20 largest ferrous scrap processors: the nation's largest ferrous scrap recyclers vie to feed the world's hunger for metal

Recycling Today, April, 2004 by Brian Taylor

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 rate 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.

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 OnmiSource 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 WallStreet 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.