A Starring Role

That’s not to say that Doug is a beginner by any stretch. With more than two decades in management positions at Kramer Metals and multiple leadership roles with the Institute of Scrap Recycling Industries Inc. (ISRI) on his resume, he is firmly established in several scrap industry roles.

But sitting about 15 feet from Doug is his father Stanley Kramer, who has spent roughly six decades in the industry and continues to provide the overall leadership for a group of four companies that includes Kramer Metals.

And when both Doug and Stanley think back to before the year 2000, they can both conjure up countless good memories of Stanley’s brother Howard Kramer. Howard, along with Stanley, guided Kramer Metals to much of its growth and provided a daily example of down-to-earth leadership that endeared both Howard and Kramer Metals to generations of Los Angeles scrap metal customers.

FROM THE GROUND UP

Stanley Kramer, now 72 years old, and his brother Howard grew up in the Boyle Heights neighborhood in eastern Los Angeles, two in a family of 10 children. They started helping their father Morton collect and re-sell scrap metal and glass at an early age.

After serving in the United States Navy for several years, Stanley returned to Los Angeles in 1957 and rejoined the family business. Not long after Stanley’s return, his father’s health began declining, and it was up to Stanley and Howard to determine their own future in the scrap metal business.

“Initially, it was pretty much Howard and I and a truck,” recalls Stanley. But that was enough, it turns out, to start a partnership that lasted several decades, with each of the brothers drawing upon their own strengths to determine the management roles they would adopt.

“Howard was involved in day-to-day operations and, even after our company grew, he stayed in touch with the customer dock trade that came in,” says Stanley. “People really liked him—he was easy to get along with. I don’t know anyone who didn’t like him.”

Howard’s good nature was combined with physical strength and mechanical aptitude that provided an ideal set of skills for a scrap yard operator.

Doug recalls the years he spent working with and for Howard by saying, “He was really very well loved, not just by employees and family, but by customers and anyone who came into contact with our company.”

Kramer Metals scrap buyer Adam Sinasky echoes those comments, praising Howard as both a person and a teacher. “He was the most gracious man I ever met; he’d give you the shirt off his back,” says Adam. “If it wasn’t for Howard, I would know very little about the ferrous scrap business. He took the time to explain things and never made you feel he was more important than you. He had respect for anybody and everybody who came in to sell scrap, no matter their station in life.”

While Howard was focused on buying and processing scrap, that left a variety of other critical tasks to Stanley, including selling scrap and negotiating prices that would make their enterprise profitable. “Most of the negotiating and the trading he left for me,” says Stanley.

The testament to Stanley’s trading and business management skills and to Howard’s operations and people skills is that Kramer Metals Inc. has grown and prospered for more than 50 years, even in the face of unique challenges.

GROWTH AMID SETBACKS

That Kramer Metals Inc. has expanded well beyond its roots of two brothers and a truck is evident upon visiting the company’s Web site (www.kramermetals.com).

Descriptions of the Kramer Group’s four companies and the range of activities in which these companies are involved point to how much strategic growth has taken place over the span of more than 50 years.

The four companies comprising the Kramer Group work from several different locations in southeastern Los Angeles or, in one case, just over the line of an adjacent suburb.

As described by both Stanley and Doug, being located in Los Angeles has carried with it tremendous opportunities, but it has also been the source of some of the company’s greatest distress.

On the opportunities side, the Los Angeles metropolitan area has boomed for most of the past 50 years, moving up in the ranks of America’s major population centers throughout those decades.

The neighborhood Kramer Metals operates in provides access to a population segment that understands the scrap economy and is eager to derive income by collecting and selling scrap metal.

The company is also close to smaller scrap dealers that it can serve and is within the heart of an industrial corridor. Recent years have greatly served to change circumstances relative to that last point, however,

In a general sense, the business climate for manufacturers and industrial suppliers who serve them can be downright hostile in California, Doug and Stanley contend. (See the sidebar “Closing Credits” on page 38.)

Touring the southeastern Los Angeles neighborhood in which Kramer Metals is situated, Doug Kramer points to one facility after another that formerly housed a steel mill, an assembly plant, a components plant and any number of other factories that used to either generate or consume scrap.

Beyond this wider industrial displacement factor, Kramer Metals has experienced first-hand a dose of California’s dismissal of its industrial base in the form of an eminent domain action that took away its largest processing location.

In a process that unfolded over several years, in 2000 the City of Los Angeles began making plans to work with a developer to build a shopping center on the very corner where Kramer Metals’ four-acre ferrous scrap yard was located.

The location was a perfect fit for the volume of ferrous processing that Kramer Metals performed, says Doug, and it provided ample room to attract and service the peddler traffic that the company has long catered to.

Ultimately, the city’s government used eminent domain proceedings to seize the land for a shopping center to be built by a private developer, says Doug. Kramer Metals vacated the land in 2008, and the shopping plaza has yet to be built. “It’s now a large, vacant space at a busy intersection,” says Doug.

Although the land is vacant, the case remains on appeal in the court system, which to some extent means Doug and Stanley must be restrained in their comments on the action as well as potential future scenarios.

In the meantime, though, Kramer Metals faced that difficult situation just after it had lost one of its founding fathers, Howard Kramer, in 2000. “He got very sick and, during his illness and after his death, it really impacted my dad,” recalls Doug. “They built this business together. They had their arguments at times, but they were fiercely loyal to each other and they trusted each other completely.”

Howard’s loss and the court battle over the company’s land have been part of a decade that has presented considerable challenges for Kramer Metals.

The company has certainly not replaced Howard, who Doug describes as “a very significant person in both of our lives,” or the unique presence he offered to the company.

In the subsequent years, though, Stanley and Doug have formed the team that divides up management responsibilities and confers (or argues) when necessary to make major decisions.

Says Doug of Stanley, “For as long as he wants to be here, he will have a place here and he will be the ultimate decision-maker. I’m not on a power trip. My father is the big dog and that’s fine with me.”

Stanley says he is proud of the way his son has grown into an increasingly larger role in the 25 years he’s been with the company. “I think he’s been a big asset to the business,” he remarks. “He has grown within our business and within the industry and he has shown his talents in both. There’s no doubt in my mind that when I leave, he will do a much better job than I do.”

On the operations side, the company’s attempt to retain its ferrous scrap business led Kramer Metals to purchase a former competitor’s company (Jos. Levin & Sons) in October of 2005. That location is only about 25 percent of the size of the property Kramer Metals lost, however.

The smaller property size can make it more difficult for Kramer Metals to service the steady stream of peddlers who have long formed a key part of the company’s customer base.

PART OF THE FABRIC

Starting in part with Howard’s personable approach, Kramer Metals has long specialized in serving peddlers and small dealers who collect obsolete scrap in modest amounts.

Stanley, Doug and other staff members have all been instrumental in Kramer Metals expanding to become a buyer and processor of industrial scrap metals. This includes ferrous and nonferrous scrap as well as specialty alloys through the Spectrum Alloys division.

Throughout the time that expansion and growth occurred, however, the company did not lose its focus on people, including the 60 employees who work for the company and the array of small customers, some of whom bring in scrap a few pounds at a time.

Establishing the tone when those two sets of people meet—employees and scrap-selling customers—demonstrates a core philosophy at Kramer Metals and how it has become part of the fabric of its Los Angeles neighborhood.

“We make sure to have great personal relationships with the peddlers who come into the yard,” says Doug. “They are treated with respect, like they are old friends coming for a visit—which in a lot of cases they are.”

He continues, “Employees, and that includes me, are encouraged to refer to customers as Mr. So-and-so, not by their first names. It establishes a level of respect and appreciation and creates an environment in which they know how much they are appreciated.”

Doug can recall when Stanley and Howard would buy each employee a turkey, a bag of potatoes and the other traditional Thanksgiving side dishes to ensure they had a full holiday dinner.

With a more diverse work force now that is emblematic of Southern California’s population, the company has gravitated toward grocery store gift cards for that holiday. Christmas Eve, however, is a time when an employee potluck creates a festive atmosphere, often including an invitation to peddlers who stop by on that day to sample from the impromptu buffet.

The Kramer Metals emphasis on people and relationships has also extended beyond Southern California. Stanley and now Doug have become deeply involved in industry trade groups, especially ISRI and its predecessor organizations.

Doug Kramer is currently the national secretary-treasurer of ISRI and has been involved with the regional chapter essentially since becoming a full-time Kramer Metals employee in 1986.

“This industry has given me a lot, and I think it’s important to give back and participate,” says Doug. The benefits of being involved with ISRI run both ways, he is quick to add. “Without question I have made life-long friendships and in some cases life-changing friendships,” Doug says. “Participating in a trade association is an incredibly valuable business tool as well.”

THE NEXT STEPS

The downturn in the economy has presented the same challenges to Kramer Metals as it has to most other companies in the past two years.

“There are measures by which you can look and say we should have cut our labor force by quite a bit,” says Doug. “We’ve made only a few cuts and have been resistant to let people go. It’s one of the most sickening feelings in the world to tell somebody, ‘I don’t know how you’re going to make ends meet.’ We’re trying to keep people busy and cut everything else we can possibly cut,” he adds. “We’d be better off on the bottom line to let more people go, but my dad and I, we just can’t do it.”

Just as relationships with people built the Kramer Metals business, Stanley and Doug both see a commitment to people as a vital part of what will keep Kramer Metals moving forward.

“The people who work for us have been here a long time—we have an obligation to them and to ourselves,” says Doug. “We’re going to fight and compete.”

There is another generation of Kramers who may be particularly grateful to see that happen. “I have two sons, Noah and Jonah, and Noah in particular has a real love of coming here and pitching in to help,” Doug comments, “so I’m going to do what I can to build it for him, like my grandfather, uncle and dad did for me.”