Speaker 1:
From the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, welcome Inside the ICE House. Our podcast from Intercontinental Exchange is your go-to for the latest on markets, leadership, vision, and business. For over 230 years, the NYSE has been the beating heart of global growth. Each week, we bring you inspiring stories of innovators, job creators, and the movers and shakers of capitalism here at the NYSE and ICE's exchanges around the world. Now, let's go Inside the ICE House. Here's your host, Pete Asch.
Pete Asch:
The metal services industry in Los Angeles is a vital backbone for the city's industrial ecosystem. As LA rose to prominence as a global economic hub, the demand for metal processing, fabrication, and distribution grew significantly. Industries like aerospace, automotive, and construction relied on local metal service providers from everything from precision cutting to custom welding, driving innovation and expansion.
With the city's proximity to major ports, metal services companies were positioned to access raw materials and deliver tailored solutions to projects including infrastructure developments and defense contracts. It was in the City of Angels in 1939 that Thomas Neilan founded Reliance Steel & Aluminum Company, a small distributor of steel reinforcing bars used in construction. In the decades since, Reliance, Inc. has grown to become the largest metal service center company in North America.
Today with more than 300 locations and over 15,000 employees, Reliance distributes over 100,000 metal products to more than 125,000 customers in a broad range of industries. At the helm of Reliance, Inc. is President and CEO Karla Lewis. With the company for over a third of its 85-year history, Karla joined Reliance as its first controller in 1992. During her over 30 years, she has witnessed Reliance's growth, including its IPO in 1994, when it officially listed on the New York Stock Exchange under the ticker symbol RS. Today, Karla Lewis steps Inside the ICE House to take us through Reliance's rise over the past three decades. We'll dive into her journey from controller to CEO, the company's exciting rebranding, and what lies ahead for its future. Our conversation with Karla Lewis, president and CEO of Reliance, Inc. is coming up right after this.
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Pete Asch:
Welcome back. Remember to subscribe wherever you listen, and rate and review us on Apple Podcasts so others know where to find us. You can also now find full video episodes of Inside the ICE House Podcast on TV.nyse.com, and on the NYSE YouTube channel.
Our guest today, Karla Lewis, is the president and CEO of Reliance, Inc., NYSE ticker RS. In 1992, Karla left her first career as an accountant at Ernst and Whinney, now Ernst and Young, to join Reliance as the company's first controller. She was promoted to vice president in 1995, CFO in 1999, executive vice president in 2002, senior executive vice president and CFO in 2015, and president in 2021. On January 1st, 2023, Karla assumed the current role as president and CEO leading Reliance, Inc.
Thanks so much for joining us Inside the ICE House, and welcome back to the New York Stock Exchange, Karla.
Karla Lewis:
Great, thanks. Thanks for having us.
Pete Asch:
We were just talking before we started recording that, earlier this week, Reliance celebrated its 30th anniversary of listing. Pretty significant milestone for a company, and for any public company. You've been with the company since that day. How does it feel to reflect on the journey that not only your career has taken, but the company's taken, since its IPO in 1994 to where you are today?
Karla Lewis:
Well, I would say it's definitely been a lot more than I anticipated when I started working there 32 years ago. Certainly, when we did the IPO 30 years ago, it's been great being on the NYSE. It's brought value to our company. We did our IPO back in 1994 because we wanted to grow a little more nationally. We were pretty much a West Coast company then. That really gave us the funding to do that. Since then, it's created a lot of value for the company, but also a lot of our employees, our stockholders. We've been just really excited to be listed on the NYSE for that long.
Pete Asch:
Yeah. I think in 1994, you had 18 locations. Today, you have about 300 locations, so definitely a bit of growth over that time. The average company today lists after around 12 years of being in existence. Reliance took their time, because this year is also the 85th anniversary of the company's founding. February 3rd, 1939, the company is founded is founded as Reliance Steel Products. Today it's the largest metal service center company in North America.
Can you explain for our audience what a metal service center does, and how much of the business is still tied to Mr. Neilan's plan from 1939 to distribute steel reinforced beams?
Karla Lewis:
Yeah. I'm glad you asked the question because a lot of people don't know that our industry really exists. We're a bit of a wholesaler, distributor, and becoming more and more of a value-added processor to metal products. Yeah, Mr. Neilan, the story as I know it is he actually had opened a hardware store in Los Angeles, California in the late '30s, and he sold hardware products to a customer up in Fresno, California. The customer wasn't able to pay him in cash, so he paid him with rebar instead. Mr. Neilan made a good profit on that, and decided maybe he should start buying and reselling metal. We sell very little rebar in the company today, but we sell many, many other metal products and have grown from that.
Pete Asch:
The Bureau of Labor Statistics says the average employee stays at a company for around four years. You joined Reliance in 1992, ahead of that IPO, as its first controller. What is it about the company, the people, the mission, the culture that's inspired you to stay and grow with the company over that time?
Karla Lewis:
Yeah. Well, mainly I love the company, I love the people. I was fortunate that I actually started my career as an auditor, and Reliance was one of the first clients that I had the opportunity to work on. They quickly became my favorite client. They were fun, but they had really good people. Even though it was a small to medium-sized company at the time, Reliance was always doing something different. They were buying little companies, selling little companies, opening new offices. After four years of getting to know them auditing them, I wanted to go some place where I would be able to see the whole business, so that was the right size for that. That I could be involved in many parts of the business. But also one where it was people with high integrity, and I didn't want to get bored. 32 years later, I have not been bored yet.
Pete Asch:
I can imagine that. You talked about buying and selling small companies. Since you joined the company, it now has 300 locations, as I mentioned, 41 states, 13 countries, 15,000 employees. What are the strategies and factors of that growth? Is it merger and acquisitions, is it organic growth? How do you get from, when you first start, maybe West Coast most company, to now an international company?
Karla Lewis:
Yeah. Most of the growth, especially in the early years, was through acquisition. As I mentioned, in 1994 when we did our IPO, that's when Reliance decided that instead of just being West of the Mississippi, we wanted to grow into a more national company. We had tried to enter certain parts of the Southeast, but our California people didn't do so well with the local people down in South Georgia, so we retreated back to California. And decided it would be better for us to grow to buy a well-established, reputable company that already had a customer base. At the same time, we were seeing good companies in our industry become available for sale, so that was our reason for getting the funding.
We did several acquisitions early on, of again, good companies, good people. We leave their name on the building. We leave their culture intact, their people for the most part stay intact. That's a good exit. The reason these companies were available is because a lot of the owners were retirement age. For some reason, their kids didn't love the metal service center industry. We started seeing the opportunities and felt that was a really good way to grow. We've completed 76 acquisitions currently. I've actually been involved in all 76 of those since the IPO, so it's been really fun getting to know all the different companies and cultures out there.
But we also do grow organically. The last few years, we keep seeing a new record for capital expenditures, most of which is growth related. 2024, our cap ex budget is $520 million. That's hundreds and hundreds of items to grow to our 300-plus locations. Some of its building greenfield buildings, some of its expanding existing facilities. But the biggest part is investment in value-added processing equipment, because we continue to see more and more opportunity from our customers to do that.
Pete Asch:
Yeah. You had mentioned the growth. I think, since IPO, Lance found the data that said you had an annual growth rate of about 12.8%. If you think about that from 1994 to 2024, there's a couple bumps in the road. You talked about retrenching out of when you first tried to leave California, you think about the recessions in 2008, the recent one in 2020. What are the strategies you've used to help the company remain fiscally strong and resilient, when perhaps the rest of the economy is going through some fluctuations?
Karla Lewis:
Yeah. Really, I think our model of the way we've just been structured and grown has helped us create a more resilient business model than many others. Especially considering that we sell commodities. We can't control the various metal prices. They go up, they go down. We can't control that. But what our model does for us, it does a couple of things.
We're very diversified, and we've purposely grown the company to be diversified. From the products that we carry, whether it's carbon steel, aluminum, stainless steel, titanium, brass. Products. And markets. Our largest end market is non-residential construction, but we sell into aerospace, energy, automotive. Through our tolling businesses, general manufacturing, consumer products. Most of our locations are somewhat specialty service centers that focus on certain products and certain end markets, so it's not a duplicate of store everywhere. We think that really lets them focus more.
They know what's going on in their markets. We have a very decentralized structure. We're typically within about 150 miles from our customers that that location services. What that does is allows us to service smaller orders. Our average order size in 2023 was about $3200 an order, and we did $15 billion in sales. That's a lot of orders. But we have to have the product and the processing equipment close to the customer. Then of those orders, 40% of those orders, we delivered to our customer the next day. They call this afternoon, we pull and process the product, load the truck up, have it to our customer the next morning so they can fill their production line. We're now, we've been increasing the value-add processing we're doing. We do value-add processing on about 50% of our orders.
Just having that diversification, that closeness to the customer, the focus on customer service, the small order size, quick delivery has really, we believe, helped us be resilient. Then from a working capital standpoint, we're somewhat countercyclical from a cashflow standpoint. If the price of metals go down or demand goes down, our working capital requirements go down and we produce cash. Even in 2008 and '09, which was not a good year for us in the metals industry, or for most people, we actually threw off a significant amount of cash and came out of the Great Recession in a stronger financial position than we entered it.
Pete Asch:
You were talking about those commodity markets and how your business is tied the business. Another business very tied to commodities is farming. You were born and raised in a small farming community in Ohio. You mentioned how, when the company first tried to get from California to the East Coast, it didn't work. How did you find your way from Ohio, Ohio State out to California, and that new land front?
Karla Lewis:
Well, I may upset some Ohioans here, but typically I say it's because I grew up in Ohio. But actually, I like sunshine. There are a lot of gray days in Ohio. When I was at Ohio State, my accounting professor, he came up to me and he said, "Karla, why haven't you applied for a professional accounting internship?" I said I didn't know anything about it. He said, "It's the last day, go down and sign up." It was going to be during winter quarter. I said, "Well, I want to go some place no one else has gone." I went to Los Angeles, did my internship. Actually visited Reliance. I had to drive some work papers out there during my internship. Then they offered me a job, and I went back and told my family I'd live in LA for two years. Now it's been 38 or so.
Pete Asch:
You told the family two years. Did you know that it was going to be more than two years?
Karla Lewis:
No, I thought I would go back. I think I really did. But it got harder and harder.
Pete Asch:
You mentioned that first time you drove up to Reliance to drop off some paperwork. I assume at that point, you didn't know what the metal industry was about, the metal services industry was about. How did you gain that information over time? How have you been able to keep up with a very changing environment, as that business has evolved? As you've said, from rebar to what you do today.
Karla Lewis:
Yeah. As I mentioned, I did audit the company for a few years. I audited a couple of other metal companies in the area. I got to know a little bit about the product. As an auditor, you learn process and flow, and get to know that.
Very early in my career at Reliance, the company decided that maybe we should move off of our old mainframe computer system and put in a new computer system. As controller, and in a very small corporate office, I was tasked with that. I did all the requirements definitions, going out, meeting with some of our different businesses, to understand what their functional needs were. Selected the ERP. And then, really did the training, developed the processes. I was working three shifts training our warehouse people, everybody in the office, and all the different areas.
I will say, when you actually work for the company and spend time there, when they're trying to process all of these transactions quickly, not everything goes right all the time. It really helps you learn about the challenges, and just the incredible job that all of our people do out there every day.
Pete Asch:
You talked about going from mainframe to I imagine a server room, and into those computers. Speaking of the next innovation, you recently launched, a couple years ago, Fast Metals, Reliance's ecommerce business. An innovation in that business as well.
We can talk about that as well, that business particularly. But I just want to talk about in general. How do you, as a company, identify problems or growth opportunities, develop a solution like Fast Metals, and then actually bring that into the market?
Karla Lewis:
Yeah. It varies a lot, because the way Reliance operates with our decentralized operations being close to the customer, and then the acquisitions that we've done where we preserve that company and the culture, so we're on many different systems with many different management teams, and different ways to go-to-market. We really rely on our people and try to push the continuous improvement way of thinking. Most of the ideas come up from the people actually doing the jobs. They come up with the idea of, "This is my pain point, this is where I need help."
Then we do have distributed IT teams at some of those companies, also from a corporate level. We have developed some solutions, like in advanced delivery notifications, to help our truck drivers communicate with their customers. Fast Metals is interesting. Actually, our board challenged us that we should be able to go out and hire a couple of 20-year-olds and build an ecommerce platform over a weekend. We didn't quite hit that time period, but we did develop Fast Metals.
It's actually interesting because Fast Metals had to be a different business model, because we don't have what we call catalog pricing. Every transaction is dynamically priced based upon what the customer needs and the circumstances of that order. We have a human involved in setting the price on each transaction. For Fast Metals, we do not. It is a very small part of our business, but we were able to deliver what we were challenged with.
Pete Asch:
Very interesting. I always find it fascinating how many companies have a similar to ... The exchange business is dynamic pricing, and how many companies deal with that on a day-to-day.
Speaking of technology and the human element, can't talk tech, can't talk modern business without touching on AI. That's really changed how a lot of people operate their day-to-day businesses on a small scale. How is Reliance approaching AI? What role do you see it having in the near term, and then also as you look out ahead?
Karla Lewis:
Yeah. We've been trying to learn and understand more about AI and how we could use it. At Reliance, we're not typically bleeding-edge. We try to be practical, and really understand how technology fits our business, how it can help us. We do have a couple of pilots going on with AI. Again, at a small scale, whether it's from a maintenance standpoint with our equipment that we use in our warehouses. Our legal team is looking at it for contracts. We're looking at it for writing training manuals. There are a couple of applications that are looking at inventory management and purchasing.
I do think we will use it more in the future, but it's a pretty measured pace right now at Reliance. We want to get a couple successes before we roll it out more globally to other parts of our business.
Pete Asch:
I want to go back a little bit to an earlier success for you, which is the acquisition of Earle M. Jorgensen Company in 2006, which was the first time Reliance acquired a public company. How was that different from the small acquisitions you were making prior to the IPO in 1994? And how did that help you expand east across North America?
Karla Lewis:
Yeah. We had done some acquisitions, but they were typically regional companies, privately owned companies, and we were very successful with those. Earle M. Jorgensen Company, it's I believe pretty interesting that ... We call them EMJ. EMJ also was headquartered in Los Angeles, that's where it was founded by Mr. Jorgensen. Mr. Jorgensen and Mr. Neilan's nephew, Mr. Gimble, who ran Reliance for quite some time, they were very similar. They were friendly competitors, so to speak. There were a lot of things, like putting in an ESOP, and who they used being in the LA market, it was very similar structures between our companies in many areas. They carried what we would call a slightly richer product mix, so a little more specialty type metals.
Reliance had talked to EMJ several times over the years about an acquisition. They were owned by private equity for the last, I think, 15 or 20 years prior to our acquisition. Shockingly, we could never agree on a value. Ours was lower than what they thought they should receive. EMJ went public about a year prior, before we acquired them. The market gave them a value, it came in pretty close to where our number was. In 2006, we were able to acquire them. Well, it was the first time we acquired a public company. We used cash 50% and equity 50%. Of the 76 acquisitions, that's the only one so far that hasn't been 100% cash.
I'm not the only one whose worked at Reliance over 30 years, so we had a lot of longtime employees who grew up working at Reliance in LA knowing Jorgensen. The day we put the press release out about the acquisition, I had a few of them come to me and say, "Karla, they bought us, right?" We said, "No, no, no. We bought them." These are employees, because of the way we stayed decentralized and gave the autonomy, they hadn't realized that Reliance had become larger than EMJ. But it was a transformational product. It got us into many more geographic locations. It got us into some products that we had not historically been in. Timing with the market was good. That was a great acquisition for us and we're really happy to have them as part of the Reliance family.
Pete Asch:
You mentioned 76 acquisitions. We don't have time to go through them all, so we'll jump forward to a more recent one. Earlier this year, you acquired Midwest Materials and American Alloy Steel, and have agreed to acquire the tolling assets for FerrouSouth. How do these acquisitions align with the growth that's happened since that 2006 acquisition? What benefits do they bring not just your customers, but as you said, that decentralized infrastructure you're creating for the whole company?
Karla Lewis:
Yeah. Each one, a little differently. Midwest Materials, it's a carbon steel flat-rolled company based in Northeastern Ohio. We have a larger multi-location flat-rolled company who has been wanting to get into that geographic area with their products. It's a good way for us to get there quickly and grow them. From Reliance, we're under-serving that market, so there will be a lot of benefit that Midwest picks up from being a part of Reliance, and in particular of that Reliance company. It also positions us well for some mill expansion that's going on.
American Alloy is a company, they specialize in pressure vessel quality carbon steel plate, which was a product we didn't really carry. They're the masters of it in the US. They have a lot of technical knowledge on the product that most others don't. The Reliance companies have been buying this product from American Alloy for many, many years. It was a time that the owner was actually 98, and he decided it was time to pass on the company, and we were honored that he came to Reliance to offer us the ability to acquire the company. We completed that transaction. They're working closely with some of our other carbon steel plate companies. They had recently added some value-added processing capability, and we have a lot of people who can help them with the learning curve a lot faster, so a lot of value coming there.
FerrouSouth, it's a small location in the Southeast, Iuka, Mississippi. Toll processing, we don't own the metal, we process it for other people. We have an existing company nearby out of capacity. Do we add on to their existing facility, or can we pick up a good performing business that has the right assets in the right area? We were able to complete that recently.
Pete Asch:
Part of that, you got back to Ohio, so you did fulfill that. It took more than two years, but you're back.
Karla Lewis:
Yeah. Well, yeah. We have quite a bit in Ohio, actually.
Pete Asch:
Thinking about how that all goes together, to dive into this a bit more. You mentioned that American Alloy Steel, you were buying from them, now they're part of the company. How do you maintain that infrastructure to know, within the building, within the company, I think about 75 different brands you're operating, that each one is operating as efficiently as possible with each other? That you're taking advantage of those synergies. How are you tracking that, going back to your accounting background?
Karla Lewis:
That's actually an exciting area for us that is somewhat new, in getting the companies to collaborate more with each other. Because as I said there, they operate in local markets, they're fairly autonomous from each other. We try to give them decision making authority, treat them more like an entrepreneurial type company still privately owned. The most effective way, I would say, to manage that is we set the right metrics for them and structure their bonus correctly. Then they're going to think like an entrepreneur, they're going to make the right decisions. They decide what they buy, how much of it they buy. They decide who they're selling to, what they're charging them. They request capital for processing equipment, for delivery fleets. We do obviously have oversight and control the capital allocation to them, but we really try to incentivize them in a way that they're going to run the business as profitably and efficiently as they can.
However, we know we can get better in every one of our operations. A lot of it is locally, or with similar products or processes, the companies are on their own or we'll direct them. "Hey, this company manages our inventory really well. Why don't you go visit them?" Or, "Let's send a machine operator who runs a laser over to your location to help you get there sooner." There is a lot of sharing of knowledge. But it used to be some competed against each other. A lot competed against each other before we acquired them and they were part of the Reliance family. That continues for a bit.
We're at a point now where we're really saying, "Let's look at this from a Reliance standpoint," while at the same time maintaining that local entrepreneurial spirit. That's where there's opportunity currently. I don't know exactly what it's going to look like, but our teams are excited. I was just with about 30 of our people yesterday, all from different companies getting to know each other and identifying opportunities about how they can work together to improve each of their businesses. We think there's a lot more to go on that.
Pete Asch:
One of the ways that you've been talking about operating locally is making sure things are done the best way. I want to pivot a little bit to sustainability. Usually, smaller supply lines is usually helpful for sustainability. But overseeing these 75 different brands, very different environments, very different processes, even different locales, how do you put it all together into one ESG policy? How are you viewing as a distributor, rather than a producer, emissions and creating an environment that's going to overall help with your ESG numbers, and also help the communities you operate in?
Karla Lewis:
Right. Before the rebrand, when we were Reliance Steel & Aluminum Co. for many years, I think people would just see our name, and they picture big smokestacks, and dirty steel. By the way, there's a lot of clean steel out there that's being produced, especially in the US. It's a very recycled product.
But our footprint is very different than that. We're not producing metal. Our biggest emission is our fleet of about 2000 trucks that go on the roads every day. We are tracking that, reporting that, trying to bring it down. There are not electric trucks available today that can deliver the way that we need to deliver our product for our customers. But we continue to look at that. We have a consistent practice of replacing our trucks, so we're putting in more fuel-efficient trucks every year through parts of our fleet. We're putting in electric forklifts. We're trying to reduce our emissions where we can, but we are driving trucks every day.
With that though, on sustainability and responsibility to our communities and to our employees, is safety, which we put a very high emphasis on. That's our number one value within our company. It's our job, every person in our company, it's our job to send our people home from work at the end of the day the same way they came to work. It's our responsibility to make sure our drivers are trained and safe when they're on the roads in our communities. That, we do have a corporate-wide focus on. That's the one area where we say, "There is only one culture for safety, and you're all part of Reliance, and you have to adhere to these policies."
Pete Asch:
Yeah. To put some numbers on that, last year, Reliance's total recordable incident rate was 1.96, which is almost half of what the industry average is. What do you attribute that to? Is that every day, just being diligent? Is that using technology to oversee the processes?
Karla Lewis:
I think it's a combination. It's really moving to embedding a culture where we try to tell, as I said earlier, each person, "You're responsible for yourself and you're responsible for others." We try to empower them that if anyone in the company sees another person doing something they think is unsafe to go stop that act right away. Maybe a lot of people say this, but I truly believe we care about our company. As you know, a lot of these were family-owned companies where the employees grew up together. As I said, we have a lot of longtime employees, they've known each other for a long time. We have many, many examples of our employees, where now their son or daughter, grandson or granddaughter, niece, nephew, are also working with us at those locations. They really are a family and an extended family, and they look out for each other.
Our leadership team knows how important safety is and they have bought in. It's just really trying to get it down every day, to every person, "Don't take shortcuts. Follow the procedures, and you can stay safe."
Pete Asch:
With the number of employees, and particularly family connected employees have a big role in the community that you operate in. In 2017, you launched Reliance Cares. How are you using that program to make sure the company has a role in the community that it's operating in and that it's pulling its often multi-generation workforce from?
Karla Lewis:
Yeah. Reliance Cares, as you mentioned, when we first created that program and put it in place, the real genesis of it was that we had, for many, many years, given to Red Cross when there was a natural disaster. Red Cross is a great organization. But as Reliance grew, every time there was a natural disaster, in most cases we had impacted employees. Our employees were saying, "I like giving to the Red Cross, but I'd rather give to my coworker at a different Reliance company. I'd like to directly help that employee." Reliance Cares originally came about to give grants and immediate relief to people who were victims, suffered losses from natural disasters. Then coming through COVID, people had some new issues to deal with, so we expanded the coverage, added a lot of other social reasons of why people could get funding.
Then as you mentioned, we really stepped it up a couple notches now, and are really looking to give back more to the local communities, both financially and with our employees volunteering time. Last year, Reliance rolled out a matching program that our employees can donate to the charity of their choice and we'll match that up to $1000 per employee. And also, paying for volunteer time for them to go help within their communities and the different organizations.
Then we also became a large sponsor for Ronald McDonald House Charities. We think that's a great organization. They have houses in many of the communities where we have employees, so it's another opportunity for our employees to give back, for us to give back, and go and help locally. One of the other organizations where we've been stepping it up is the 9/11 Day, which I think they rang the bell on 9/11 here.
Pete Asch:
They did, they did. Yes.
Karla Lewis:
Yeah. One of our corporate officers who heads up the program for us was up on the podium with them. We were a national sponsor this year. We had over 500 employees in 17 different cities that day packing meals for people with food insecurity. We had another 500-plus who didn't have an event in their city, so they came up with their own ways to contribute.
Pete Asch:
Very cool. Just as we begin to wrap up, we want to open the aperture a little bit to the overall industry. You touched on it in one of your answers earlier, recycled materials. I think last year, your company reintroduced 220,000 tons of recycled scrap metal into the manufacturing cycle. How much does recycled metals represent both a sustainability road, as well as just in a limited resources world, the ability to continue to provide your customers and the overall metal services customers, what they need to continue to build the economy?
Karla Lewis:
Yeah. The aluminum products have historically been recycled. All those cans, that comes out in nice, shiny, new coils of aluminum that we buy. Aluminum has always been that's just one of their inputs to the process. Then there are different technologies, on more of the carbon steel side, what the type of furnace that you have. Blast furnaces were the older technology. Still very good technology, they produce very high quality steel products. But then, there's the electric arc furnace technology, and that consumes quite a bit of scrap metal. That's where they need the old cars, and all of the recycled steel, that goes in as a raw material input for the EAF furnaces. That's the newer technology, so where you see producers expanding, it's typically on the EAF side.
The United States is the cleanest steel there is. We have the most EAF mills in the world. It's older technology in a lot of the other parts of the world.
Pete Asch:
Talking about technology, and we've touched on a bunch of different ones. EAF. We talked a little bit about how the role of AI and technology is playing. What are the biggest trends in the metal services industry right now, and how do you think they'll shape the next five, 10 years for the work?
Karla Lewis:
What we've seen and Reliance has made a lot of more investment, as I mentioned earlier, in value-added processing equipment. Part of the reason is, about 10 years ago, we saw the equipment that we use to generally change the size or the shape of the metal, we would do first-stage processing for our customers. So that they then had, instead of a huge piece of metal that they couldn't handle, they didn't have the right equipment, it wouldn't fit on their production lines, so we would take it to the size and shape they needed to feed it into their production lines. Sometimes they would still have to do, they or we, might need to grind it, to clean it up a little bit, or do some manual processes.
Now there's equipment available that allows that to be done. You can do more complex processing. You can get smoother finishes, tighter tolerances. You can do two or three steps on one machine, which really adds value for our customers. The equipment keeps coming out and advancing, which is valuable for our customers, either because they're facing higher requirements and specifications just as all the technology continues to advance, or as I said, it makes them more efficient.
There's also been a trend of many of our customers, and other service center customers, moving away from some of the processing that we're now doing. They used to do it themselves, but for various reasons, they've realized we could maybe do it more cost effectively for them. Labor, there aren't people beating down our doors to work in our warehouses and drive our trucks. We wish they would be, because they're really good jobs, but it's not the most attractive position in today's world. Some of our customers, especially smaller ones, may not want to deal with having to be able to source labor, train them, keep them safe. We're in a better position to do that.
There are just different reasons service centers are having more processing pushed to them. I think that's going to continue in the future. I think operational excellence, the continuous improvement is going to continue to be at top of mind, because everyone's trying to figure out how to do things faster, cheaper, and keep up. There are some really good tailwinds for our industry right now too, with a lot of the government stimulus money that's out there that still hasn't been spent. There truly is re-shoring, there's more manufacturing coming back to the United States and to North America. We think that creates some good opportunities for all of us in the metals space moving forward.
Pete Asch:
Yeah, the final question about that. How are you making sure that Reliance is taking advantage of these opportunities by having that workforce they need? How are you attracting a modern workforce with the technological skillsets you need, but also those, as you said, those skillsets that may not be so attractive in the modern economy?
Karla Lewis:
Yeah. As I said, it is a challenge. It's a challenge for all of us in our industry. But I think the way Reliance operates, people like being part of the culture. We create a lot more opportunity potentially for people, if they want to move to a different part of the country, or internationally. We provide great benefits to our employees. We talked about the Reliance Cares program. But I think the biggest thing is just trying to give opportunity and mobility to those people who want to succeed. I think we've got the platform to be able to do that.
Pete Asch:
Well, I think that's a great way to end this conversation, giving opportunity and mobility to people who want to succeed. Well, thank you, Karla, so much for joining us Inside the ICE House.
Karla Lewis:
All right. Thank you very much.
Speaker 1:
That's our conversation for this week. Remember to rate, review, and subscribe wherever you listen. Follow us on X at @icehousepodcast. From the New York Stock Exchange, we'll talk to you again next week Inside the ICE House.
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE, nor its affiliates, make any representations or warranties, expressed or implied, as to the accuracy or completeness of the information, and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy an security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
