Description of Commercial Metals's Business Segments
AMERICAS RECYCLING
Our Americas Recycling segment processes scrap metals for use as a raw material
by manufacturers of new metal products. This segment operates 26 scrap metal
processing facilities with 13 locations in Texas, five locations in Florida,
two locations in Missouri and one location each in Georgia, Kansas, Louisiana,
North Carolina, Oklahoma and Tennessee.
We purchase ferrous and nonferrous metals, processed and unprocessed, from
a variety of sources in a variety of forms for our scrap metal processing facilities.
Sources of metal for processing include manufacturing and industrial plants,
metal fabrication plants, electric utilities, machine shops, factories, railroads,
refineries, shipyards, ordinance depots, demolition businesses, automobile salvage
firms, wrecking firms, and small scrap metal collection firms.
Our scrap metal processing facilities typically consist of an office and a
warehouse building located on several acres of land that we use for receiving,
sorting, processing and storing metals. Our warehouse buildings are equipped
with specialized equipment for processing both ferrous and nonferrous metal
and one of our facilities has extensive equipment that segregates metallic content
from large quantities of insulated wire. Several of our scrap metal processing
facilities use a small portion of their site or a nearby location to display
and sell metal products that may be reused for their original purpose without
further processing. We equip our
larger scrap metal processing facilities with various equipment, such as scales,
shears, baling presses, briquetting machines, conveyors, magnetic separators,
presses, shredders, and hydraulic shears, which enable these facilities to efficiently
process large volumes of scrap metals. We use cranes to handle scrap metals
for processing and to load material for shipment. We primarily transport processed
ferrous metal to consumers by open gondola railcar; therefore many of our metal
processing facilities have rail access. When water access is available, we also
transport processed ferrous metal via barge.
Americas Recycling operates four large shredding machines, two in Texas, one
in Florida, and one in Oklahoma, capable of pulverizing obsolete automobiles
or other sources of scrap metal. We have three additional shredders, two operated
by our Americas Mills segment and one operated by our International Mill segment.
With the exception of precious metals, our scrap metal processing facilities
recycle and process practically all types of metal.
We sell scrap metals to steel mills and foundries, aluminum sheet and ingot
manufacturers, brass and bronze ingot makers, copper refineries and mills, secondary
lead smelters, specialty steel mills, high temperature alloy manufacturers and
other consumers. Ferrous metal is the primary raw material for electric arc
furnaces, such as those operated by our Americas Mills segment and other minimills.
Some minimills periodically supplement purchases of ferrous metal with direct
reduced iron and pig iron for certain product lines. Our Irving, Texas office
coordinates the sale of substantially all scrap metals from our metal processing
facilities to our customers. We negotiate export sales through our global network
of offices as well as through our Irving, Texas office.
AMERICAS MILLS
Our Americas Mills segment includes our five domestic steel mills, four commonly
referred to as "minimills" and one commonly referred to as a "micro-mill,"
two scrap metal shredders, ten scrap metal processing facilities that directly
support the steel minimills, and a railroad salvage operation.
Our five steel mills, located in Alabama, Arizona, Arkansas, South Carolina
and Texas, produce one or more of steel reinforcing bar ("rebar"),
angles, flats, rounds, channels, fence post sections and other shapes. We utilize
a fleet of trucks that we own or lease as well as private haulers to transport
finished products from the mills to our customers and to our steel fabrication
facilities. To minimize the cost of our products, to the extent feasibly consistent
with market conditions and working capital demands, we prefer to operate all
of our mills at or near full capacity. Market conditions such as increases in
quantities of competing imported steel, production rates at U.S. competitors,
customer inventory levels or a decrease in non-residential construction activity
may reduce demand for our products and limit our ability to operate the mills
at full capacity. Through our operations and capital improvements, we strive
to increase productivity and capacity at the mills and to enhance our product
mix. Because the steel mill business is capital intensive, we make substantial
capital expenditures on a regular basis to remain competitive with other low
cost producers.
AMERICAS FABRICATION
Our Americas Fabrication segment consists of our steel fabrication facilities
that bend, weld, cut and fabricate steel, primarily rebar; warehouses that sell
or rent products for the installation of concrete; facilities that produce steel
fence posts; and facilities that heat-treat steel to strengthen and provide
flexibility.
Steel Fabrication
Through our Americas Fabrication segment we operate 37 facilities engaged in
the various aspects of steel fabrication. Most of the facilities engage in general
fabrication of reinforcing and structural steel, with three facilities fabricating
only steel fence posts. We obtain steel for these facilities from our own mills
and directly from third-party steel vendors. In addition, we utilize our marketing
and distribution business to purchase steel from other steel manufacturers.
We conduct steel fabrication activities in 14 locations in Texas, three each
in South Carolina and California, two each in Colorado, Florida, Illinois and
Louisiana, and one each in Arizona, Georgia, Mississippi, Nevada, New Mexico,
North Carolina, Tennessee, Virginia and Utah.
Fabricated steel products are used primarily in the construction of commercial
and non-commercial buildings, hospitals, convention centers, industrial plants,
power plants, highways, bridges, arenas, stadiums, and dams. Generally, we sell
fabricated steel in response to a bid solicitation from a construction contractor
or from a project owner. Typically, the contractor or the owner of the project
awards the job based on the competitive prices of the bids and does not negotiate
with the bidders individually.
Construction Services
Our Construction Services business unit sells and rents construction-related
products and equipment to concrete installers and other businesses in the construction
industry. We have 19 locations in Texas, five in Louisiana and one in Oklahoma
where we store and sell these construction-related products, which, with the
exception of a small portion of steel products, are purchased from third-party
suppliers.
Impact Metals
We provide heat-treated steel products through CMC Impact Metals, a subsidiary
of CMC. CMC Impact Metals is one of North Americas premier producers of high
strength steel products. We operate facilities in Alabama and Pennsylvania,
which manufacture armor plate for military vehicles, high strength bar for the
truck trailer industry and special bar quality steel for the energy market.
CMC Impact Metals works closely with our Alabama minimill, our distribution
business and other steel mills that sell specialized heat-treated steel for
customer specific use.
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