Independence Tube Acquisition Might Spark Needed Consolidation of Structural Tube Producers, Says Zekelman Industries CEO
10/05/2016 - Nucor Corp.’s acquisition of Independence Tube will benefit the structural tube sector and will likely lead to additional acquisitions within the segment, Zekelman Industries executive chairman and chief executive Barry Zekelman said on Wednesday.
Speaking during the CRU North American Steel 2016 conference in Chicago, Zekelman said he believed Nucor will instill some discipline in a company that has been a disruptive force within the market.
He also said he believes Nucor will contribute greatly in promoting structural tubes over beams, and, more importantly, concrete and wood.
“Their long-term vision of the industry will be more so to invest and develop the product, which will grow the market.”
Zekelman said he believes the deal will lead to other mergers and acquisitions, adding that the structural tube segment needs to be consolidated.
“I believe that two or three larger, more national, disciplined players is better.”
Independence produces approximately 600,000 tons annually.
Zekelman supports the acquisition, even though he’ll now be competing head to head with a company owned by one of his hot-rolled suppliers. But given the way Nucor operates, Independence will have to stand on its own within the larger company, he said.
“One division is not going to subsidize another,” he said. “They’re going to be an excellent competitor.”
He also said he believes Nucor will contribute greatly in promoting structural tubes over beams, and, more importantly, concrete and wood.
“Their long-term vision of the industry will be more so to invest and develop the product, which will grow the market.”
Zekelman said he believes the deal will lead to other mergers and acquisitions, adding that the structural tube segment needs to be consolidated.
“I believe that two or three larger, more national, disciplined players is better.”
Independence produces approximately 600,000 tons annually.
Zekelman supports the acquisition, even though he’ll now be competing head to head with a company owned by one of his hot-rolled suppliers. But given the way Nucor operates, Independence will have to stand on its own within the larger company, he said.
“One division is not going to subsidize another,” he said. “They’re going to be an excellent competitor.”
