Packaging, which was incorporated as a separate entity in December 1991, is one of the two major domestic producers of steel strapping and strapping tools in North America and, by management estimates, shares approximately 80 percent of the domestic market equally with its primary competitor. Packaging represented approximately 33 percent of the Company's sales in 1997, 33 percent in 1996 and 32 percent in 1995. Principal markets served by Packaging include the agricultural, automotive, brick, construction, fabricated and primary metals, forest products, paper and wholesale industries. Packaging receives all of its flat-rolled steel supply from Acme.

Packaging currently manufactures its products in four steel strapping plants, located in Riverdale, Illinois; New Britain, Connecticut; Leeds, Alabama and Bay Point (formerly Pittsburg-West), California.

Alpha, which was acquired in May 1989, is a leading producer of high quality welded carbon steel. Alpha receives a portion of its flat-rolled steel supply from Acme. Alpha markets its products to the appliance, automotive, construction, heating and cooling equipment, household and leisure furniture, material handling, recreational products, service center and truck exhaust industries. Alpha's sales represented approximately 17 percent of total sales for the Company in 1997, 16 percent in 1996 and 15 percent in 1995.

Alpha currently operates two tubing facilities in Toledo, Ohio, equipped with rolling mills for the production of steel tube and pipe. During the fourth quarter of 1996, Alpha announced it would lease a built-to-specification manufacturing facility to consolidate both of the existing operations in Walbridge, Ohio. In addition, the formerly operated Alta Slitting Corporation which provided slitting capacity for Alpha was shut down at the end of 1996, and these operations were consolidated in the new facility as well. The new manufacturing facility is under lease and the consolidation will be completed in early 1998.

Universal, acquired in May 1987, produces automotive and light truck jacks, tire wrenches and accessories for the original equipment manufacturer ("OEM") market in North America. Management estimated that it currently holds a 30 percent share of the OEM market for auto and light truck jacks in North America. Universal markets its products to domestic and foreign transplant automotive manufacturers and the automotive after market. Universal's sales were approximately 8 percent of total Company sales in 1997 and 7 percent in 1996 and 8 percent 1995. Universal's production facilities, located in Butler, Indiana, include a computer assisted design and manufacturing system, and automated stamping and assembly lines. (See "Assets Held for Sale")

Assets Held for Sale

In March of 1998, the Company sold its wholly owned subsidiary Universal Tool & Stamping Company, Inc., ("Universal").

Competitive Conditions for the Steel Fabricating Segment

Acme Packaging. In the steel strapping market, Acme Packaging's primary competitor is ITW Signode, a division of Illinois Tool Works, Inc., which management believes has a U.S. market share approximating that of Acme Packaging. The Company believes Acme Packaging's strong market position is attributable to (i) a broad product line, (ii) high quality, low cost strapping produced in modern facilities, (iii) the location of its production facilities in close proximity to a broad customer base and (iv) the benefits of a close relationship with Acme Steel, which supplies all of Acme Packaging's steel. The steel strapping market, however, is a mature market which is not expected to grow significantly in future years. Furthermore, competition from plastic strapping, especially the higher strength polyester products, is intensifying in the traditional steel strapping markets of lumber, paper, textiles, wood, synthetic fibers and brick, primarily due to improvements in product strength characteristics. As a result, Acme Packaging is installing two plastic strapping manufacturing lines to strengthen its competitive position in the marketplace. The new strapping lines are expected to be operational in the second half of 1998.

Alpha Tube. Alpha Tube operates in a highly competitive market characterized by numerous participants with widely varying capabilities. Alpha Tube's customers are increasingly demanding products with increased formability, greater gauge control and lighter weight in combination with higher strength and different steel chemistries. Customers, especially in the automotive market, also are increasingly demanding just-in-time inventory delivery, which has the effect of increasing inventory carrying costs at the tubing manufacturer level. Unlike Alpha Tube, many of its competitors compete only on price and generally offer little or no technical service. To improve Alpha Tube's competitive position, they have undertaken a consolidation project which will result in an upgrade of tube mill diameter and increased capacity and the reduction of various operating costs.