Principal Belief

When Sam Jacobs and John Gralewski founded Cimco Resources Inc. in 2001 they brought with them considerable scrap industry experience, positive attitudes and a shared belief that a company that operates with integrity could find plenty of growth opportunities in the scrap recycling industry.

In its 10 years, Cimco has continued to grow its trading business and its processing capacity.Seeking that growth in the Midwest—where ample competition from existing processing and brokerage companies is in place—has added to the challenge, but has not proven insurmountable.

The key Cimco philosophies have stayed in place as the company has grown to now employ 110 people, doing so by both acquiring and starting up scrap processing facilities and opening additional sales offices.

TAKING ROOT

There was no question in Sam Jacobs’ mind that he would start working full-time in his family’s Nebraska scrap business after he graduated from high school in 1977.

Sam had already accumulated a great deal of experience at Columbus Metal Industries (CMI) in a variety of operational tasks. “I learned a lot about trucks, loaders, [Harris] HRB balers; I started driving semitrucks as a teenager,” he recalls.

In more than two decades working full time with CMI, Sam helped the company greatly increase the volume of scrap it processed and brokered; had oversight over the installation of an auto shredding plant at a greenfield site in Columbus, Neb.; and helped expand business at an acquired location in Kearney, Neb. Each of these work experiences has proven valuable as Sam and John have worked to grow Cimco’s business. (Sam sold his ownership share of CMI in 2007.)

John also earned some income and scrap metal experience in high school, working part time as a nonferrous scrap sorter for the company that employed his father.

After graduating high school, though, he earned a bachelor’s degree in criminal justice and political science from the University of Wisconsin and anticipated pursuing a career with the Federal Bureau of Investigation.

But when an opportunity to work as a broker for Illinois-based Azcon Corp. developed soon after he graduated, John found himself back in the scrap industry.

It was in that role as a broker that John first crossed paths with Sam Jacobs. “In 1991, CMI bought the location in Kearney, and John began calling on that facility as a broker,” recalls Sam.

John worked for other firms in subsequent years, “but we kept in contact and became really good friends,” says Sam.

Ten years into their friendship, the duo started Cimco Resources on Sept. 1, 2001, just 10 days before the terrorist attacks of Sept. 11 and the geopolitical and economic turmoil that followed.

The duo point out that the attacks had no direct impact on their lives or their new venture, which started out as a scrap metal brokerage company. Working through that time, though, helped establish a culture of working through adversity and putting people first.

In the decade that has followed, Cimco has grown beyond its modest starting point. “We started it as a trading company, and initially the company was run from John’s basement as a brokerage,” says Sam.

In 2003, the opportunity to expand the trading business was abundant. “I needed help, thus I consulted with Sam, and we both immediately agreed that Dan Pecora was the right fit for Cimco,” says John. “Dan had extensive brokerage experience in the West and Midwest with National Material Trading and at his [then] current position as vice president of Behr Iron and Steel,” he adds.

As to why Dan was the right choice, John says: “As young traders, we had done a lot of deals together. Some traders are order-takers; Dan can close a deal, and I had a friend I could trust.”

In the following seven years, Cimco added four more partners. One was Chad Cylkowski, an aluminum trader from Spectro, who came to the company with an extensive customer base and knowledge of domestic nonferrous consumers.

Cimco also added Scott Anderson and Bud Karsten, each of whom had spent their adult lives building their own recycling businesses up from nothing. “Guys who can build a business from nothing are rare, and we found two of them,” says John.

The other addition was David Cauble, who had been a district manager with David J. Joseph (DJJ) and was the former president of Gemini, a joint venture between DJJ and Ferrous Processing & Trading. “David’s past experience made him the perfect fit to manage the Cimco program that manages scrap for all the Johnson Controls facilities in the United States and Mexico,” says John.

Since then, Cimco has continued adding processing capacity and widened its brokerage business, growing well beyond the walls of John’s basement.

PART OF THE PROCESS

Cimco added its initial processing capacity in 2004, with the purchase of a scrap operation in Dixon, Ill. “We bought our first company in 2004 and we’ve really just kind of been growing since then,” says Sam.

 The company took one of its largest steps forward with the acquisition of 25 acres of property in Sterling, Ill., a parcel of farmland that Cimco has since turned into a large-volume scrap yard complete with an 80/104 auto shredder built by Metso Recycling North America and installed by U.S. Shredder and Castings Group, Trussville, Ala.

In Sterling, Sam and Dan worked together to build a facility from scratch. “When you start from scratch, you can contain all the environmental issues and devise a layout for traffic flow that you know will work,” says Sam.

The Sterling and Dixon yards are now two among a total of seven facilities operated by Cimco Resources.

While the Sterling greenfield location houses one of the company’s higher volume yards, Sam notes that growing through acquisition also has been a key Cimco strategy.

Cimco’s approach when acquiring a company is to look beyond the parcel of land and equipment on site as the key factor in the transaction. The owners as a group seek out people who can effectively manage the acquired facility in a style and philosophy that matches the Cimco way of conducting business.

“As we have grown, we have brought on partners who were good operators, good owners, who have become part of our company and have stayed with us,” says John.

“Our philosophy has been that it takes good people to make a company grow,” he continues. “We can have dreams and ideas, but we have to have good people who are motivated.”

Cimco has grown its processing capacity in this manner while also adding brokers and traders who staff additional sales offices and have the opportunity to become principals with the firm.

Adhering to that philosophy has meant that Cimco now has an extensive group of people who can manage the company into the future. As of March 2011, Cimco has seven principals or co-owners. (See the “Cimco Resources Inc. at a Glance” sidebar.)

SEVERAL OPPORTUNITIES

Among the challenges when building a scrap company in Illinois has been carving out market share in a territory with several large companies with deep histories in the region.

“It’s a very competitive market, but we weren’t intimidated by that,” says Sam. “John and I believe in opportunity every day. There are shredders all around us, but we find our niche markets and we continue to grow.”

The owners say they agree on a core idea: Good people are the key reason why Cimco can elbow its way into a competitive market. “People make a big difference. When customers believe in your people, that makes a big difference. When customers see integrity, they begin to trust you,” John comments. “We treat customers the same whether markets go up or down.” Facilities also are set up to provide quick service to customers and to handle a variety of materials. Both philosophies can earn customer service points, according to Sam.

Sam says that as a former truck driver (He still retains his commercial driver’s license, or CDL , he notes.) he has kept in mind an appreciation for quick weighing and ticketing procedures and how they can allow one scrap yard to gain an edge over others for repeat business. “I drove semis for a long time, and I think that makes me a little more understanding. That includes customers knowing the value of a clean facility they can patronize where their vehicles are not damaged.”

Cimco pursues the purchase of both ferrous and nonferrous scrap at all of its facilities. The Ottawa, Ill., operation also handles a healthy amount of paper and plastic scrap, which presents a future opportunity at other facilities.

Another opportunity explored by Cimco is its purchase of the U Pull a Part auto salvage operation in Milan, Ill. The 20-acre auto salvage facility, which displays some 800 salvaged autos at once from which do-it-yourself mechanics can harvest parts, was purchased by Cimco in December of 2010.

U Pull a Part is attractive both as a way to diversify Cimco’s business and as  a source of feedstock for the company’s shredding plant.

Seeking new sources of scrap remains a key task for Cimco. The company accepts and seeks out across-the-scale peddler traffic and puts together programs to attract and retain industrial and small dealer customers.

Cimco’s Corporate Scrap Management Program entails working beyond a regional basis. “For a couple of large customers, we essentially have a national accounts system,” says John. “We handle scrap procurement for them at all their plants. This has involved our brokers traveling to some 30 plants to take tours, conduct audits and then offer cost-saving suggestions—things like finding better end markets or seeking out the most suitable local processor to keep their transportation costs in check.”

ON THE HORIZON

In its first 10 years, Cimco has made considerable progress in establishing a foothold as a growing regional scrap company. The company’s principals say they intend to adhere to the philosophy that has served them well while also being willing to seek out and consider new opportunities.

Cimco recently has been preparing foundry grades to serve that segment of scrap consumers and has made considerable investment in its auto shredder’s downstream system. “We started, in late 2010, a huge downstream upgrade,” says Sam. “Millions are being spent [by the scrap industry] on downstream systems. Eventually, they may figure out what to do with the glass, plastic, etc. Then if shredder output is 100 percent recycled, that will be a good thing.”

Cimco sells its shredded ferrous scrap domestically. “From our location, we can reach good consuming customers including Sterling Steel,” says Dan. “We can also reach several other mills in the region as well as many foundries.”

The company prefers having rail sidings at its facilities, which is helpful both for shipping its ferrous scrap to regional consumers and for starting containerized nonferrous scrap on what are often longer journeys. Setting up facilities that can process and ship out scrap while taking advantage of the best market opportunities will remain one of the challenges for the ownership group as it charts the company’s future course.

The group is optimistic that if it keeps doing things right, good results will follow for Cimco. “The philosophy we have is to operate every day to a standard that we can all be proud of,” says Sam.

“Our people help us do that—not just the principals, but all our employees understand the company’s opportunity,” says John. “All the owners work every day and are not reluctant to make plans to keep expanding our business.

 “It seems like the only thing we know how to do is grow and expand our business,” says John. “The owners and employees are all excited about the prospects for this company.”

The author is editor-in-chief of Recycling Today and can be contacted at

btaylor@gie.net

.