Although you’ve probably never heard of the Commercial Metals Company (CMC), chances are good that you’ve driven across a bridge or spent time in a building made of its steel products. And when builders repaired the Pentagon after the September 11 terrorist attack, they turned to CMC for ultra-strong structural steel girders. To industry insiders, the choice seemed obvious. Since 1915, companies building bridges, skyscrapers, vehicles, and industrial equipment have relied on CMC to provide steel and metal products of every conceivable type. The company’s high-quality products coupled with its reputation for outstanding service has paid off on the bottom line. Even in an economically rocky period, the company has consistently been performing well. In fact, the fourth quarter of 2009 was the 180th consecutive quarter that CMC paid dividends to its shareholders.

The company’s president and CEO, Murray R. McClean, has emphasized that the key to its success is CMC’s high level of efficiency. Indeed, CMC operates a network of companies that carefully feed one another in a manner that minimizes waste. Specifically, the firm is organized into five segments:

Domestic Mills; the Polish company, CMC Zawiercie (CMCZ);

Domestic Fabrication; Recycling; and Marketing and Distribution. The Domestic Mills segment consists of four steel “minimills” and the Howell Metals Company, which manufactures copper tubes in Virginia. Servicing the European market, CMCZ mills 1.1 million tons of steel a year.

CMC’s Recycling Segment ensures a constant supply of raw materials for these units. Operating 34 metals-processing plants across the Sunbelt, CMC is one of the largest processors of scrap metals in the United States, providing metal products of all types to steel mills (including the company’s own facilities) and manufacturing plants.

Supporting these divisions is CMC’s Marketing and Distribution segment. This portion of the business, which itself is composed of four different divisions, focuses on marketing steel, nonferrous metals, and other commodities and products through a network of offices located around the world. One of these divisions is the International Division, which knits together CMC’s operations in 130 countries and coordinates business ventures with companies in other nations (e.g., Australia and Germany). To help promote the manufacturing business, the Marketing and Distribution segment also performs vital service functions for its customers, such as providing technical information, financing, transportation and shipping, and even insurance. In short, if it’s something that a metals customer may need, this segment of CMC is there to provide it. And the more seamlessly customers have their needs met, the more metal products they buy from the organization.

To say that nothing goes to waste at CMC is an understatement.

Take scrap, for instance. For a quarter century, CMC has been holding an annual “Scrap Can Be Beautiful” contest for art students at a high school in the Dallas area (where the company is headquartered). The company donates scrap metal to students in a metal sculpture class and awards cash prizes for the best entries. Some of the projects are displayed in the corporate office for a year, others are displayed in local galleries and museums, and still others are auctioned off to benefit Dallas-area arts organizations.

Questions for Discussion

1. What type of organizational design does CMC appear to use? On what do you base your answer?

2. How might CMC be redesigned to make it even more efficient than it is already? How would this fit what you would regard to be its strategy?

3. How might CMC benefit from entering into some form of strategic alliance with other companies? What particular form of strategic alliance should be used and why?