Advancing Quickly

Nathan Frankel

HANGING TOUGH. "When we first got into business, the market was not healthy," Nathan says, noting prices as low as $50 per ton. "But as the cycle changed, there was demand from overseas," he adds.

While the demand was enticing, there was a large disconnect between the break-bulk brokers that most yards had to deal with and their eventual customers.

ASR focused on domestic mills, but the lure of overseas business was strong. "Demand seemed unlimited. There was a significant premium to the local market," Nathan says.

The problem at ASR, as at most other yards, was the time it took to load an export container, although in theory such containers could allow ASR to bypass the break-bulk market. Two to four hours was a normal loading time, and often the container would be damaged in the process.

"There was not enough time in a day nor space for a loader facility," Nathan says. Still, he was convinced of the viability of sea containers for shipping ferrous scrap—if only they could be loaded efficiently.

That’s when Nathan developed his idea for the FASTek system. He hired a lawyer to look at patents and a New Mexico engineering firm to create a prototype. A project that was supposed to cost $300,000 and take three months dragged out beyond a year. Associates, even friends, began to compare his project to billionaire Howard Hughes’s Spruce Goose airplane—an expensive investment in technology that would never fly.

But Nathan did not give up. Eighteen months and more than $1 million later he took delivery of the FASTek prototype. The company began testing the unit in February of 2005.

"It will load a container in six minutes without damaging the container," Nathan says of the FASTek, which features an integrated scale. Add the 10 minutes it takes to load on the yard, and the FASTek will fill a container in about 15 minutes.

"Nobody believed we could fill a 100-container booking in five days," he says. Yet it worked. ASR can do 800 tons per day with a two-man team, enabling ASR, which is 60 miles from the ocean, to become an exporter. "It can be replicated anywhere: Los Angeles, Omaha, Kansas City," Nathan says.

ASR quickly added a second machine. "We currently have two FASTek machines, allowing us to ship out approximately 800 tons per eight-hour shift in containers," he continues. That is about 40 containers per day.

"It is not bragging to say this is unparalleled in the world," he says.

In theory, with six machines, ASR can equal the capacity of any break-bulk company without the $300,000 monthly port lease payment. FASTek also takes up little physical space in the yard.

In 15 minutes, with just one operator, FASTek loads 21 metric tons into a 40-foot sea container, compared to up to four hours and four men it used to take, according to Nathan. "Plus, FASTek eliminates the use of traditional backhoe steel loaders," he says.

"On top of that, there are fuel savings, logistics savings—we don’t have to send a truck back empty. There are no more deadhead hauls."

Best of all, ASR gets to use the difference between the overseas market and local spot pricing to compete with the larger scrap operators at the port. By offering its customers stronger pricing, ASR has helped the southern California scrap market remain fair, Nathan contends. "I’m selling overseas to a guy who is paying exactly what he would to a break-bulk dealer," Nathan says.

ON THE WEB. Tracking the added tonnage might seem like a giant task, but Nathan has attacked that with vigor, too. He has made ASR a Web-savvy company. Its Web site, www.advancedsteel.com, offers customers a chance to follow their own accounts.

Nathan says he saw a crying need for "transparency" in the scrap business. "We wanted a system that would give our clients ability to see what they are doing 24/7," he says.

"Integrity is key," Nathan continues. "We have had tremendous success in [enhancing] the reputation of the industry and will continue to make that our No. 1 priority," he says.

His answer to this potential problem is ASR’s Web-based portal called "Metal Management System (MMS)." It allows ASR’s customers to analyze their current scrap metal output and compare it to past production. This lets customers keep tabs on what is happening in their own businesses as well as letting them accurately project scrap metal output.

"Our Web engineers designed MMS to be user-friendly and secure," says Nathan. "Through a password protected, user-defined login, clients are only a few keystrokes away from total access to their scrap metal production online 24/7."

Designed to be simple to set up and to navigate, MMS answers questions like: How much scrap did a company produce? Where did its past scrap output go? What did it weigh? What was the company paid for a shipment?

"We let people tap into our system and see how much scrap we pull out each day, week, month or quarter and what they were paid for it," Nathan says. "It does not eliminate the possibility to steal. But things either make sense or they do not. It eliminates the need to have blind faith in dealers," he continues. "Now you can have an audit trail."

MMS gives each client online access to its account history from the company’s own network or from any remote laptop—letting ASR’s customer track inventory, check payments or analyze scrap production trends from anywhere in the world.

Each month, clients receive an in-depth inventory, payment and scrap transaction analysis that also includes a month-to-month and year-to-date comparison. These reports are also available through the MMS.

In addition, ASR issues a monthly newsletter keeping its clients abreast of the world of scrap metal. "This helps our clients project scrap [and] their revenue and gain insight into industry trends and analysis," he explains.

Nathan has taken the Internet even further, installing a Web camera setup at ASR. As a sole proprietor, he was always responsible for the business, but often on the road. "I wanted to know what was going on in my facility without calling 15 people and having things filtered through their eyes," Nathan says.

"It was expensive to set up, but for me—psychologically—it was worth it," he says. From anywhere in the world, he can stream video to his laptop and see the yard in real time.

It turns out the Web cams are a powerful sales tool, too, allowing Nathan to show customers his year-old Harris shear or the company’s loading system from the comfort of the customer’s office.

Nathan says he is quite proud of ASR’s new Harris’ GS-11-E-5, 1100-ton shear/baler/logger. The new machine, along with mobile shears, comprise the majority of ASR’s processing capability.

THE COMPANY. Nathan’s father Leo was also in the scrap business. He owned the former Frankel Iron & Metal Co. in Fontana, Calif., and Ferromet Inc. in nearby Etiwanda. Leo Frankel sold both companies to Sims Group Ltd. in 1999, which subsequently sold the two yards to Pacific Coast Recycling LLC, a Los Angeles-based exporter that uses the facilities to feed scrap to its export operations.