Less than two-thirds of family businesses persist beyond the second generation, and only 13 percent of them last through three generations, according to research by John Ward of Northwestern University’s Kellogg School of Management. Given those statistics, the achievements of the Shapiro family, owners of Austin Metal & Iron Co. LP, Austin, Texas, are notable.
Jim and Sam Novy established Austin Metal & Iron in downtown Austin in 1913. In the century since, the city has developed around the company’s scrap yard, which sits on 2.5 square blocks on East 4th Street, dwarfed by high-rise buildings. Bobby Shapiro and his sons Jim and Ike now own and operate the firm. They are the third and fourth generations of Novy family descendants to do so.
The Shapiros take a great deal of pride in the longevity of their company, the tradition of family ownership and the personal relationships they have established over the years, which they say is a factor in Austin Metal’s success. They have a fondness for their company’s downtown location and the history it represents—the walls are decorated with photos taken throughout the generations of family ownership—which makes encroaching development a reality they don’t like to ponder.
Despite the encroachment, the Shapiros say they have no plans to leave the downtown yard. Jim, who serves as the company’s vice president, says, “The goal is to stay here as long as possible.”
The Shapiros established a second facility outside of the city in 2008. That yard measures 22 acres.
The downtown yard is home to the company’s 30-year-old HRB baler manufactured by Harris, Cordele, Georgia, and both yards are equipped with excavators from Link-Belt, Lexington, Kentucky.
From an early age
Bobby, president of Austin Metal, Jim and Ike say they each knew from an early age that they wanted to work in the family scrap business.
Ike, Austin Metal & Iron’s secretary/treasurer, says he and Jim worked in the yard as children. “You either love it or hate it starting at a young age.”
Bobby says his father, Morris, who died almost two years ago at the age of 92, remained active in the business until the last five years of his life, sometimes offering “unsolicited advice.”
Ike adds that he knew his grandfather’s health was declining when he stopped asking about the business.
Bobby’s 89-year-old mother, Elain, whose father was one of Austin Metal’s founders, still asks about the company, he says. “She wants to know what is going on at the yard.”
This type of family interest can be hard to maintain from generation to generation. “You see all these businesses that don’t make it past the second generation of family ownership,” Bobby says. “We are very proud; it’s a great feeling knowing you’re maintaining the family legacy.”
Bobby encouraged Ike and Jim to work outside of the family business after graduating from college to broaden their knowledge base.
After graduating from college, Jim went to work for Longhorn Recycling and Newell Recycling in San Antonio, while Ike worked briefly in the banking industry before joining Houston-based Allied Alloys, where he worked for eight years. Ike officially joined Austin Metal eight years ago, while Jim has been with the company since 1998.
Both men say they formed relationships and gained information that benefit them in their current roles with Austin Metal & Iron.
Despite their official titles, Jim says he, Bobby and Ike tend to share the responsibilities of managing the yards.
“Our customers can count on us,” Bobby says. “They can call us and talk to an owner. We can make a decision on any concern,” he adds.
Austin Metal’s dedication extends to its employees. Jim says many of the company’s employees, which number roughly 30, have been with Austin Metal for decades. The company’s former copper warehouse manager, Carlos Garcia, was hired in 1971 and retired last year after 47 years of service. Ted Kane, who runs the office at the downtown location, has worked for the company nearly 30 years.
“Over a third have been with the company over 10 years,” Bobby says of Austin Metal’s employees. “A couple have been here over 20 years, and a couple have been here over 30 years. It’s a remarkable feat to keep employees.”
Austin Metal has returned that loyalty in kind. Even when times have been tough, such as during the Great Recession earlier this decade, Jim says, “We have never had a layoff in the history of this company.”
“Be honest and pay a fair price and good things will happen.” – Jim Shapiro, vice president, Austin Metal & Iron Co. LP
He says key to the company’s ability to retain employees is the Shapiro family’s approach to running the business, which involves treating everyone like family and providing a retirement program for employees. “We want it to be a career and not just a job,” Jim adds.
“I don’t care whether it’s employees or customers: Treat people the way you want to be treated,” Bobby says.
“Be honest and pay a fair price and good things will happen,” Jim adds.
This philosophy has led Austin Metal to form long-term relationships with suppliers and consumers, Bobby says.
Going the distance
Most of the scrap Austin Metal & Iron processes comes from outside the city.
“Austin has never been like Houston with machine shops and the oil and gas industry,” Ike says.
Jim adds, “Entertainment and government are our industries here.”
To secure nonferrous scrap, he says the company will “go as far as we need to in the Gulf Coast region,” while ferrous scrap tends to come in from within a 40-to-70-mile radius. But, Jim adds, “We’ll go as far as our relationships will take us.”
Austin Metal & Iron buys from peddlers, but industrial and commercial material accounts for the bulk of its incoming scrap metals. The company has roll-off containers and trailers that it will place with its scrap generating customers and a fleet of trucks that it uses to transport material.
The Shapiros say the flow of scrap into their yards has been slower than usual this spring. “It’s normally not that slow this time of year,” Jim says, quoting the adage, “Sell in May and go away.”
This year, he continues, “It was more like sell in March and April and go away.”
Buying also has been muted, particularly for nonferrous scrap, and consumers are more mindful of quality. “Aluminum demand is terrible right now,” Jim says as of mid-May. “Once they really don’t need [scrap], they crack down on quality. First, sheet mills didn’t need the material, and now it’s the extruders. It starts at the lower grades and trickles down to some of the primary grades.”
Austin Metal has broadened its base of nonferrous scrap consuming customers domestically and internationally in response to China’s changing scrap import policies and the impact tariffs are having on the market. “We’ve made trips and contacted people and tried to position ourselves with consumers to have continuous markets,” Jim says.
“We were never 100 percent reliant on one consumer,” Bobby adds.
While Austin Metal has been affected by the market upheaval, he says the company has been able to adjust.
Austin Metal ships some aluminum scrap to Mexico, but Jim says that flow has been restricted because of the uncertainty surrounding the United States-Mexico-Canada trade agreement, the Section 232 tariffs and the threat of further tariffs related to Mexico’s immigration enforcement. “There have been growing pains with the tariffs,” he adds, “but I feel they were definitely needed and that the country and industry will benefit in the long run. We are willing to go through the growing pains to level the playing field.”
The Shapiros’ plans for Austin Metal & Iron include making the needed adjustments to ensure they have markets for all their material. Such an attitude can be expected from a company that has persisted for more than 100 years and wants to ensure it reaches the fifth generation of family ownership.