OFFERS INSULATION FROM COMPETITION
Metal Center News / March 2002
By Tim Triplett,
With its focus on specialty copper and brass alloys, sales to both commercial and military markets, and sophisticated processing, Standard Metals, Inc. has remained largely above the fray in the red metals market.
Standard Metals was founded in 1980 by president and owner, A. Stephen Buzash, Jr. The company operates out of a single, 20,000 square foot facility in Hartford, CT with ten long time employees.
"As a result of this cadre workforce, we have a depth of product knowledge that many engineers and other service centers call on for specification type questions," Buzash says.
Though the company is small, the specialized nature of its products and services makes it a national, and often international, supplier.
Standard Metals carries one of the largest selections of domestic red metal alloys in the United States. It sells copper, brass, bronze and thirteen different specialty alloys in its commercial line. Its military line includes copper nickel (C715 and C706), nickel aluminum bronze (C630 and C632), bronze (C903 and C922) and the Monel equivalent N04400 alloys often used for marine applications due to their resistance to the corrosive effects of saltwater.
Military contractors that make parts for ships and submarines, as well as aircraft bushings, represent about 100 of the company's 1500 accounts, but make up nearly half its sales, Buzash estimates.
Dealing with military contractors that sell to Uncle Sam is a double-edged sword. The number of competitors in the market is limited, and barriers to entry are significant. On the other hand, the government's specifications are extremely exacting and its paperwork requirements are daunting.
"We deal in highly specified material with pedigreed certification, which is not a simple market niche," Buzash says. "A lot of people have tried it and gotten out, sometimes twice."
To be a government supplier, Standard Metals must have an approved quality system in place, which is continuously audited. Every ounce of metal it sells must be documented and tracked from the moment it is produced to the time it's sold, including the exact heat from which it was processed, its chemistry and composition, and physical characteristics.
"We have to track that material from cradle to grave and then we have to hold onto that paperwork for ten years in case there is ever a part failure," Buzash says. "In fact, we have never thrown a piece of paper away. We have twenty-one years of records."
Standard Metals' inventory and sales management system, based on MetalWare software, facilitates such record keeping. "We can track heats, costs, locations, usage, customers, pricing history, duplicate quotes and many more functions," Buzash notes.
So far, Standard Metals' military related business has seen no direct effect from the war in Afghanistan or the Republican administration's plans for increased defense spending. "We were the busiest when they were building Trident submarines. Now they are only building one sub a year. They're not in a big shipbuilding mode right now. If we get into one, that will help our business," Buzash says.
Copper prices, currently in the seventy-cent range, are near historic lows. The market has been battered by the recessionary economy and declining demand in key markets, such as electronics and telecommunications. But the specialized nature of Standard Metals' products and Buzash's business philosophy, keep the company out of the price competition game.
"When you have to buy 2,000 pounds of an alloy, which you will only sell occasionally in 100-pound lots, you can't afford to discount. The price is the price," Buzash says.
Unlike many distributors today who focus on reducing stock to maximize inventory turns, Buzash focuses on having what customers need when they need it. He estimates his company gets less than two full inventory turns per year.
"I am a stocking distributor. I make the investment in this highly certified product and lay it on the floor. When someone needs something quickly, they come to us," he explains. "I refuse to broker at all. I don't ask the customer to wait twenty weeks until I can get it from the mill."
Buzash favors domestic suppliers over imports, because he believes in supporting the American economy. Standard Metals sources from U.S. market leaders such as Ansonia Copper & Brass, Bunting Bearings Corp., Concast Metal Products, Electralloy, Hussey Copper, NGK Metals and Revere Copper Products.
He expresses concern that America is losing its industrial base, and that it is in danger of losing domestic sources for certain alloys used in components critical to some military applications.
Standard Metals operates a variety of processing equipment: one horizontal plate saw, three vertical saws, two cut-off saws, two milling machines, three hand lathes, and one Mazak CNC turning center, in addition to bridge cranes and forklifts.
But it's the company's most recent additions, two abrasive waterjet systems that offer the most promise. Waterjet systems have not saturated most markets yet, which means there is not a lot of price competition for waterjet services, Buzash says.
Standard Metals invested in waterjetting in 1999 and now operates two machines made by Flow International. The latest, bought in June 2000, has a 6-ft by 12-ft bed and is capable of cutting through 6 inches of steel. The waterjet setup incorporates a closed loop system made by Ebbco, which filters the water and recycles it through the cutting head, eliminating any potential wastewater problem.
"We invested in waterjet processing equipment to augment our plate sales, as many of our customers wanted rings, circles and other shapes precut from plate and sheet. We have cut many different metal alloys of sheet and plate as well as, wood, rubber, plastic, fiberglass, laminate, foam, felt, cork, even granite, black onyx and glass," Buzash says.
Almost any two dimensional material can be cut with abrasive waterjet to tolerances of up to +/- 0.010. "If you can live with tolerances like that, waterjet beats the devil out of normal milling" in terms of speed and price, Buzash says.
Buzash expects his commercial sales to be off by 10 percent this year, compared to 2001. Sales to military customers are likely to dip 10 percent as well, unless the Bush administration increases military spending this year. He doesn't expect a significant turnaround in the economy until 2003.
The poor economy makes Standard Metals' foray into waterjets all the more timely, Buzash says. "The waterjetting segment of the business will more than compensate for the lost margin of the sales decline. From a margin point of view this year, we should be fine."
While the rest of the copper market is suffering from low prices, Buzash is laying in inventory, anticipating rising tags in 2003. "It's a good time to be buying inventory, at these prices."
Buzash sums up his formula for success: "We have strived to be the best in a specific portion of the market. We demand loyalty from customers, employees and suppliers. We never broker, always prefer domestic over foreign regardless of price, and we do not want to grow just for the sake of being big."