Service Center Metals proves manufacturers can grow rapidly
- May 2, 2008
by Donna C. Gregory
By most accounts, Service Center Metals (SCM) probably shouldn’t be one of the fastest-growing companies in Virginia. After all, manufacturing has taken some big hits in recent years. Overseas competition, a shortage of qualified workers, tightening government regulations and the trend toward a more service-based economy have all taken a toll.
But SCM has beaten the odds to become a top player in the aluminum extrusion market in less than five years of operation. Extrusion is a manufacturing process in which aluminum is forced through a die to create a variety of shapes such as bars, rods, tubes and pipes. In all, SCM can manufacture some 1,200 different shapes on demand, in large or small batches.
“We’re living proof that manufacturing in America is not dead,” says Chip Dollins, SCM’s vice president of operations. He likens SCM to Southwest Airlines, a company that has prospered in a depressed industry. “It’s the same with manufacturing, but manufacturing can work if you’ve got the right approach, and we think we’ve got the right approach.”
SCM started production in July 2003 with an innovative idea: Target the service center market exclusively. The service centers resell aluminum manufacturers’ extruded products to customers in machinery, electrical and transportation industries.
When it started nearly five years ago, SCM was a new face in an industry that had undergone massive consolidation, leaving service centers with few choices for suppliers. Aluminum companies that survived the changing market were usually large conglomerates that often had outdated facilities and high overhead costs.
With its new plant in Prince George County and its service-center focus, SCM outmaneuvered older competitors and turned a profit within seven months of beginning operation. “Our mission when we started was to really redefine what an extrusion company can do for this market, and we really focus in three areas: quality, service and operation efficiency,” says Scott Kelley, SCM’s president and CEO.
Less than three years after its founding, SCM doubled the size of its plant in Southpoint Business Park and added a 5,500-ton press, tripling the company’s capacity. The plant now employs 120 workers, who run three shifts, five to six days a week.
To improve efficiency, SCM offers a lucrative incentive plan for employees, allowing them to essentially double their standard wage each day if they meet certain production goals. As the company grows, so do the workers’ paychecks. “It’s a good system, and it drives the right behavior. Everybody contributes, and everybody reaps the rewards of the business,” says Dollins.
The company also has avoided corporate mainstays such as private offices and time clocks, creating a more relaxed corporate culture. “We’re a real flat organization. Innovation has been key to making this company work and be successful,” says Dollins.
Last year, SCM produced 80 million pounds, accounting for about 20 percent of the extrusion market. “We service practically every major service center in the nation with our biggest markets in the Midwest and Northeast,” says Kelley. “We’ve been very successful, especially considering our market has been down 15 to 20 percent.”
Because of its rapid growth, company officials are discussing more expansion either in Prince George or at a location in another state.
“We’re trying to make manufacturing fun again,” says Kelley. “We have a significant market share now in our industry, and we feel like we’ve created the new benchmark in terms of service, quality and cost. The fact that we’ve made a better model … we take a lot of pride in that.”