Dan Sandoval

Features

Tried and true

Cover Story

Manitoba Corp. adjusts its tried-and-true approach to business in response to the challenging Environment.

February 11, 2015

For many recyclers, the present combination of volatile prices, uncertain markets and fierce competition requires adopting a different approach to business. For Manitoba Corp., a Lancaster, New York-based nonferrous scrap recycling company, the current volatility is not necessarily symptomatic of a changing market but just one of many ongoing challenges the company has to adjust to using its “tried-and-true” approach to business.

Even a heavy snowstorm in late 2014, which dumped 7 feet of snow on Manitoba’s facility in western New York, was a temporary hurdle for the company. The “horrible” storm, in the words of company President Brian Shine, forced Manitoba Corp. to close for three days.

Manitoba’s quick and efficient response to challenges and obstacles is indicative of a company nearing 100 years in business.
 

Finding its niche

Solomon Shine founded Manitoba Corp. under its original name S. Shine & Sons in 1916. A European immigrant, Shine couldn’t find work, so he began picking up rags, waste paper and scrap metal from households in western New York.

Over time the company grew from a single man with a pushcart to a modern metal recycling facility that includes wire chopping lines, briquetting machines, shears and incinerators.

As Manitoba Corp. matured, it narrowed its focus, ultimately specializing in copper scrap—specifically, according to the company, the cleanest, purest grades of copper scrap. “We have made copper our strength over the past 40 years and have developed a superior reputation in our industry,” Brian says.

This decision to focus on copper scrap has brought challenges and opportunities for the company.

Richard Shine, Manitoba Corp. CEO, says the foremost challenge for the company has been the steady decline in the manufacturing and industrial base in western New York. “Over the past 40 years, manufacturing in the region has steadily disappeared,” he adds.

“We went from 20 major industrial accounts that we serviced in the region to a point now where we may have just one of those clients left,” Richard says. And, he adds, “That one customer left is merely a shadow of what it used to be.”

Because of western New York’s declining industrial base, “We were forced to work on a larger footprint and now buy and sell copper throughout North America,” Brian points out.

Despite the loss of manufacturing plants in the area, the leadership of Manitoba Corp. never considered relocating the company. In hindsight, Brian says, it was the right call. “The location provides us with a gateway to the Canadian market. Additionally, Buffalo provides us with access to customers in the Midwest and also the northeastern states.”

 



 

Flying high

For scrap processing companies, a shrinking industrial base often requires rethinking the company’s business approach to ensure survival. Manitoba Corp. took the unusual step of using an airplane to expand its reach and its business.

Richard explains that in the 1970s, as the region was starting to lose its industrial base, he came up with the idea to use a recently purchased airplane to call on potential customers. “I went to our partners and told them we should use [my airplane] for the business.”

Using this plane, Manitoba was able to stretch its supply area.

“Maybe one day a week we would use the plane to call on customers,” Richard says. “With the plane, we had the ability to leave in the morning, fly out to see customers over lunch, make some more calls and perhaps a call in the evening,” he adds.

Expanding into electronics recycling

While Manitoba Corp., Lancaster, New York, is focused on copper scrap, affiliated company Sunnking (www.sunnking.com), Brockport, New York, specializes in electronics recycling.

Adam Shine, vice president of Manitoba Corp., says Manitoba Corp. formed a partnership to resell electronic equipment in 2000. “Back then not a lot of people were involved in the electronics recycling industry,” he says.

The partner in that venture, Duane Beckett, was a former Manitoba Corp. employee.

Brian Shine, president of Manitoba Corp., says Beckett was the first manager the scrap processing and brokering company hired. “Duane did an excellent job while working for us for three years. However, he could no longer deny his entrepreneurial instincts and left us on very good terms and with our full support as he saw an opportunity in the electronics recycling industry,” Brian adds.

“That company,” Brian says of Sunnking, “has grown to more than 60 employees.”

Brian adds, “Duane was an early pioneer in this exciting segment of the recycling industry.”

Brian says Lancaster-based Integrated Recycling Services, a company he formed in 2007 with Peter Linder, formerly of United Alloys & Steel Corp., has maintained a very close working relationship with Sunnking. Integrated provides recycling and disposal services designed to help companies achieve zero waste.

“We are helping to grow and manage the business on a long-term basis,” Brian says of the company’s relationship with the electronics recycling company. “We are excited to be so integrally involved with Sunnking.”

While Sunnking is an independent company, “We are consultants and are still involved with the business,” says Adam, who also serves as vice president of operations at Sunnking. In his role with Sunnking, Adam manages the OEM contracts as they relate to New York state legislation.

Adam says a growing number of traditional scrap recycling companies are looking at opportunities presented by the electronics recycling sector. There is good growth, he says, though there are a lot of challenges. “Right now it has been a good business,” he says of electronics recycling. “It is a larger-margin business than scrap metal, but working its ways toward narrower margins.”

He continues, “Laws and regulations are making it challenging. There is margin compression, but there is an opportunity here.”

While the electronics recycling and scrap metal recycling industries share similarities, Adam says there are differences as well. In the scrap metal business there are “old timers,” while the e-scrap business is a younger man’s game, he says. Another difference that Adam mentions is that while Manitoba is working in a niche market with a small number of suppliers, “in the escrap business everyone is a target. We can knock on anyone’s door. Any business of any size has electronics. Where you make better money is on the resale side of the business. Anything that has a circuit board is an opportunity to recycle.”

Today, Sunnking, with locations in Brockport and Buffalo, New York, provides electronics recycling services throughout New York state. The company is R2 (Responsible Recycling Practices) and RIOS (Recycling Industry Operating Standard) certified and is registered with the New York State Department of Environmental Conservation.

Sunnking also has an eBay storefront where it sells refurbished electronics. As of late January, the company had achieved a 99.5 percent ranking for positive feedback on the site.

The company also gives back to the community through its partnership with the nonprofit group Camp Good Days and Special Times. Adam says the partnership has introduced Escrap 4 Camp, a fundraiser to benefit children and families going through cancer treatments. In the first three years of the charity fundraiser, Sunnking collected more than 990,000 pounds of electronics, ultimately raising more than $30,000, which it donated to Camp Good Days.

Brian concurs that using the plane helped to cement the company’s fortunes.

“My father, Richard, consistently credits his ability as a pilot even more so than as a business operator as to the reason we are still operating in the recycling industry,” he says. “This unique skill has allowed us to travel and visit customers and suppliers on very short notice and to be incredibly responsive to opportunities.”

Richard’s interest in planes came from his time as a pilot with the U.S. Air Force, where he spent six years on active duty, including serving in the Vietnam War. While his original plan was to become an airline pilot, he instead joined the family scrap metal business in 1970.

While the company is headquartered in western New York, in 1981 Manitoba Corp. opened its second facility in St. Louis at the request of one of its customers. “We were dealing with a multiplant company, supplying them with various commodities from our New York plant. They wanted us to be able to do some of the same things at their plant in the Midwest,” Richard says.

Manitoba Corp.’s St. Louis plant also demilitarizes ammunition for remelting and offers packaging and distribution services.

“Additionally, we perform special projects, such as equipment tear downs, and other recycling efforts,” Brian says.
 

Focusing on quality

China has been a popular destination for copper scrap generated in the United States for nearly a decade, and Richard notes that the country had been very aggressive with its copper scrap purchases for much of that time. “They bought everything, including wire chop, bare bright, burned copper—anything they could get their hands on.”

While China remains the dominant destination for copper scrap, Manitoba Corp. purposely has made trade with consumers in that country a small portion of the company’s overall business.

“My father and I looked at the China market years ago and thought that while we could ship material and make lots of money, we decided to focus on quality over quantity,” Brian says. “Our company does not export much material as we produce high-quality products that tend to be consumed in North America.”

Adam Shine, Manitoba vice president, agrees that the company has made a conscious decision not to chase every last pound of copper scrap generated in its operating region. Rather, the company focuses on material of the highest purity. He says Manitoba does not chop insulated aluminum wire or No. 2 insulated copper wire so as not to contaminate its copper chops, which are produced from No. 1 insulated copper wire only.

“We are concerned about contamination,” Adam adds. “We focus on copper to provide the high-quality material for our customers.”

While the company’s focus is on high-end copper, Manitoba Corp. continues to look for ways to tap different markets to supply its customers. “We have developed several strategic alliances within the recycling industry,” Brian says. “Although we focus predominantly on copper, we have developed several partnerships that work on recycling of other material types, such as electronics (See online sidebar at www.RecyclingToday.com/rt0215-manitoba-corp-profile.aspx.) and water, gas and electric meter recycling.”

Manitoba has gained a solid reputation among suppliers as a result of this focus. Richard says, “It takes a long time to build up a good reputation, but you can destroy it overnight.”

“That is a critical element for us,” Brian says of the company’s reputation.

Manitoba also closely considers the reputation of the companies that it does business with. “We work very hard to ensure that our suppliers and customers have a good reputation,” Brian says. “Often we enter into fixed price arrangements, and we have to have assurance that the counter party will honor contracts, regardless of market direction. We look for long-term and stable relationships and tend to attract partners that operate the same way.”

Manitoba Corp. relies on a number of financial tools, notably hedging, to protect against risk. “We hedge all of our purchases and sales so that we are protected from market movement up and down. What we are unable to control of course are spreads, which are very small at this time,” Brian points out.

“The old axiom of buy low and sell high does not work for our suppliers or customers, and most often we buy high and sell low,” he continues. “However, by hedging futures, Manitoba has been able to protect its margins.”

To ensure that Manitoba continues to meet the high expectations it has set for itself, the company has established benchmarks. “We develop ISO-related objectives each year since we became ISO certified in 2003. One of the consistent objectives we use is customer ratings,” Brian says. “We survey our customers and are so proud of our entire organization when we review these customer survey responses. We consistently score extremely high and feel great about the pride our entire company shares in achieving these high marks. Our company works extremely hard to thoroughly know our customers’ objectives and specifications so that we can at minimum comply and hopefully exceed their expectations on a consistent basis.”

Russell Burr, Manitoba Corp. controller, says he has seen how important it is to reduce errors to produce a consistent product. “There is so much emphasis on quality,” he says of Manitoba Corp. “That is not something we just talk about. We practice these things. They hold my feet to the fire to make sure we meet these expectations.”

As for the value the company offers its customers, Brian says, “With a sharp focus on copper, we are able to work closely with our customer base in order to understand their needs on everything from quality and material types to packaging, order frequency and also pricing mechanisms. We pride ourselves on delivering what our customers want when they want it.”

He continues, “We often are asked to help write specifications because of our credibility and understanding of what customers are looking for. We are ISO certified and therefore can and do comply with customer-issued specifications.

“We maintain long-term relationships and often are referred to other consumers as a result of our consistent performance and approach to the business,” Brian says.

“We developed a proprietary value-added packaging method that is now widely used in melting copper,” he continues. “This product has significantly reduced the time required to make alloys using copper.”
 

Seeing the bigger picture

While running a family business can take up a tremendous amount of time, the Shine family recognizes the importance of working to improve the industry and their community as well.

Brian, currently the vice chair of the Institute of Scrap Recycling Industries (ISRI), Washington, has helped steer the industry. “I have thoroughly enjoyed being involved with such a first-class organization, led by tremendous volunteer leadership along with Robin Weiner (ISRI executive director) and her very talented staff.”

While Brian is proud of his work with ISRI, he also has played the role of a mentor to budding entrepreneurs. “I had the opportunity to participate in a program through the University of Buffalo and graduated from the Center for Entrepreneurial Leadership in 1991 and since have mentored 12 candidates who have participated in the program.”

Richard’s time in the Air Force and 20 years of reserve service not only was the impetus for Manitoba’s purchase of a plane but also for his appointment as chairman of the National Business Aviation Association, an association that promotes the interests of organizations using general aviation aircraft for business purposes.

Adam has opted to invest some of his spare time with a number of charities in western New York, most notably Camp Good Days, an organization dedicated to improving the quality of life for children, adults and families affected by cancer.
 

Looking to the future

Supply issues continue to be a concern for the scrap industry. Even with talk of manufacturing returning to the United States, Brian says he is not sure how much this will result in greater scrap generation. Programs such as Six Sigma and lean manufacturing have contributed to the reduction in industrial scrap generation.

Adam says this trend is forcing Manitoba Corp. to look continually for opportunities to operate a leaner business. “You can’t control the price of copper,” he says. “The one thing you can control is the cost of your operation. You need to look for ways to automate.”

Accomplishing this can be a challenge for an industry that he says is often “behind the times.”

“Throughout our history, we have learned so much from our customers and suppliers alike,” Brian says. “Half the battle is hearing what your customers need and figuring out a way to make that happen.”

He adds, “Most importantly, we feel a tremendous sense of pride in knowing the many sacrifices that our predecessors endured and the integrity and reputation that has been built over our nearly 100 years in business.”

 


The author is senior editor of Recycling Today and can be contacted via email at dsandoval@gie.net.

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