Reynolds Services’ Growth Comes from Overseas Sales

By Hal Johnson, Daily Business Journal Online
February 22, 2002

GREENVILLE, PA - Since its birth a decade ago, Reynolds Services Inc. has exported a tenth of its custom-cut tin-plated steel to canning companies overseas.

"We had to", said F. John Frangakis, President of the family-owned company. "At that time, some of its products could be used only overseas."

In the last two years, though, Reynolds Services found additional growth opportunities outside the United States. That strategy won it a 2001 Pennsylvania Governor's Excellence Export Award.

Reynolds Services began by exporting through brokers. Exporting was necessary because "10% to 15% of our products were not suitable for domestic applications for quality reasons," commented Frangakis. "Custom cut from coils, some of the tin-plated steel could be used by overseas companies to make paint cans, but not for the more sophisticated uses, such as food canning, demanded by U.S. companies. Also, the cutting equipment for exported sheets was not as demanding as it was for U.S. uses," reported the President's son, John R. Frangakis, Vice President.

In 1999, Reynolds Services began exporting directly to a growing list of overseas customers. For reasons never explained, a competitor exited the foreign markets in custom-cut steel sheets. "On a Friday, our competitor shut down its whole operation, and on Monday, its exporting operations opened under our name," the older Frangakis said.

"Besides the steel sheets cut from coils, Reynolds Services exports coils of galvanized steel that it purchases from Winner Steel in Sharon," said F. John Frangakis.

Exports total $5.5 million and account for 11% of the company's sales, John R. Frangakis says. Its overseas customers are in Spain, Italy, Egypt, United Arab Emirates, Indonesia, the Philippines, Malaysia, Pakistan, Hong Kong, China, Honduras, Peru, Ecuador, Bangladesh, Costa Rica, Thailand, South Africa and Great Britain. Free trade agreements with South America have enabled Reynolds Services to find repeat customers in Argentina and Uruguay.

"We expect exports to grow to 50% of our total sales and total sales to increase by 8% each year for the next five years."

F. John Frangakis found himself in the steel cutting and exporting business after years of working in steel mills. A Senior Vice President at Olsher Metals, Brookfield, which also cuts steel coils into sheets, the elder Frangakis left in 1991 to start his own company. "I wanted to work for myself as opposed to working for someone else," he comments.

He located his Reynolds Services in the Greenville-Reynolds Development, south of Greenville, PA. The location is near Select Industries, which prints codes and decorations on metal sheets for the canning industry. "That saved us $190,000 a year in transportation costs," stated the elder Frangakis.

Besides wanting to work for himself, F. John Frangakis had his eye onhis son when he started his own steel cutting business. As Vice President, John R. Frangakis keeps his eye on the day-to-day operations and exporting, while his father works as a consultant.

"Like most parents, you want your son to keep close to you."

© 2002 Youngstown Publishing Company. All rights reserved.

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