Success in the scrap industry can come in many forms, particularly in the late 20th and into the 21st century as the sector has attracted considerable investor attention. The story of Orange, California-based SA Recycling, at its core, is an older and more familiar one of a successful family business.
SA Recycling CEO George Adams Jr. joined a business started by his father, the late George Adams Sr. The initial business model entailed auto salvage and operating a scrapyard. It then involved harvesting scrap metal at landfills. It was a modest start to a company that now boasts more than 120 scrap recycling locations and that likely collects and processes more scrap metal than any other firm in North America.
Although he is quick to credit the success of SA Recycling to the company’s 3,000 employees, Adams has been the driving force behind a strategy that has involved growth through acquisition and an ability to diversify operations as the industry changes.
Like many other scrap industry executives, Adams joined a family business and has continued to take measures to ensure the company he manages retains family aspects to its operation.
Adams joined the family firm full time in 1977, with his two brothers, Mike and Terry, and his sister, Wendy, joining shortly thereafter. He is clear about the company’s modest origins. “We had one truck, one crane, one yard and a contract at a landfill” in Southern California.
Shredder owners already played a large role in dictating material flows and pricing during that era. Early on, Adams says his father “had an idea of putting in a shredder.” That idea came to fruition in Anaheim, California, in 1980, and Adams is characteristically blunt when recalling, “We didn’t know anything about the shredding business, and I didn’t even know we had to change hammers.”
Despite what Adams recalls as shortcomings, the company took possession of a used shredder. “We reassembled it and made it work,” he says, adding that Adams Steel, as the firm was then known, “ran that until November 2004, when we installed the first ‘megashredder’ in California.”
Timing can be everything, and in the case of Adams Steel, a big upswing in the ferrous market in late 2004 and early 2005 meant “we were doing 50,000 tons by February 2005,” Adams recalls. That upswing helped provide the momentum (and the capital) for the company to add a second shredding plant in Bakersfield, California, and then chart a course that helped mold SA Recycling’s current shape.
“The business was good,” Adams says of the mid-2000s. On its own, Adams Steel began “buying more scrap yards; we were buying yards to feed our shredder,” he comments. “By the time we did the deal with Sims, we had 15 yards,” he says, referring to the 2007 joint venture (JV) arrangement that created today’s SA Recycling.
In that deal, publicly traded Australia-based Sims Ltd. joined with Adams Steel LLC to form SA Recycling. The history of JVs has its share of disappointments, but Adams and Sims Ltd.’s current leadership make positive comments about the results of their partnership.
In a 2020 press release, Sims Ltd. Managing Director Alistair Field remarked, “SA Recycling has proven to be a successful JV over its 13-year history, and we are pleased to continue the strong operating relationship. I continue to work with George Adams to operate efficiently and maximize profit for the company’s shareholders.”
Adams tells Recycling Today, “We have a great relationship. They support us, and we respect each other’s ability to manage the business.”
Sims Ltd. and its Sims Global Trade business unit took on the marketing of SA’s exported ferrous scrap, while SA Recycling gained access to a bulk cargo ferrous dock in Los Angeles as part of the JV agreement.
Subsequently, the SA management team has moved aggressively to grow the company, with an acquisition list that includes Silver Dollar Recycling of Las Vegas in 2008; the transfer of Sims Metal assets in Arizona to SA Recycling in 2012; Newell of El Paso, Texas, in 2014; Newell Recycling Southeast in 2015; Tennessee Valley Recycling in 2017; the purchase of Alter Trading yards in Alabama and Mississippi in 2018; Steel City Recycling of Alabama in 2020]; Kentucky and Tennessee facilities from Southern Recycling in 2021; and most recently the acquisition of Ohio-based PSC Metals and its network of about 30 yards late last year.
When he spoke with Recycling Today in early 2022, Adams was in the midst of visiting the newly acquired PSC facilities and meeting with new employees to provide them with insight into the SA Recycling way of doing business.
A growing presence
In the aftermath of the PSC acquisition, SA Recycling adds to a network of facilities that already had extended from the Pacific Coast in California to the Atlantic Coast in Georgia and Florida.
PSC Metals traced its roots back to several family scrap companies that the former Philip Services had acquired. Philip Services was a Canada-based environmental services firm that engaged in a wave of scrap industry consolidation in the late 1990s.
Florida-based Icahn Enterprises, led by veteran Wall Street investor Carl Icahn, owned PSC Metals for more than a decade before engaging with Adams and SA Recycling in negotiations throughout 2021 that culminated in SA’s acquisition of PSC last December.
At the time of the sale, PSC operated some 30 facilities in many states, including Arkansas, Georgia, Illinois, Missouri, Ohio, Pennsylvania and Tennessee.
“We’re pretty familiar with the southern markets and already have yards in Tennessee,” Adams says. For SA Recycling, operating in Ohio and Pennsylvania is “definitely a new experience.” He says visiting the newly acquired sites has convinced him SA Recycling has “picked up a really good bunch of people.”
The company now has a presence in 15 states and operates 23 shredding plants, providing it with the largest presence in that sector in the United States.
Many of the company’s facilities serve in part as feeder yards for those shredders, but SA also has invested to support other processing methods. As one example, the company processes copper wire and cable at six locations, four in the southeastern U.S. and two in the West.
Adams tells Recycling Today a separate family venture of his is conducting due diligence to establish a direct-reduced iron (DRI) and hot-briquetted iron (HBI) production plant near Cedar City, Utah. It is already operating Utah Iron, a mine that ships about 2 million tons per year of iron ore through the port of Long Beach. The HBI project would create another route to serve America’s growing electric arc furnace (EAF) steel mill sector.
Shredding, however, as it has from the beginning for Adams and his father, remains a predominant activity and management focus for SA Recycling. The growing scrutiny of shredder emissions, with California often at the center of that scrutiny, therefore is of significant interest to Adams.
“There are going to be challenges going forward; the [U.S. Environmental Protection Agency] is looking at air emissions on all the shredders across the country,” he comments. “Every operator is probably going to have a capture device for its emissions. California is requiring emissions be burned, such as with RTOs (regenerative thermal oxidizers),” he adds. “We have installed two RTOs in California already, and another is being installed in Bakersfield that will cost about $6 million.”
At the same time he was growing his business, Adams committed to consistent involvement with the Washington-based Institute of Scrap Recycling Industries (ISRI) and, later, the Brussels-based Bureau of International Recycling (BIR). “We need strong trade associations,” Adams says, “in part to stay in front of governments that run amok, for lack of a better word.”
Adams also credits ISRI, for which he served as the national chair from 2008 to 2010, for providing vital networking venues for the industry and ensuring recycling was deemed an essential industry in the pandemic.
Regarding BIR, “I don’t have overseas operations, but I sit on the Shredder Committee and the Ferrous Division board, and the information one can gather is significant.”
Beyond regulatory and market conditions, even more important to SA Recycling, Adams says, is how the company relates to and manages its people.
Competitive and rewarding
In his 2016 book, Create the Connection: 25 Surefire Strategies for Success in Leadership and Life, George Adams includes “Live life like a bridge” among those strategies designed to “offer a blueprint for crafting a more rewarding career, becoming a more effective leader and living a more balanced, powerful life.”
Incentivizing facility managers is one of the primary ways Adams and SA Recycling instill an ownership mentality and a competitive atmosphere throughout a growing network of facilities that stretches from coast to coast.
“It is impossible for one person to watch 125 operations,” Adams says. “The only way to do that is with strong managers who are motivated by success, in part by offering them a percentage of the profits as monthly bonuses,” he continues. “We look for managers who want to hunt, who are aggressive and who build the business at their yards.”
Communication and an open-door policy are other management traits, he says. “We send a welcome letter to all employees,” he adds, noting that the letter comes with a copy of his book and his personal cellphone number and that of his son, Tyler, who serves as chief operating officer of the company. Adams says the book spells out the culture and expectations for workers and managers alike. One goal, he adds, is for the company’s workers to hold their managers accountable to those expectations.
The letter points to a family atmosphere and the family aspects of the company that remain firmly in place. The shifting landscape of the scrap industry, including the significant growth of his own company and the growing presence of publicly traded steel producers in the sector, has not jarred Adams’ faith in the family business model.
He does not express alarm about the growing presence of steelmakers such as Nucor Corp. and Cleveland-Cliffs in the scrap sector, saying, “I believe in the free market and capitalism; there is always room for more competition.”
While by no means underestimating the ability of these firms to compete, Adams says he maintains equal or greater respect for emerging entrepreneurs who can rise through the ranks much as he, his father and siblings did.
“Small, independent dealers are hard to beat,” Adams says. “They move fast and they hustle. I have a hard time competing with a tough, family entrepreneur. I don’t care how many yards SA buys or that steel mills buy. I never underestimate someone who works hard and wants to grow their business.”
He strives to maintain that atmosphere even in what is now the largest scrap company in the U.S. “Some companies are ‘top down;’ management makes all the decisions, and people are expected to do what they’re told,” he says. “We don’t work that way. We are ‘bottom up.’ We listen to the people on the ground doing the job—the crane operator, the metal sorter. My job is to support them and let them do their jobs. That’s the way we try to conduct our business: to support and empower people and let them do their jobs.”
Competitors in the sector, in any form, should have plenty to do in the decade ahead, Adams says. Growing EAF steel mill capacity in the U.S. means “we’ll export less scrap going forward,” he predicts.
He says of ferrous and nonferrous metals producers in the U.S., “They’re melting more scrap. I think it’s all positive. There will remain a market for exported scrap; in California, it will still go off the coast. But more melting capacity and the return of manufacturing via reshoring to the U.S.—all those things are positive,” Adams concludes.