petkus has big plans for James Steel & Tube in equipment. His plans to enter the construction market are going to require more than a few small changes. The company is in the process of reinventing itself again.

“We were really heavy in the recreational vehicle market, but we’re trying to moderate that,” he said. It’s not a matter of that market drying up. Far from it. Recreational vehicle sales, including both towable and motor home types,

fell from 353,400 units in 2007 to about half that in 2009, but they rebounded quickly. By 2014 the market was on par with the 2007 level, and RV sales hit 374,100 units in 2015. It’s really a matter of diversification.

“We don’t do large sections or heavy walls now, but we need these two capabilities to enter the construction market,” he said. In addition to making larger sizes, Petkus wants to make changeovers easier and quicker.

“Changeovers and setups are labor-intensive,” he said. He has his eye on equipment suited to quick changeovers and outfitted for single-point adjustment. In addition to moving more tons of steel per hour, these plans suggest a better use of staff.

“The company’s goal is to add capacity and reduce labor,” he said. In other words, brains over brawn.

Entering the construction market will cause significant changes in the way James handles material and turns it into tube. In terms of receiving raw material, material handling, and shipping finished goods, every piece of equipment needs much more capacity than it has now.

“We’re looking at producing 10- or 12-in. squares,” he said. To execute this change, James will have to handle and form raw materials that are at least twice the width of its current raw materials, but material weight is another concern altogether. James’ heaviest products weigh in about 16 pounds per foot. A 12.25-in. square with 0.625-in. wall thickness weighs about 5 times that at 77 lbs. per ft.

“As the weight per foot goes up, you need more horsepower, more welding power, and a higher level of skills and abilities,” Petkus said.

Surely this change means that James’ mill operators will have to deal with a learning curve. As it stands, Petkus estimates that it takes three to five years before a mill operator works independently. This foray into construction means that they’ll have still more to learn. Nobody likes a long, steep learning curve, so it’s up to the management team to keep the learning curve as short and shallow as possible. How to do it? Quite a bit of research, a reliance on accumulated expertise, and some trial-and-error experimentation.

In other words, the company is going to work with its strengths, just like the shepherd who defeated the solider.

James Steel & Tube Co., 29774 Stephenson Hwy., Madison Heights, MI 48071, 248-547-4200, www.jamessteel.com.