[COVER STORY] Against the Grain

One might expect a company located in a place called Middletown to play
things moderately and safely, and in some cases that accurately de-
scribes Cohen Brothers Inc. But a closer look at the southwestern Ohio
scrap company reveals a willingness by its leaders to go against conventional wisdom and current trends as part of its more important overall plan of providing the best possible service to its scrap generating and consuming customers.

The result is a company that considers and implements new ideas, but only if they are customer driven. In a decade that has seen rapid changes and scrap empires built and come undone in the span of a few years, Cohen Brothers has enjoyed stable and impressive growth from its base in Middletown, Ohio.

SERVICE AT THE CENTER. The strict adherence to a code of service starts with current Cohen Brothers president Ken Cohen, who describes the company’s organizational chart as consisting of everyone else on one layer with him below them. "We’re not a complicated company; there’s everyone, and then there’s me—working for all of them and offering support."

The company’s dedication to service is evident in the layout of its Middletown scrap yard; in the 24-hours-a-day, 365-days-a-year hours that it keeps; and in the coordination and upkeep of its trucking and rolloff container service.

Ken Cohen is the grandson and grand-nephew of company founders Mose and Phil Cohen, who started the company in 1924. Mose’s son Wilbur Cohen is Ken’s father and current chairman of the company.

Wilbur remains an active advisor to the company. "He’s directly involved. We don’t make a major decision without talking to Wilbur Cohen first," says executive vice president Don Zulanch.

Zulanch is another key part of the management team, having joined the company in 1968 while Ken Cohen was still studying business management and playing basketball at the University of Pennsylvania.

"Wilbur agreed to let me try out for six months, and I’m still here," quips Don, whose primary role is in the sale and brokerage of materials.

The fourth key manager is Ken’s brother Neil Cohen, who is based at the company’s Hamilton Scrap Processors location in nearby Hamilton, Ohio. Neil heads operations at that subsidiary and also takes on additional responsibilities for Cohen Brothers locations in other parts of southern and central Ohio.

The company’s management team meets daily in Middletown, exchanging information and making sure good ideas are not lost because of a lack of communication.

At its Middletown site and at facilities either owned by Cohen Brothers or operated jointly by a mixture of managing partners, the company bales, shears and shreds scrap the same ways its competitors do.

But Don Zulanch credits Ken Cohen for managing the firm in such a way that it has enjoyed stability and steady growth for the past three decades. "A good part of the credit goes to Ken’s vision," says Don. "He could envision expanding the market so we’re not just a Middletown dealer anymore. We’re a factor in this regional market offering prompt attention to generators and just-in-time delivery to mills and foundries that are depending on us."

Ken says a key has been understanding the true nature of the business they are in. "I think what sets us apart is that we understand we’re not in the scrap business but the service business," he remarks. "Scrap is the product, but service is the business we’re in. We live or die by serving our customers and consumers."

RESISTING THE RUSH. In the mid and late 1990s, several established and respected family names in the scrap recycling industry disappeared in a wave of consolidation that reached into virtually every part of the U.S.

Cohen Brothers was certainly among the companies invited to sell to the consolidating entities, but the management team agrees it was never seriously considered.

"There was a temptation to move into that consolidation direction and cash in," acknowledges Wilbur, "but none of us felt it was worth it."

The company’s own service standards were a key part of its decision to remain a family-owned business. "Our customers influenced us to a great extent to stay independent," says Wilbur. "They wanted to do business with the Cohen family and the Cohen personnel."

"We didn’t want to change the feeling of the Cohen family way of doing business," agrees Don Zulanch. "There was some doubt as to how to react to the rapid consolidation, but a general consensus to stay independent."

The Cohen family way of doing business has been appreciated not only by scrap-generating and consuming customers, but also by the surrounding Middletown community.

In a town where steelmaking is still a key part of the local economy (AK Steel Corp. is based in Middletown and has a mill there), the scrap business undertaken by Cohen is better understood than it might be in a less industrial region.

Nonetheless, the company’s leaders have put significant effort into being part of the communities in which their facilities are located. In Middletown, Ken Cohen, like his father Wilbur before him, has been active on boards of directors of local hospitals, banks and nonprofit groups like the chamber of commerce. "We’re a good corporate citizen," says Ken.

Neil has been similarly involved in Hamilton, where he has also served on that community’s hospital board and has forged a benefactor’s role for Hamilton Scrap Processing at a nearby public elementary school, as well as being active with Junior Achievement and the United Way campaign.

The company offers tours of its sites to school classes and business groups, and is conscious of the image it presents to the community in terms of how its facilities, trucks and even bins and containers are maintained. "If a truck or box looks bad on the road, that’s a reflection on Cohen Brothers. We try very hard to make sure that doesn’t happen," says Don.

The openness to the community has probably helped Cohen Brothers Inc. avoid the mis-labeling and nuisance inquiries that can surround scrap companies viewed as "junk yards." Says Don, "There is no mystery to the people in our town as to what we do."

Cohen Brothers officers have also been active in the Ohio Valley Chapter of the Institute of Scrap Recycling Industries Inc. (ISRI), and at times also on the national level with ISRI.

Ultimately tying in with its public image, trucks, trailers and containers are maintained and in most cases built on site in Middletown (see sidebar). The company uses its on-site maintenance, fabrication and paint shops to make sure its containers portray a freshly-painted, responsible image when they are seen on area highways.

Going through the ISO 9001 process and being the first scrap company to upgrade to ISO 9001-2000 helped the company find ways of making its Middletown yard friendlier and safer for truck drivers and other visitors to the yard. Buildings are uniformly and freshly painted and numbered in a yard that is laid out to handle a steady flow of traffic and processing. This has been a challenge—but one the company has met—in a yard where 80 percent of the material is brought in via truck, but then 80 percent has to be staged to be shipped out via rail.

AN INDUSTRIAL VIEW. Part of the reason people in Middletown, Hamilton and other areas can understand what Cohen Brothers Inc. does is probably because they understand heavy industry overall.

On the scrap consuming side, steel is made at the nearby AK Steel mill in Middletown, while other consuming mills and foundries also operate in the regions served by Cohen Brothers, which includes all or parts of the Tri-State area where Ohio, Kentucky and Indiana meet.

"There is still a significant amount of scrap consumption in Ohio, Indiana and Kentucky," says Ken. "Most of our consumption is within 150 miles of us. We ship to integrated steel mills, mini-mills and foundries on the ferrous side," he explains. "On the nonferrous side, we do some exporting, but we look to the domestic market there as well."

Similarly, southwest and central Ohioans understand scrap from the generating side, as the company is able to serve a variety of industrial and contract scrap generators at its multiple locations.

In Hamilton, Neil describes a mixture of scrap generators served by the Hamilton Scrap Processors facility. "Hamilton has an older industrial base that is in the process of revamping, while nearby Fairfield has a pretty good modern industrial base," he notes. He lists small machine shops, smaller fabricators and contractors bearing scale traffic as among the customers served by the Hamilton location.

The move of some industry to the south has not been lost on Cohen Brothers either, as its latest move into the Lexington, Ky., market demonstrates. The company recently acquired the assets of Baker Iron & Metal in that city.

GROWING WHEN APPROPRIATE. Although it remains a family business, Cohen Brothers Inc. should not be mistaken for a mom-and-pop operation.

As its recent Lexington acquisition demonstrates, the company is willing and able to grow and has been doing so steadily since the 1970s.

From what is still its corporate base and largest volume yard (it’s now 35-acre site in Middletown), Cohen Brothers grew first by adding the Hamilton location in 1975.

At the time the business was primarily a paper packing plant owned by one of Neil Cohen’s great uncles. Neil Cohen moved to that location and has helped shift the location’s emphasis from paper to metals over the years. (The company still accepts office paper and cardboard generated by customers who also generate scrap metals.)

Several other facilities with which the Cohen family is involved started as joint ventures, including the Metal Shredders Inc. facility in West Carrolton, Ohio, (near Dayton) and the I.H. Schlezinger operation in Columbus.

The Columbus operation remains a joint venture between Cohen Brothers officers and partners from Muskingum Iron & Metal in Zanesville, Ohio. The original partners in the Metals Shredders partnership have subsequently dropped out, with this facility now owned by the Cohen family.

The most recent expansion for Cohen Brothers has been into neighboring Kentucky, with the acquisition of Baker Iron & Metal in Lexington. "This moves us into a new market," says Ken, who also notes that Lexington is just 100 miles or so south on Interstate 75.

TYING IT TOGETHER. Although Cohen Brothers has now expanded beyond its Middletown roots, there are very clear ties made so that the various locations are integrated operationally and managerially.

To some extent, processing is centralized in Middletown (for baling and shearing) and West Carrolton for shredding.

In West Carrolton, "the shredder and its downstream system are the only pieces of processing equipment on that site," notes Ken. In Middletown, "our footprint really is shearing, baling and torching" ferrous scrap, Ken comments.

Thus, generators, buyers and sellers of scrap are all trained to steer auto hulks, white goods and other shreddables to West Carrolton, while scrap to be baled, sheared or torched is directed to Middletown.

The other locations act as feeder yards, and in some cases the Middletown and West Carrolton sites serve as feeder yards to each other.

Two-thirds of the company’s revenues derive from ferrous scrap. The nonferrous portion is handled and processed at each of the different locations, including a portion of the Middletown acreage that concentrates on nonferrous materials.

The company’s good reputation with its customers has helped it expand into additional businesses. At one time, an on-site fabrication shop in Middletown provided an assortment of fabrication services to surrounding industries. "In the mid-1990s as our business was growing and we became a 365-days-a-year company, we realized we needed our fabricating resources internally," says Ken. So now, the shop’s workers are kept busy mostly with truck trailer and container fabrication and repair work, although some fabrication services (such as of safety railings) are still offered to select customers.

Cohen Brothers has also gone national, in a sense, by offering scrap management services to regional customers with operations in other parts of the country. "Since we do such a good job with local customers, they often recommend us to service national accounts," notes Don Zulanch. "We help devise certain procedures to follow for all the plants under that corporate umbrella," he adds.

In some cases, says Ken, this has resulted in Cohen Brothers having someone on its corporate payroll working from a remote location to service an out-of-state plant. It has proven to be a low-key but effective way for the company to have a national presence, sidestepping the alternative of making acquisitions in other parts of the country.

Growing through such cautious measures has been and will probably remain a Cohen Brothers trait. "We grew very conservatively and modestly until we’re where we are at today," says Wilbur Cohen.

The cautious but steady pace of growth exemplifies a management method that has helped build a 750,000 tons per year scrap company that still has the means to grow additionally if circumstances permit.

"We’re in a growth mode, with our Kentucky operation representing an entry into the Southern market," says Don. "We feel strongly there are good markets in that area."

Cohen Brothers may have resisted the urge to take part in the 1990s consolidation craze, but by going against the grain it has remained a viable regional company.

Like Don and Ken, Neil Cohen is looking forward to seeing the company’s momentum continue to propel it forward. "I’m very enthusiastic right now about what we’re doing and my own participation in it. I think the future is bright for our industry, and it’s fun to be engaged in what we’re doing."

The author is editor of Recycling Today and can be contacted via e-mail at btaylor@RecyclingToday.com.