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Final team assignment (IA3)

Krogman Metals

MGMT 661

Course Section: 07.

Students names:

Anon Kimnae (2024588)

Ashok Kumar Nirala (2110287)

Christopher George Alvarez (2112965)

Stephanie Rodríguez Reyes (2019596)

Steven Uy (2104115)

Date of submission:

November 20th, 2022

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Krogman Metals BV – Stainless Steel – Canada Market

Contents
Market Research.........................................................................................................................3
Analysis and Recommendations................................................................................................4
Strategy......................................................................................................................................4
Financial Perspective in the Canadian Market...........................................................................5
Startup cost.................................................................................................................................5
Operational cost (Short- and Long-Term)..................................................................................6
Payment structure.......................................................................................................................6
Customer Insurance....................................................................................................................6
Operation....................................................................................................................................7
Infrastructure..............................................................................................................................7
Equipment..................................................................................................................................8
Logistics.....................................................................................................................................8
Marketing...................................................................................................................................8
SWOT Analysis.........................................................................................................................8
PESTEL ANALYSIS.................................................................................................................9
Five Forces...............................................................................................................................10
VRIO........................................................................................................................................11
Business Model Canvas...........................................................................................................12
Risk Analysis...........................................................................................................................12
Customer Analysis...................................................................................................................12
Customs procedure...................................................................................................................13
Import Restrictions and Quotas................................................................................................13
US – Canada Trade Treaty on Steel.........................................................................................14
References:...............................................................................................................................15
List of Annexes........................................................................................................................19
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Market Research

Background

The International Trade Administration states that Canada was the world’s eighteenth-
largest steel exporter in 2019. In 2019, Canada exported 5.8 million metric tons of steel, a 12
percent decrease from 6.5 million metric tons in 2018. Canada’s exports represented about
1.5 percent of all steel exported globally in 2019, based on available data. By volume,
Canada’s 2019 steel exports represented over one-tenth the volume of the world’s largest
exporter, China. In value terms, steel represented 1.1 percent of the total goods Canada
exported in 2019.

Canada exports steel to over 130 countries and territories. The United States and
Mexico represent the top markets for Canada’s steel exports, receiving more than 350
thousand metric tons each. All of Canada’s top ten export destination countries are labeled in
the map (see Annex I), accounting for 99% of Canada’s steel exports in 2019.

The United States was the top market for semi-finished steel products at 70 percent
(276 thousand metric tons), followed by China at 21 percent (84 thousand metric tons). The
United States was the export destination for 74 percent of all stainless-steel exports (22
thousand metric tons), followed by China at 10 percent (3 thousand metric tons). See Annex
II

Major Players and Market Share

Russel Metals Inc. (Market Share 9.5%) is one of North America's oldest metal
service centers, established as John Russel & Co. in 1785 by John Russel, a Scottish
immigrant. Like its largest competitor, Samuel, Son & Co. Limited, Russel is headquartered
in Mississauga, ON. The company is estimated to be the largest metals wholesaler in Canada
and has a significant presence in the Southeast and Midwest regions of the United States.
Russel employs about 3,000 people and recorded $2.7 billion in consolidated revenue in
2020, according to its 2020 annual report.

Founded in 1855 and based in Mississauga, ON, Samuel, Son & Co. Limited
(Market Share 6.7%), family-owned for five generations, is Canada's most prominent metal
service center. Samuel has a significant presence in the United States and Canada and
operates in Mexico, Australia, and China. Samuel employs more than 5,000 people and
generated total revenue of $3.4 billion in 2016, according to its 2016 Corporate
Responsibility report. See Annex III

Capital Intensity
The Metal Wholesaling industry in Canada exhibits a low to moderate level of capital
intensity. For every $1.00 spent on wages, industry operators are estimated to pay $0.15 on
capital in 2021. Still, within the industry, capital intensity varies depending on an operator's
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focus. Operators that focus on distribution rather than processing operate with lower capital
intensity, while specialized service centers and operators that offer a range of services are
more capital-intensive. Purchases of expensive technology such as computer numerical
control (CNC) machines or inventory management systems account for a large share of
operators' capital expenditure.

Outlook

The Metal Wholesaling industry in Canada is forecast to decline over the five years to
2026 in response to stagnant demand and an expected decline in the world price of steel.
Over the five years to 2026, the world price of steel is forecast to decline an annualized 3.2%,
lowering the value of sales and inventory.

Stakeholders:

(a) Shareholders
(b) Customers
(c) Suppliers
(d) Employees
(e) Investors
(f) Government

Analysis and Recommendations

Strategy

I. Partnership (Short Term)

Since the Krogman Metals head office is in the Netherlands and its sales office is in
Istanbul. It is beneficial to consider Partnership as one of the business strategies. Having a
local business partner may bring knowledge and experience that may be lacking and
complement both skills to help grow the business. The right business partner may also
enhance the ability to borrow money to finance the company’s growth. Furthermore, A
partnership can bring in a set of new eyes that can help spot what may have been missed. It
may help adopt a new perspective or gain a different outlook on how to do business or even
how to price the products and services.
A partnership, as defined by the Government of Canada, is an association or
relationship between two or more individuals, corporations, trusts, or alliances that join to
carry on a trade or business. Each partner contributes money, labor, property, or skills to the
partnership. In return, each partner is entitled to a share of the profits or losses of the
business. The business profits or losses are usually divided among the partners based on the
partnership agreement. A partnership by itself does not pay income tax on its operating
results and does not file an annual income tax return. Instead, each partner includes a share of
the partnership income or loss on a personal, corporate, or trust income tax return. Since a
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partnership is considered a separate person, it is required to register for a collection of GST
(goods and services tax) and HST (harmonized sales tax).

II. B2B E-Business Solution (Short to Medium Term)

Wholesaling is a competitive industry where customers demand speed, accuracy, and
satisfying customer experience. Introducing an online presence to the wholesale business can
increase revenue by leaps and bounds. The beauty of having an online business or e-
commerce store is that it can run parts of your business on near autopilot when set up
correctly. Digital marketing strategy can continuously be expanded and fine-tuned, but four
channels should be prioritized: e-commerce store, social media presence, email marketing,
and SMS marketing.

III. Competitive Pricing (Short to Long Term)

Regarding pricing, businesses can either keep their prices low to attract more clients
or give their products aspirational value by pricing them beyond what most ordinary clients
could afford. Competitor-based pricing is commonly used to test product pricing, especially
if you’re new to the market. It requires thorough research on what your competitors are
doing, what they offer, and what price they offer to arrive at your pricing strategy.
Krogman Metals has an advantage in terms of pricing because, having multiple
sources of stainless steel around the globe, from prime quality to secondary quality material,
they can adjust the pricing depending on their client's needs. They can also change prices
depending on the quantity orders and the existing stocks they have in their warehouses due to
advance purchases they did when they forecasted the value of the material is advantageous at
the time of sale.

Financial Perspective in the Canadian Market

Startup cost
The starting costs would be various based on many factors, such as location, office
size, and business type. Krogman would need a back office and a warehouse to stock material
and inventory. Thus, the report will share the guideline for office and warehouse costs as the
main start-up cost when expanding the business to the Canadian market.
The first main cost for the office is an office space cost that typically ranges from $3/
sq. Foot to $20/ sq. foot. However, The cost of office space in the commercial downtown
could be up to 40 Canadian dollars, such as the rent per square foot was around 39.02
Canadian dollars in Downtown Toronto in 2020. Then, while equipment and furniture costs
range between $1,500 and $2,500, inventory and supplies can cost approximately $5,000 to
$10,000, but these costs would be considered based on the business type again. The legal cost
is another consideration that would depend on each lawyer's performance and reputation. And
the cost can range from $500 to $10,000. Also, business registration fees could range from
around $100 to $250 based on each province. For example, the registered costs in Ontario
and Alberta are $134 and $113, respectively.
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In terms of the warehouse construction cost, the report found that using the method of
the average construction costs by square foot could help the company know the approximate
cost for the warehouse construction. However, each region also has a different level. For
example, while the warehouse cost ranges between $90 and $200 per square foot in the city
of Brandon in Manitoba, the average construction cost per square foot in Toronto is $98.

Operational cost (Short- and Long-Term)

The report uses peer analysis to investigate how much the operational cost for steel
wholesalers would be in the Canadian market by looking at the financial performance of a
public company in the stock market (TSX) named Russel Metal. The company is one of the
leading steel distributors in Canada. It has a metals service center to provide processing and
distribution services, which is considered familiar to the business of Krogman Metals, which
has the business of steel traders and provides customized services to customers.
Based on Annex IV, Russel Metal had a total operational cost of around 15% of
revenues, categorized by employee expenses for 9% and other operating expenses for 6% of
total revenues. When the report breaks down the additional operational expenses, those costs
are divided into Plant and other fees for 4% and Delivery expenses for 2% of revenues.
The report also looks at the average financial performance of the wholesaler-metal
service centers sector (NAICS: 4162), which is based on the financial performance of 161
steel wholesalers in Canada, with revenue in the range of $CAD 5 million to CAD 20 million.
Based on Annex V, it can be concluded that the operational cost for the industry is $
1,561,400, which is around 16% of total revenues. And it could be categorized by labor and
commission cost for 9%, rent for 1%, and other expenses for 2%.
To sum up, the peer analysis by industry performance and one of the leading steel
wholesalers in the Canadian market, Russel Metal, showed that the operational cost is around
15% of total revenues. This 15% comes from employee costs for about 10% and other
expenses for 5%. These percentages to total payments could be one of the guidelines to help
Krogman Metals make a budget for expansion to Canada for the short and long term. And the
amount of each expense based on the industry performance is shown in table 2 as another
benchmark for the company to control its cost following the industry.

Payment structure
Based on the Canadian government, the standard payment term in Canada is thirty
(30) days. The report also uses peer analysis to investigate how the leading players in the
steel market provide credit terms to their customers. So, the information looks at Stelco's
account receivable policy. Notice that Stelco is considered the largest steel producer in
Canada. Based on its accountable receivable policy, Stelco provides non-interest bearing and
credit terms of 30 to 45 days to its customers. However, practically, the report suggests
conducting the customer's creditworthiness and the business relationship before making the
decision.
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Customer Insurance
Regarding customer insurance, the report considers that it is the insurance that
Krogman would need to secure its account receivable. Krogman would provide a service of
sales on a credit line to customers. In this case, Krogman would need insurance to secure its
account receivable, ensuring it can collect money and avoid bad debts. And these are some
tools that Krogman could use to secure its account receivable for the market in Canada :

Trade Credit Insurance is insurance used to protect against the non-payment risk
when a company sells goods to customers on credit terms. Suppose a customer cannot pay for
the product purchased within the due date and other trade credit insurance policy conditions
have been met. In that case, the insured company could seek a claim with its insurer for the
payment it does not receive. These are lists of the organization that provides a credit
insurance policy: AIG, Euler Hermes by Allianze, Atradius, Coface, and Export
Development Canada (EDC). A service fee for this insurance ranges from 1% to 10% based
on the amount of risk exposure and the quality of the accounts receivable portfolio.

Bank's Guarantee and Letter of Credit: a bank guarantee is an obligation that a

bank will compensate the company if the debtor fails to meet the company's contractual
obligation. Many financial institutions in Canada have provided this Bank Guarantee service,
which is suitable for trading and contractual transactions. Meanwhile, a Letter of Credit will
work as the bank's Guarantee but will be issued for the importing and exporting companies.

Parent's Guarantee: a guarantee that a customer's parent company will provide in

connection with the customer's obligations under the purchased contract. In this case, if the
company's customer fails to make a payment within the credit term provided, the company
can use this parent guarantee to get money back from the customer's parent company.
However, this Guarantee would be based on the negotiation and business relationship.

Operation

Infrastructure
According to Pierre (2021), “Business infrastructure is an operating system that links an
organization's people, processes, and tools or technologies to ensure that growth is
sustainable, repeatable, and profitable.” Every business should have a great operating system
to ensure the work is going smoothly and to make every service offered convenient to every
consumer.

Based on figure 1.1. The warehouse market based in Canada is from Russel Metals,
which offers warehouses for metals all over the country. These warehouses have many
storage spaces to cater to the metals and products. The services provided cater to processes
and tools that will make the business of Krogman easier and more convenient if they partner
through Russel Metals Inc. (Refer to Annexure V)
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Equipment
As mentioned in the infrastructure and what technologies are being used in the
Canadian steel market. The types of equipment used in these modern times would be iron-fed
electric arc furnaces (EAF), which would make the electric supply cleaner and would not use
the old traditional coal equipment. ArcelorMittal’s steel-making procedures are one of
Ontario's largest greenhouse gas emisión sources. There are many advantages to using the
Electric Arc Furnace. It is smaller than a traditional blast furnace. It uses electricity as the
primary energy source to form and create metals. It has lower initial costs and does not take
up much space compared to the blast furnace. And lastly, it takes less time to manufacture
and create products. That is why these types of equipment may change how a steel
manufacturer or wholesaler works since its equipment will have a greener and cleaner ways
to produce metal.

Logistics
There are many warehousing options in Canada for steel companies that want their
products stored and safe. The company that can accommodate Steel products would be the
Canaan Group. The company is Canaan Group. They offer a state-of-the-art warehouse here
in Vancouver. The warehouse is from their private land, which is a few companies in Canada
to have their real estate. That is why it gives assurance to customers that they will have a
competitive price when it comes to warehousing because they don’t have to compete with
other companies for their pricing since they own everything.
Another example is from Warehousing services. Maersk (n.d.) which is based on the
annex VII, it shows how the steel is transported from the manufacturer or production to the
warehouse, where it is securely stored afterward. Maersk offers these services from all over
the world.

Marketing

SWOT Analysis (Strength)

(a) Strong Logistics network: Krogman has a strong logistics network capable of
delivering goods to any destination worldwide at a very competitive price. It has developed a
good logistics network over the years. Its network is capable of handling any giant order. Its
network is so extensive that some logistics support will always be there, even in contingent
circumstances.

(b) Customized products: Krogman offers

a wide range of customized products. Customization yields higher customer satisfaction.
It slits, decoils, polishes, and adds a PVC coating per customer’s demand in terms of size and
quality. This large variety and customization can attract new customers and retain them.
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(c) Global warehouses: Company has a large pool of global warehouses such as Istanbul,
Antwerpen, Malaysia, and UAE. These warehouses allow Krogman to deliver goods swiftly
with less transport cost.

SWOT Analysis (Weakness)

(a) Stockist and not a manufacturer: Krogman is a stockist and not a manufacturer.
Therefore, it has a dependency on the manufacturer in terms of the supply of steel as well as
its purchase price.

(b) Too small to influence the manufacturer and negotiate the price: Krogman is not a
giant organization that can affect the manufacturer to negotiate the price. The company is
growing and gradually building its goodwill but has a long way to go to be a market leader.
SWOT Analysis (Opportunities)
(a) Tie up or merge with any leading manufacturer in India or China: India and China
are two cost-effective steel producers due to low labor costs. Krogman can tie up or connect
with any such entity, and with economical steel, it can dump in the Canadian market and
make a mark right from the beginning.

SWOT Analysis (Threat)

(a) Competition from companies who achieve economies of scale: If the giant players
enter the market with meager steel prices, Companies like Krogman will have no ground to
fight because they can’t compete with manufacturers in terms of price.
(b) Government regulation: If there is any government regulation that prohibits any steel
trade with Sweden, then it will cast a negative impact on Krogman.

PESTEL ANALYSIS (Political factors)

(a) Bureaucratic or government intervention in Steel & Iron industry

(b) Trade regulations and tariff control by the government.
(c) Price regulation
(d) Change in tax policies related to the steel industry, such as tax rates and incentives

PESTEL ANALYSIS (Economic factors)

(a) Government interference in free trade policy

(b) Change in Exchange rates policy
(c) Impact of inflation and interest rate
PESTEL ANALYSIS (Social factors)

(a) Demographics and skill level of the people of Canada.

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(b) Canadian culture (gender roles, social conventions, etc.)

PESTEL ANALYSIS (Technological factors)

(a) New technological advancement in the steel industry

PESTEL ANALYSIS (Environmental factors

(a) Weather
(b) Climate change
(c) Recycling and waste management related to steel

PESTEL ANALYSIS (Legal factors)

(a) Introduction of Anti-trust law in the Steel industry

(b) Introduction of laws related to Consumer- protection.
(c) Stringent Health and safety laws

Five Forces

Competition in the industry: In 2020, the market for stainless steel was estimated to be worth
USD 105.67 billion, with APAC holding the largest regional market share. In emerging
economies, rising energy demand, automobile production, and construction activity are all
predicted to increase stainless steel demand. (ReportLinker, 2021)
Within the Canadian market, some companies considered competition are ArcelorMittal SA,
Stelco Holdings Inc., and Gerdau SA, which are dedicated to manufacturing and
commercializing steel and metals. (IBIS World, 2021)

Potential of new entrants into the industry: The steel industry is well-established. The
ability to produce at economies of scale to survive is a challenge for new entrants. Significant
capital investment is also necessary for this sector. Due to the absence of product
differentiation, buyers also have a low switching cost. Worse than that, clients might readily
transfer to overseas rivals due to globalization. A further source of uncertainty for the steel
business is shifting laws and regulations. As a result, the threat posed by new competitors is
moderate.

Power of suppliers: Iron ore, coke, and limestone are the primary raw materials used in steel
production (Gaspar 2016). Since Krogman Metals has numerous suppliers worldwide, the
company has additional options if one source cannot produce a particular material, giving it a
strategic advantage over most of its market competitors. It also means that the business may
quickly form a strategic alliance with the top local vendors of this product to guarantee that it
can get the supplies for the most affordable price.
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Power of customers : North America has many steel producers, and fierce competition exists
among them. The pricing war is the fundamental source of competition. For buyers,
switching costs are minimal. Additionally, the economic cycle's fluctuations will lead to
cyclical demand, and there may occasionally be an oversupply situation. Buyers will seek out
the highest-quality goods in significant quantities at the lowest cost. (Morrison, 2016)

The threat of substitute products : In this case, the risk is minimal. The building,
transportation, and manufacturing industries all depend on steel products. For these
industries, finding a substitute for steel is nearly impossible. According to Ojo (2018), steel
gives structures strength, and using another material might not be viable.

VRIO
Value: Krogman Metals can define its corporate social responsibility. By doing this, the
company will engage in social responsibility actions and make them transparent with
prospective clients. The brand image on the webpage is developed.

Rarity: The company has an international profile and operates in several nations and regions,
which allows them to generate revenues all over the globe. Krogman Metals is also striving
for innovation, leading to higher competitiveness.The company can grow and expand in the
market.

Imitability: Quality product offering. They have a wide range of metal qualities.The
company has a marketing communications team, which helps them to be updated and easy to
keep up with. Competitive services- Logistics, customizable products, warehouse, and
certifications.

Organization: Financial strength and brand power. Technological integration and

advancement contribute to their competitive advantage. Training and certifications. The
company can diversify its distribution channels.
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Business Model CanvasBased on the information the company has provided through
the available channels.

Risk Analysis

Hazards/risky activities: In general, within the steel industry, some familiar risks are falls,
noise, heat, vibrations, toxins, and heavy lifting. (Ranjbar, 2022)

Due to their high workstations, use of loud equipment, and chemical exposure, front-line
employees are especially vulnerable to these risks. These hazardous conditions can result in
accidents and physical and mental health issues for anyone performing any duty. The best
course of action for Krogman Metals is to take preventative measures, train their staff, and
ensure they are aware of the protocols they must follow to complete the necessary
responsibilities. The business should also give workers the equipment required to stay safe.
Besides these dangers, other risk are inflaction, raw material can increase prices, goverment
regulations accros different territories and lack of knowledge from employees.

Customer Analysis

There are mills in Canada's iron and steel manufacturing sector that create flat and long steel
products. Integrated steel mills, which make primary steel from minerals and metals, and
electric arc furnaces, commonly referred to as minimills, which create new steel products
from scrap, are two different types of enterprises that make up this sector. (IBIS World, 2021)

Even though steel is used in many industries (such as energy, construction, automotive and
transportation, infrastructure, packaging, and machinery) housing and construction sector are
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the largest consumer of steel today, using more than 50% of the steel produced (worldsteel,
2022). Therefore, there are two types of customers in business, people and companies, people
who generally work with metals and people who are developing a project and need metals for
it. And companies in the construction industry will need more products for their projects.
Depending on the quantity of the product and the quality they would require, the approaches
will be different, as well as each client.

Customs procedure
The import of steel products in Canada is governed by Canada’s Export and Import Permit
Act (EIPA). To import any steel product, custom brokers use GIP No. 80 or 81 with
provisions of EIPA and its regulations. Every import document of any shipment of products
must mark that the import is being done within the authority of GIP 80 and 81. This rule
applies to all products with HS heading 7206, 7302, 7304,7306,7308, 7312, and 7317. The
custom brokers must ensure the quantity (in Kg) and value (in cad), product classification,
and country of origin. They should also mention the name and address of the supplier and
importer details in the customs declaration form. Any wrong information served will likely be
attracted to post-clearance audit. After the products have been imported, the importer must
keep the following information for up to 6 years of import:

(a) Name and address of the consignee with residence proof

(c) The date when goods get entry into Canada
(d) Quantity of goods in Kg and value of import in CAD
(e) Origin country details
(f) Shipping documents, including freight and transport
(g) Classification of tariffs as per custom schedule
(h) Complete description of imported goods
Failure to comply with any import document will attract prosecution under EIPA, and CBSA
officers shall levy appropriate penalties.

Import Restrictions and Quotas

For the period commencing from May 13, 2019, to October 24, 2021, the Canadian
government imposed final safeguards in the form of tariff rate quotas (TRQs) on imports of
some steel products. All TRQs were managed by Global Affairs Canada through shipment-
specific permits. A list of some of the TRQs (country-wise) has been given below.
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Source: Global Affairs Canada

(https://www.eics-scei.gc.ca/report-rapport/Steel_Fin_Safeguard_Util_Alloc_and_Res.htm)
But recently, these safeguards have expired, and importers don’t need to apply for a
shipment-specific permits. Instead, they can import using general import permit 80 or 81.

US – Canada Trade Treaty on Steel

Canada imports more than 45% of US exports of steel. In 2021, Canada traded steel worth
17.4 billion dollars with the US. On June 1, 2018, the US imposed a 25% tariff on the import
of steel by Canada. Canada also retaliated by increasing US tariffs on the proportionate
amount of imports from the US.
(Source: Government of Canada)
On May 17, 2019, both countries issued a joint statement ending this tariff war and ending all
WTO litigations upon each other.

On November 30, 2018, Canada signed a free trade agreement with USA and Mexico at the
G-20 summit.
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Function=getVD&TVD=118464&CVD=118471&CPV=416210&CST=01012012&CLV=5

&MLV=5

Steel Supply LP. (2020, September 11). Electric arc furnace vs. blast furnace.

https://www.steelsupplylp.com/blog/electric-arc-furnace-vs-blast-furnace
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Stelco Holdings. (2021). STELCO Built Canadian 2021 Annual Report.

https://s201.q4cdn.com/143749161/files/doc_financials/2021/ar/Stelco-Holdings_Annual-

Report_2021_Opt.pdf

Tausche, K., & Pramuk, J. (2019, May 17). US reaches a deal to lift steel and aluminum tariffs

on Canada and Mexico. CNBC. https://www.cnbc.com/2019/05/17/us-to-announce-deal-to-

lift-steel-and-aluminum-tariffs-on-canada-and-mexico-as-soon-as-today-sources.html

U.S. tariffs on Canadian steel and aluminum. (n.d.). Government of Canada

https://www.international.gc.ca/trade-commerce/controls-controles/steel_alum-

acier_alum.aspx?lang=eng.

Worldsteel. (2022, August 17). Steel industry facts. worldsteel.org. https://worldsteel.org/about-

steel/steel-industry-facts/

Zenbusiness. (n.d.). Cost to Open a Business in Canada. https://www.zenbusiness.com/costs-

start-business-canada/
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List of Annexes

Annex I Canada’s Top Ten Export Destination Countries

Reference: Buchko, M. (2021, August). Metal Wholesaling in Canada. IBISWorld.

Annex II Canada’s Top 5 Export Markets by Products year 2019

Reference: Buchko, M. (2021, August). Metal Wholesaling in Canada. IBISWorld.

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Annex III Major Players and Market Share

Refe

rence: Buchko, M. (2021, August). Metal Wholesaling in Canada. IBISWorld.

Annex IV: Russel Metal Financial Performance for the years ended December 31

December 31 (in millions of $CAD) 2021 2020 2021 2020 Average

Revenues 4,209 2,688 100% 100% 100%

Cost of materials 2,996 2,170 71% 81% 76%

Employee expenses 376 231 9% 9% 9%

Other operating expenses 234 189 6% 7% 6%

Earnings before interest and income taxes 606 65 14% 2% 8%

Breakdown: Other Operating Expenses 2021 2020 2021 2020 Average

Revenues 4208.5 2688.3 100% 100% 100%

Plant and other expenses 145.5 116.8 3% 4% 4%

Delivery Expenses 55.6 50.5 1% 2% 2%

Other expense 32.7 21.7 1% 1% 1%

Total Other Operating Expenses 233.8 189 6% 7% 6%

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Reference: Russel Metals. (2021). 2021 Russel Metals Annual Report.

https://www.russelmetals.com/wp-content/uploads/2021-Annual-Report.pdf

Annex V: the average financial performance of the steel wholesaler industry (NAICS

4162 - Metal service centers)

Source: Statistics Canada from 161 Small businesses performance in Canada, 2021

Revenue range Annual revenues $5,000,000 - $20,000,000

Industry NAICS 4162 - Metal service centers

Revenues and expenses ($CAD: in thousand) Industry Average % to total revenues

Total revenue 9684.6 100%

Cost of sales (direct expenses) 7207.1 74%

Operating expenses (indirect expenses) 1561.4 16%

Labour and commissions 835.4 9%

Amortization and depletion 92.9 1%

Repairs and maintenance 47.5 0%

Utilities and telephone/telecommunication 40.3 0%

Rent 134.5 1%

Interest and bank charges 39.2 0%

Professional and business fees 71.7 1%

Advertising and promotion 26.2 0%

Delivery, shipping and warehouse expenses 39.9 0%

Insurance 29.2 0%

Other expenses 204.6 2%

Net profit/los 916.0 9%

Reference: Government of Canada. (2022, July 15). Report for: NAICS 4162 - Metal service

centres - Financial Performance Data.

https://www.ic.gc.ca/app/sme-pme/bnchmrkngtl/rprt-flw.pub?execution=e1s4
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Annex VI: Russel Metals Location

Reference. From “Russel Metals Locations” by Russel Metals Inc,

https://www.russelmetals.com/en/location/?sector=metal-service-centers

Annex VII: Maersk Warehousing Services

Reference: “Maersk Warehousing Services” by Maersk, https://www.maersk.com/supply-

chain-logistics/warehousing-and-distribution/warehousing-services.