The nation’s largest ferrous scrap recyclers vie to feed the world’s hunger for metal.
Scrap metal dealers are not generally accustomed to the spotlight, so when Metal Management Inc., Chicago, was the subject of a Wall Street Journal "Heard on the Street" feature this March, it gained some attention within the industry.
The story’s author traced the rise in Metal Management’s stock price as it has related to the concurrent escalating rise in ferrous scrap prices.
Recognition by the wider financial and business media may be rare for scrap processors, but the scrap market of 2003 and early 2004 has been no ordinary market.
After toiling through a price slump that started in the late 1990s and ran with few upswings until drifting up in 2002 and then sharply up again in 2003, the companies that buy and sell ferrous scrap suddenly found themselves dealing with larger numbers on their financial spreadsheets.
While most privately held scrap firms are reluctant to discuss their financial situations, it can be generally concluded that 2003 was a good year for a company to be one of those appearing on Recycling Today’s list of the "20 Largest Scrap Processors in the U.S."
This update of America’s major ferrous scrap recyclers, which first appeared in the March 2002 issue of Recycling Today, again contains a mixture of companies from different geographic regions with different corporate organizations. Some are publicly traded, while others are privately or closely held. One of the largest is owned by an overseas holding company.
Nearly all of them can trace their roots back to humble small business origins, with even the larger publicly held companies consisting of combined assets of several such companies.
As referred to earlier, many scrap companies are reluctant to provide information, and in some cases this probably led to their omission from the list. We hope that owners, managers and employees of the companies that are on the list will consider it an honor. It takes hard work by a lot of people to procure, process and ship mill-ready ferrous scrap.
Not only in 2003—when scrap yards were bustling with activity—but through entire up-and-down cycles, managers and employees of these largest companies can be proud of the mountains (of scrap) that they move. We hope that our recognition of those companies will be viewed as a way to honor leadership in an industry that can provide challenges with each up-and-down cycle in the market. (To view the chart, including volumes, number of facilities, and whether or not the company owns a deep water port click on the following link -- Processor Chart)
MAJOR VOLUME.The 10 largest ferrous scrap companies have arrived at their positions via different paths. OmniSource Corp., Fort Wayne, Ind., has been guided by the Rifkin family to grow in several ways, with regional purchases being just one arrow in its quiver.
After becoming Fort Wayne’s largest ferrous scrap recycler, the company made key acquisitions in markets such as Toledo, Ohio; Jackson, Mich.; and East Chicago, Ind.
More recently, the team led by chairman and CEO Leonard Rifkin and his son Danny, who is president, has expanded OmniSource’s reach beyond the Great Lakes region by setting up a shredder yard in Baldwin, Fla., and acquiring another shredder yard in Athens, Ga. Already in 2004, the company has finalized the acquisition of the former H. Hirschfield Sons facility in Bay City, Mich.
Part of OmniSource’s growth can also be attributed to its success in creating alliances. Some alliances are with consuming mills, such as with its hometown ally Steel Dynamics Inc., or operating the shredder plant in Florida to serve the Gerdau AmeriSteel mill there.
Other close alliances have been formed with scrap generators and with companies that both generate and consume scrap—such as America’s automakers. A story in the Feb. 2003 issue of Recycling Today ("Full Circle," pg. 22), details how OmniSource helped Ford Motor Co. and Alcan Aluminum establish a loop that brings stamping scrap created by Ford in Chicago back to Alcan’s Oswego, N.Y., sheet mill—where some of the aluminum sheet produced will make its way back to Ford’s Chicago Stamping Plant.
As the Wall Street Journal noted, Metal Management Inc. has been as hot as the ferrous scrap market. In a March 23 feature article, writer Paul Glader details the company’s stock price as having risen from $6 per share in March of 2003 to $40 per share one year later.
The upward stock movement was not enough to save long-time Metal Management officers Al and Frank Cozzi, who left their executive posts early in 2004. Current CEO Daniel Dienst has a finance and banking background as opposed to having the life-long scrap roots of the Cozzis.
Although it spent parts of 2000 and 2001 in bankruptcy, Metal Management reported a net income of $12.6 million in its most recently completed quarter. The company has operations in 13 states, with shredding plants in several regions.
The Coslov family has been guiding Tube City Inc., Glassport, Pa., since the 1920s. While still actively guiding the firm, the family relinquished majority ownership of Tube City in 2003, when Blue Point Capital Partners, a private equity firm with offices in Cleveland, Seattle and Charlotte, N.C., became majority owner.
The continued involvement of the Coslov family will reportedly remain intact. "We have found an excellent partner in Blue Point and look forward to working with them," I. Michael Coslov, chairman and CEO of Tube City, remarked at the time. Blue Point principal Chip Chaikin expressed confidence in the growth prospects of its newly acquired scrap company. "Tube City has grown due to its strong focus on the customer," he remarks.
This year’s list of the 20 Largest Ferrous Scrap Processors was restricted to U.S. companies, although it can be difficult to segregate the Canadian market, which moves in close concert with that of the U.S.
American Iron & Metal Co (AIM)., Montreal, would just miss making a combined list of North American companies. AIM operates one shredder plant and an additional facility through which more than 365,000 tons of ferrous scrap were handled last year.
In all likelihood, the Toronto market’s biggest company, Triple M Metals of Brampton, Ontario, would qualify for such a list. On its Web site, the company refers to itself as "one of North America’s largest processors of ferrous and nonferrous metals" and as "Canada’s largest retail recycler." The company has five Ontario locations.
Tube City provides scrap management, slag processing and metal recovery services to integrated steel mills, mini-mills and foundries in North America and to U.S. Steel Co. mills in Eastern Europe.
With corporate offices in Manhattan, Hugo Neu Corp., New York, operates from the world’s trading and finance capital, which is a good fit for a company that has specialized in the global trading of scrap commodities.
The company was founded in 1945 by Hugo Neu, who had been involved in the metals business since the 1920s. According to a history offered on the company’s Web site (www.hugoneu.com), Neu’s company grew along with the booming post-World-War-II economy, and was particularly adept at following up on international trading opportunities in Europe and Asia.
Partnerships have been a part of the company’s history. A former partnership with the Prolers in Houston expanded Hugo Neu’s presence in the West and in New England. A current partnership with Schnitzer Steel Industries Inc., Portland, Ore., has helped maintain the Neu presence in the West. The company exports 3 million tons or more of scrap metal annually from six ports: four on the Atlantic coast, one on the Pacific Coast, and one in Hawaii.
The Great Lakes region is also home to Detroit-based Ferrous Processing & Trading Co. (FTP). The company’s 10 scrap facilities (housing its eight shredders) processed 3.3 million tons of ferrous scrap in 2003.
FPT is owned by Soave Enterprises, based in Detroit and run by Anthony Soave, who initially built his business empire with the solid waste firm City Management Corp., which he eventually sold to a national solid waste company.
Current President Howard Sherman helps oversee three shredding plants in and around Detroit. The company has acquired many of its area competitors, including nonferrous recycling company SLC Recycling in Warren, Mich., and Zalev Brothers Co., of Windsor, Ontario, Canada, located just across the border.
The company has expanded beyond its Detroit operating region by acquiring properties of the former Atlas Iron & Metal in Cleveland and in the Miami, Fla., region. The company has made metals shredding the core of its business.
WIDE REACH.Although the power of the five largest scrap companies is impressive, the next several largest companies still deals in scrap volumes that make them major players in the overall scrap arena.
On the Pacific Coast, Schnitzer Steel Products Co., Portland, Ore., has become a major processor and exporter and of ferrous scrap, while the steelmaking portions of its parent company (Schnitzer Steel Industries Inc.) are major consumers of ferrous scrap.
Large shredder yards in Portland, Oakland and Tacoma, Wash., are where much of the ferrous scrap processing takes place. Some of this scrap is exported to Asian destinations, while some is prepared for domestic mills, including the company’s Cascade Rolling Mills division, which makes steel rod, wire and rebar.
Some of the company’s scrap operations are joint ventures with Hugo Neu Corp. that extend the company’s reach into the eastern half of the U.S.
A recent company effort to reach deeper into the scrap stream involves ownership of auto dismantling subsidiary PNP (Pick-N-Pull) Auto Parts.
Figures from the company’s most recently completed financial quarter reflect the strong markets for ferrous scrap and for finished steel. Schnitzer Steel Industries Inc. reported net income of $12.2 million on revenue of $128.4 million, compared to net income of $2.9 million on revenue of $90.7 million from the same time the previous year.
PSC Metals is the operating name now used by the metals recycling division of Philip Services Corp. The PSC Metals division is also based in the Great Lakes region of the U.S., with its corporate office in Cleveland.
The company’s operations are more dispersed, with facilities in both northern and central Ohio as well as in Pennsylvania, Tennessee, Missouri and Illinois.
Much like Metal Management, PSC Metals was formed during the consolidation wave of the 1990s. Some of the company’s facilities trace back to the Luria and Luntz organizations in Ohio and the Steiner-Liff and Southern Foundry companies in Tennessee.
Parent company Philip Services has twice been in bankruptcy, with the first time occurring in 1999 and 2000. The company just re-emerged in January from its second reorganization under bankruptcy terms, having filed under Chapter 11 rules in June of 2003.
One of the most wide-reaching names in scrap belongs to the David J. Joseph Co. (DJJ), Cincinnati. The company’s trans-oceanic brokerage service reaches into most parts of the world. And in North America, it has built a powerful ferrous processing business centered on auto shredding operations divided into three regional operating units.
River Metals Recycling processes some 700,000 tons of ferrous scrap annually in Kentucky, while Trademark Recycling handles a similar amount in the state of Florida. Out west, Western Metals Recycling is another DJJ operating unit.
In 1975, the company was purchased by a Dutch holding company called SHV Holdings. In addition to processing scrap, DJJ also brokers large amounts of scrap and offers complimentary logistical, transportation and industrial services.
Pittsburgh is the traditional Steel City and the home of AMG Resources Corp. The AMG stands for Allan M. Goldstein, who grew up as the son of a scrap dealer, became an attorney, but then found himself returning to the scrap world as the CEO of a company that is built around de-tinning facilities and ferrous recovery from the solid waste stream.
AMG processed more than 1.8 million tons of ferrous scrap in 2003, with some of that scrap going through the de-tinning process at U.S. plants in Pittsburgh, Baltimore and in Gary, Ind.
Among the other AMG facilities are ones that recover the ferrous portion of solid waste heading into waste-to-energy plants. In a 2003 feature story ("Sharp Focus," Recycling Today, May 2003, pg. 22), Goldstein credits a knowledgeable and hard-working research team for helping AMG successfully delve into these niche markets. The company also offers what it calls "turnkey scrap management" to large scrap generators.
In the Lone Star state and beyond, Commercial Metals Co. (CMC), Dallas, has established itself as not only a processor of scrap metal, but also as a major consumer with its SMI steel operations.
The company’s SMI division runs four EAF steel mini-mills, while other CMC divisions offer finished steel, copper products and concrete building materials.
Starting from one scrap yard in 1915, CMC now has more than 30 scrap processing facilities, with its largest presence in the southern states of Texas, Florida, Tennessee, Alabama, Louisiana, Arkansas and South Carolina. In addition to the 1.4 million tons of ferrous scrap it processed in 2003, the company also handles and trades large amounts of nonferrous scrap.
REGIONAL POWERS.Most of the companies rounding out the list have built successful regional companies by providing strong customer service, taking advantage of growth opportunities and trading commodities wisely.
The California-based Simsmetal America is the American subsidiary of a larger Australian metals company carrying the Sims name. The 1988 purchase of the former LMC Metals Co. (Levin Metals Co.) in the San Francisco Bay area helped Sims establish its American foothold, which has grown to include several facilities in California. The company also has scarp yards in Virginia and Illinois as well as in British Columbia, Canada.
Miller Compressing Co., Milwaukee, competes strongly in the Wisconsin market. The company’s six scrap facilities have two auto shredders, with some having access to Great Lakes shipping routes. Sports fans who recall the former County Stadium in Milwaukee can take note that Miller Compressing processed the considerable ferrous scrap generated when the ballpark was taken down in 2001.
In southwestern Ohio, Cohen Brothers Inc., Middletown, Ohio, works closely with consuming mills and large-scale scrap generators. In a 2003 Recycling Today feature story ("Against the Grain," Sept. 2003, pg. 18), CEO Ken Cohen credits the company’s ongoing success to leaders willing to try new ideas and employees who carry them out magnificently. "I think what sets us apart is that we understand we’re not in the scrap business but the service business," he remarks.
Down along the Gulf Coast, Southern Scrap Recycling, New Orleans keeps southern steel mills supplied as well as shipping ferrous scrap to the hungry export market. Access to the industrial canal that serves the New Orleans port region provides an important shipping option.
The interior waterways are important to Alter Scrap Processing, a company based in St. Louis that harvests much of its scrap from facilities in the Midwest. Three shredding plants are among the equipment operating at the company’s 16 facilities. The company is a prominent barge shipper of ferrous scrap.
Based in Rockford, Ill., Joseph Behr & Sons Inc. processes scrap at facilities in Illinois, Wisconsin and Indiana, as well as managing in-plant operations for a John Deere facility in Iowa and a Caterpillar plant in Peoria. In addition to having two shredders, the company processes its ferrous stream with shears and balers.
On the East Coast, Camden Iron & Metal Inc., Camden, N.J., processes the industrial and obsolete scrap of southern New Jersey and has been since 1929. The firm’s two shredder yards and two additional locations prepare scrap for domestic and export shipments. The company’s Philadelphia SPC Corp. location serves that major city.
Back in the Midwest in Danville, Ill., Mervis Industries operates a growing scrap processing company with eight U.S. locations and one in Mexico. The 70-year-old company is also involved in the recycling of other materials as well as warehousing and property development.
The Midwest is also home to Samuels Recycling Co., which is based in Madison, Wis., and operates facilities in more than a half-dozen cities in that state. The company runs auto shredders in Madison and Green Bay. The company’s roots trace back to 1896.
The Galamba Metals Group LLC, Kansas City, Mo., has grown steadily to build market share and extend its reach outward both east and west into Kansas and Missouri. The company now operates two auto shredders and manages 10 scrap processing facilities. On its Web site (www.GalambaGroup.com), the company states its vision is "to build a scrap metal recycling network in Kansas and Missouri that generates high volumes of quality scrap metal and results in profitable growth for stakeholders."
As noted earlier, several other companies are processing tonnage that may put them deservedly on this list, while others may be handling amounts that cause them to just miss out.
Among those companies poised to reach the top 20 are Gershow Recycling of Medford, N.Y., Newell of Atlanta; General Iron Industries, Chicago; American Compressed Steel, Kansas City, Mo.; Morris Recycling Inc., Albany, Miss.; and Atlantic Scrap and Processing LLC, Kernersville, N.C.
Companies that were contacted but that were unable to or chose not to provide information (and for which we were unable to reach sources who could provide reasonable estimates) include Sadoff Iron & Metal Co., Fond du Loc, Wisc.; Yaffe Cos. Inc., Muskogee, Okla.; Louis Padnos Iron & Metal Co., Holland, Mich.; Adams Steel, Anaheim, Calif., Pacific Coast Recycling, Long Beach, Calif.; Azcon Corp., Chicago; and Tennessee Valley Recycling, Decatur, Ala.
The author is the editor of Recycling Today and can be contacted via e-mail at btaylor@RecyclingToday.com.