Tank Components outgrows space

Tank Components, a manufacturer of steel components for pharmaceutical, biotech, food and dairy industries, is making good on a projection that the company would outgrow its 13,000-square-foot plant at 1621 W. College in Springfield.

L.J. Star Inc., based in Twinsburg, Ohio, acquired Tank Components in June 2004, making Tank Components a wholly owned subsidiary. The parent company is giving Tank Components a promised shot in the arm, covering half of the $500,000 cost to move the Springfield company to 17,000 square feet at 4520 W. Kearney. Tank Components, which began moving April 1, leases the space from Rich Kramer for an undisclosed amount.

Tank Components President and CEO Dale Sandy said the new location is intended to meet production orders that are up about 35 percent since October.

“Spacewise and growthwise we had gotten to the point where we needed to increase our capacity. When (L.J. Star) bought the company, we had 11 employees, and right now we’re running at 19,” Sandy said. “We’ve been running two shifts since October.”

The lease agreement, brokered by Gregg Stancer of Gregg Stancer Realty, is for seven years. Sandy said the shared investment includes the purchase of new plunging machines and other manufacturing equipment. Rich Kramer Construction preformed the infill work.

Tank Components shares the space with Earthgrains, which has 20,000 square feet in the west end of the building. There is also about 25,000 square feet of space still available.

The steel market

The company’s growth may be surprising in a market as volatile as steel. Steel import prices have gone up by more than 68 percent since January 2004, according to MEPS International Ltd., a worldwide consultant to the steel industry.

Daniel Manna, president and CEO of Paul Mueller Co., said prices have doubled in the last 18 months. He added that steel doesn’t usually have set prices; the industry works on a system that assigns a surcharge, based on the cost of alloys, at the time of shipment.

“To give you an idea, in 2000, if we were paying, let’s say, a dollar a pound for stainless steel, there was also a surcharge of about 20 cents,” Manna said. “This year, for the month of May, the published surcharge for food grade (steel) is 63 cents and pharmaceutical grade is $1.47. The surcharge alone is more than we were paying for material in 2000. So when you add that on to the base price, we’re seeing some really substantial increases in price.”

Sandy said higher prices haven’t adversely impacted Tank Components.

“We buy and resell steel, so really getting supply has been more critical than the pricing of it,” he said. “We haven’t had to slow anything down, and it does account for a little bit of our dollar growth.”

Other Springfield steel companies have seen similar effects.