WorldCity Business Magazine

(5-a) Who's Here Profile: Allied Steel - Reinforced Steel

by Karen-Janine Cohen

Michael Lassner, president of Fort Lauderdale-based Allied Steel Buildings, was once a dot.com entrepreneur, who saw a brilliant future in producing and broadcasting video on the Internet. Like many others, his cyber dream went up in smoke with the dot-com bust. But that was the first of a positive chain of events. Lassner took a job in a steel supply business owned by one of his investors. After his new employer also faced problems, Lassner and Charles Kowalski, an executive at the firm, started Allied. That was in 2003.

Since then, a commercial building boom along with a niche opportunity in Canada has helped the firm reach 2006 sales of $33 million, from some 700 projects. The company, which employs about 55 people, expects higher sales this year while opening more satellite offices. It already has a sales office in Orlando and earlier this year opened its first international location with an office in Toronto, Canada. At the same time, Allied is evaluating opportunities in the rest of the Americas as free trade agreements come into effect.

All this is happening just as customers are rethinking pre-engineered steel buildings, long consigned to utilitarian purposes such as warehouses and garages. Now clients choose it for schools, churches and offices as well, citing savings in both time and materials and because steel buildings can now be better crafted to resemble traditional construction.

According to the Metal Building Manufacturers Association, metal building shipments increased in 2006 by more than 8 percent over 2005, fueled by continued growth in commercial construction. The association also reported that the industrys market share has grown to more than 40 percent of all low-rise non-residential building construction.

Lassner and Kowalski started the firm with $27,000, enough to turn the lights on, said Lassner. Allied designs, markets and sells the buildings and works with contractors on projects. The steel comes from a Texas-based firm with 45 warehouses nationwide. Clients say the formula works.

Jim Lilly, general manager of Fredeking Stafford Construction, of Princeton, West Virginia, has built an office building, warehouse and animal shelter with Allied. Its now about to start on a civil air patrol hangar. You can do anything with a pre-engineered building that you want to, Lilly said, including facing it with brick. You can be as creative as you want to be.

He gave high marks to Allieds quality and customer service. Meanwhile, he said, using steel saves about 10 percent to 15 percent over conventional framing and if you stay with the warehouse look you can save more. Lassner said savings can reach 30 percent or higher depending on the kind of building and location. The average U.S. sale is about $43,000.

Allied gained lots of name recognition when it became a NASCAR sponsor, first in the United States and then in Canada. And its found one of its biggest opportunities in Canada, especially with the energy companies in the western province of Alberta. Indeed, Allied expects Canadian customers to account for 40 percent of 2007 business.

There is huge economic growth in Canada right now, Lassner said. With worldwide oil prices rising, energy companies no longer find it prohibitively expensive to extract oil from Albertas vast tracks of saturated land (known as the oil sands). Whats more, the harsh Canadian winters mean clients are keenly interested in buildings that can be raised quickly. That market drives itself, Lassner said.

Allied opened the Toronto office earlier this year. The timing couldnt have been better. The companys Canadian business is benefiting from a falling U.S. dollar and a robust Canadian currency. The U.S. and Canadian dollars reached parity in September for the first time since the mid 1970s.

Still, not all has been rosy. High demand for steel from China and other developing countries pushed prices up a dizzying 65 percent in 2004. The young company, anxious to prove itself to its customers, absorbed the increase on contracts that had been signed months earlier. It meant Allied had to forgo any potential profit for the year. Since then, steel prices have become less volatile. Still, the U.S. economys recent troubles means Allied may not reach an earlier-projected $50 million in 2007 sales. However, Lassner said, sales are up by a small margin from last year.

Allied expects to open a west-coast office and is considering one in Miami to pursue business in South and Central America and the Caribbean in the wake of free trade agreements. Lassner and Kowalski plan to hone their growth strategy before the end of the year. In the meantime, Lassner said, they hope that at least one of the big oil companies will come on board as a kind of superclient, for whom they could build a hundred or more structures. This business has always been a one-off business, Lassner said. But, he added, one big customer could change all that.