ISA idles auto shredder

The scrap metal recycling company Industrial Services of America Inc. (ISA), headquartered in Louisville, Kentucky, has announced it is idling its auto shredder in Louisville, effective immediately. The company says the “warm” idle is in response to current market conditions primarily related to ferrous price volatility and lower ferrous volumes.

ISA says it will monitor and analyze market conditions and review its long-term options for its shredder and related downstream processing operation. The company says it does not expect the cost of idling the equipment, including a reduction in employees, to exceed $200,000.

ISA's shredder operation, including the downstream processing activities, had an operating loss in 2014 related to the steep decline in ferrous prices, which has crimped profitability for many shredder operators.

ISA says it will look at the possibility of using the shredder for specialty items that can provide benefits to suppliers, consumers and ISA to maximize margin, profitability and opportunities.

The company says it will focus its energies and resources on its nonshredder business units, all of which had improved operating results in 2014 compared with 2013. These units include its other metal recycling operations, equipment rental and waste services units and an auto parts business.

ISA says its shear and baler capabilities will allow it to continue to process ferrous scrap.

“Management continues to work diligently to reposition ISA,” says Sean Garber, president of the firm. “Although the ferrous market volatility has presented significant challenges, management is optimistic that the warm idling of our auto shredder will allow the company to improve operating results while also positioning the company to implement and execute on its growth strategy,” he adds.

Todd Phillips, ISA chief financial officer, comments, “This move will allow us to focus on our operations that generate positive cash flow, which is a critical step as we position the company for financial stability and future growth opportunities.”

ISA also recently entered into an offer to sell 4.4 acres of real estate to a firm principally owned by Daniel Rifkin, CEO of MetalX LLC, Waterloo, Indiana.

Additionally, ISA entered into a lease agreement with Rifkin pursuant to which ISA will lease a portion of the parcel. The lease terminates April 14, 2019, but the company has the right to vacate the leased premises upon 90-days’ notice to the purchaser; the lease would then terminate immediately upon the company’s vacation of the leased premises. During the term of the lease, ISA is required to pay rent to the purchaser in the amount of $3,000 per month. The company is required to reimburse the purchaser for 40 percent of the property taxes on the parcel during the term.

ISA sells scrap material to MetalX LLC in the course of its business, selling scrap in the amount of $1.7 million to MetalX LLC in 2014.