Beyond Buzzwords

Jonesboro, population 50,000, is in the Northeast corner of Arkansas, not far from the Missouri border to the north and the Tennessee border to the east. Servicing the numerous metal-related manufacturing businesses in town is one scrap yard and multi-material recycling center – Hummelstein Iron & Metal. Its longstanding presence in this small Southern university town seems to have helped shape the company’s progressive, community-focused orientation.

"We see ourselves as a service company, whereas a lot of recyclers see themselves as packers or processors," says Jim Elswick, general manager of Hummelstein Recycling, the company’s recycling division. "We try to train all our employees to see themselves as providing a service to our customers, and all the things that go with any service. That has created a niche for us."

The company has gone through a number of changes since its founding as Jonesboro Hide & Fur in 1907 by Jacob Hummelstein, great-grandfather of company president Sam Hummelstein. Like many others in the scrap industry, Jacob was an immigrant from Eastern Europe who started off with very little capital but with a willingness to work hard and build a business.

"I don’t know what got him into Jonesboro except that Jonesboro was founded in 1859, so it was still a fairly new city in the early 1900s," says Hummelstein. "We’re located on a ridge which is basically the edge of the Mississippi Delta, so it was somewhat isolated from flooding, but close enough to the hardwood bottom land where there was a lot of logging going on. This was basically just a logging camp, and when the loggers weren’t logging they were trapping, so there were furs. He ended up here, and a few gentlemen were nice enough to help him get started in business, and the rest is history."

For many years, the company dealt in hides and furs, wool and rags, pecans, ginseng root and numerous other commodities. A small steel service business, which today accounts for about 35 percent of the company’s operations, started in the 1940s and 1950s when Hummelstein’s grandfather realized he was hauling scrap to consumers and coming back with an empty truck. At that time, he started the steel service component primarily as a backhaul business.

Then in the late 1960s, manufacturing – particularly metalworking – came to Jonesboro and began to employ many of the farm workers in the area. The company took advantage of this trend and began to specialize in scrap metal. By 1974, the company officially stopped trading hides and furs and the other non-metallic materials, changed the name to Hummelstein Iron & Metal Inc., and split operations into two divisions – recycling and new steel.

CONVENIENCE STORE

The most recent evolution occurred in 1996 when the company’s recycling division started handling paper and glass, reflecting a need in the community, and the division became formally known as Hummelstein Recycling. At the same time, the company opened a 30,000-square-foot warehouse for nonferrous and nonmetallics processing about three and a half blocks away from the existing ferrous scrap yard and steel service center.

To emphasize the view of the company as a community service provider, the new nonferrous and nonmetallics recycling center was designed on the model of a convenience store, with a paved parking lot and a large, open customer waiting area inside the building with a lot of glass to let in light.

"We wanted it to have the appearance more of a convenience store than a recycling facility, so that families and nontraditional folks would feel comfortable there," says Hummelstein. "And of course we also wanted it to be very convenient for our traditional professional recyclers who sell us material. That’s just another part of that service philosophy."

The facility handles paper, glass, used beverage containers and both post and pre-consumer nonferrous materials. The one material common to curbside recycling not accepted is plastics, as the markets currently do not support handling the material. Paper markets are not thriving at the moment, either, but it makes sense to accept the material for other reasons, says Hummelstein.

"We are handling a tremendous amount of news, and public-relations-wise, it has been a positive thing for us to do," he says. "Of course, you can only afford so much public relations."

The nonferrous/nonmetallics recycling center was designed for the convenience of both the people dropping off recyclable material to be good citizens and the professional recyclers, says Elswick. "The building is designed so that these two groups don’t really have to interact with each other – it’s in two different parts of the building," he says. "And material from the industrial accounts that we pick up is in a separate part of the building, so the three really don’t cross each other."

Hummelstein Recycling also buys some material from the city’s curbside recycling program, including the metals and some of the paper and glass. The company is fortunate in having a glass manufacturer located in Jonesboro – only a few blocks away, in fact. This makes glass recycling much more affordable than in many communities that have to transport the material long distances.

Overall, nonferrous and nonmetallics are about 10 percent of the company’s total business; ferrous scrap is still the largest component.

As the company expanded its nonferrous and nonmetallics operation, there was also a focus on changing the image so that it would be more clear to the general public what the company does. Even though Hummelstein Iron & Metal has been a fixture in the community for 90 years, people would still ask what the company did, says Elswick.

"We adopted a colorful logo and redesigned our truck color scheme – we have several trailers with the logo across the side of the trailer," he says. "Anything to get our name out there and to work on our image. We’ve even been working on image with our employees – it’s not a junkyard, we’re recyclers. That’s part of the reason we went with the Hummelstein Recycling name for the recycling division."

FINDING A NICHE

Hummelstein Iron & Metal has 40 employees, including four administrative staff that handle common accounting and bookkeeping, 22 with Hummelstein Recycling and 12 with the steel service center. The company processes tens of thousands of tons of scrap steel, nonferrous metals, glass, rubber, and paper annually – purchased from industry, businesses, government agencies, and individuals – and falls in the less than $10 million in annual sales category.

Processed scrap is sold to mills, smelters, and foundries in the region – of which there are quite a few, including the Nucor plant in Hickman, Ark., Nucor-Yamato Steel in Blytheville, Ark., and Arkansas Steel in Newport, Ark. Most of these are within an hour’s drive. The company is situated on a rail spur, making it possible to ship throughout the region, as well. And nonferrous scrap is marketed to Arkansas Aluminum Alloys in Hot Springs.

Although it is great in theory to be near so many mills, it’s a double-edged sword, because it makes the market more competitive, says Hummelstein. This is especially true for prompt industrial scrap that requires no processing, just a truck to haul it.

"We are very competitive on price, but we really sell the service," says Elswick. "We’re right down the street. If they have a problem with something they can call us and we’ll be there in five minutes. And we’re there as often as they want us there."

Finding a niche and sticking to it has become very important in the scrap recycling business, says Hummelstein. "For recycling, I think the thing that probably sets us apart is that we don’t think of ourselves as much as scrap processors as problem solvers," he says.

The company does the usual amount of processing, says Elswick. They have a Idromec shear/baler for ferrous scrap, a portable shear, an HRB baler for nonferrous, and several smaller balers, as well as several hydraulic cranes and a cable crane, forklifts, skid-steer loaders and front-end loaders. The company also has a fleet of trucks – complete with rolloff containers, tractor trailers and lugger boxes – which is dedicated to servicing customers. A contract carrier hauls ongoing, finished material.

"We’re blessed with a very small scrap yard, which means that we have to be very efficient, not only with equipment but with the way we use the space," adds Hummelstein. "We move a pretty significant tonnage through a pretty small land area – about five acres. There was a time when we wished we had 20 acres, but not in the current regulatory environment."

The company handles "just about any type of scrap," says Elswick, from old cars to appliances to demolition material to industrial scrap to scrap from peoples’ garages. "It ranges from people who bring us scrap in a shopping cart, all the way up to the plants that do thousands of tons a year."

The company has a strong sense of community spirit which goes all the way back to Jacob Hummelstein, who came to town with a family to feed and was helped to start his business by a few people in town who felt he could succeed, according to Hummelstein.

"If it hadn’t been for this community and a few people here who were willing to help my great-grandfather get started, we wouldn’t be here today," he says. "So our company feels a very strong commitment to this community. And, as is typical of a small town, you get very connected to the community, you get very involved in the things that make the community better, and you just pay your social rent. You serve on the United Way board and you get involved with the Chamber of Commerce and other economic development activities, and you make the donations to Little League. That’s a part of our organization’s value system."

UNUSUAL COOPERATION

Although Jonesboro is a typical small community in some ways, it has some unusual features, says Elswick. "Arkansas State University is here in Jonesboro, and I think the focus on education is a little different in this town," he says. "The way that the town grows and looks to the future is a little different than a lot of places."

Hummelstein Iron & Metal participates in a local organization called the Existing Industries Association, a group of plant managers and other people involved in owning or operating manufacturing companies and other industrial firms in Jonesboro. The association, which has been meeting once a month for the last 20 or 25 years, is the oldest organization of its kind in the state, according to Hummelstein, and a lot of interesting things have grown out of it.

"About five years ago, a group of us recognized a need to find a better way to train our existing workforce," he says. "What we were seeing was that companies that had been here for many years were being lured away by other cities offering new incentives."

The group realized what would keep jobs in Jonesboro – and bring in new jobs – was a labor force that was productive, had a good work ethic, and had the skills to make a business successful. So these industrial leaders formed a joint venture with the university, a local technical institute and the Adult Education Center. "Members of our community sat down together and developed a training consortium that has really become a model for the entire state," says Hummelstein.

What has grown out of that is a new $1.5 million facility where workers are trained both in people skills – such as problem solving and teambuilding skills – and technical skills such as electronics and math and how to operate and maintain pneumatic and hydraulic equipment.

"Typically, people from manufacturing and industry and people in education have been at odds with one another, and have not really sat down together and worked on the problem of training the workforce very effectively," he says. "Typical of Jonesboro, we said ‘no, let’s sit down together and work this problem out.’ Maybe it’s something in the water around here, but people are usually willing to work toward a common goal."

"That’s been very helpful to our company because we send a large percentage of our employees to these training functions that wouldn’t be there if Jonesboro weren’t the way it is," adds Elswick. "Courses that would cost thousands of dollars somewhere else we can do for a few hundred dollars. We’re able to do things that a company our size probably couldn’t do in a lot of places."

Hummelstein Iron & Metal is interested in teaching its employees general problem solving skills. "They’ve learned the basic skills of their job, and now they’re learning to think beyond it," Elswick explains. "That’s helping our company when you talk about our service-oriented niche."

As a result, employees do really feel empowered – beyond the buzzword, he says. For example, a driver recently overheard people talking about a customer who was complaining, and he insisted it could not be one of his customers. "He said, ‘Not one of my customers! There’s no way one of my customers was complaining!’ That’s how they feel. They’re able to take advantage of those classes in problem solving and go out and look at what the customer needs. That’s unusual, I think. They don’t just come in and do their job and go home. They’re part of the solution – all of the employees are part of the solution."

Employees know they have a direct impact on what happens at the company, Elswick continues. "We share a lot of financial and production information with our employees so they’ll know how we’re doing," he says. "Most people in these types of jobs don’t ever see this type of information."

"We try to walk the walk before we talk the talk," adds Hummelstein. "A lot of times management is guilty of the flavor of the month – the management style of the month. We basically are just doing the things that have become almost cliched, but without using the jargon. The main thing is being consistent in the application."

It takes time and patience to change an organization’s culture. "My father was a very successful leader of this organization for nearly 60 years, and he ran it as a benevolent dictatorship," he says. "The mark I’ll leave on this company is a change in that culture to one where people were given the ability, freedom and license to make their own decisions, and have an impact on the direction the company is taking and its growth. There’s a tremendous level of satisfaction for everyone in that."

QUALITY AND SAFETY

Hummelstein Iron & Metal is currently working on ISO 9002 certification, with a goal of being certified by the first quarter of 1999. In addition, they have also applied for the Arkansas Quality Award, a state-level version of the national Malcolm Baldridge Award.

"The ISO 9000 is a quality system, whereas the Arkansas Quality Award is more continuous improvement and showing how you are taking care of your customers," says Elswick. "Both of those work together and we’re working on both at the same time."

It’s notable that no customer has come to Hummelstein Iron & Metal and demanded that they become ISO 9000 certified – it’s just a way to tie practices the company is already undertaking to a deliverable, says Hummelstein.

"There’s a lot of satisfaction when you can package it all together and actually know when you’ve accomplished that goal," says Hummelstein. "And it certainly doesn’t hurt you when you go to a client or a customer or consumer and say ‘we’re ISO 9000 certified.’ It may not get you any more for your scrap, or allow you to pay less for your scrap, but I think it gives you – both internally and externally – something to hang your hat on."

The company is also proactive on the safety side, as one of only four companies in the state – and the only scrap recycler – to be recommended by an OSHA inspector for the Arkansas Department of Labor’s Safety and Health Achievement Recognition Program (SHARP). This is probably unique for a company its size, says Elswick. Under the SHARP program, a consultant comes in once every two years (but Hummelstein Iron & Metal invites them in every year) to inspect the company’s safety procedures and help them with their written programs, he explains.

"We’re considered a leader in the state as far as safety is concerned," says Elswick. "Everybody’s involved in the safety program here, and I think that’s unusual. But it’s not new for us – we’ve been involved in various state safety programs for more than 15 years."

The SHARP program has a lot in common with ISO 9000, says Hummelstein. "It’s a written program with 25 indicators," he explains. "It took one of our employees close to a year to develop a written document. We then went through a much more comprehensive program. But the bottom line is, we’ve gotten more personally involved in the management of that program."

This involvement includes monthly inspections, monthly meetings of the entire committee, and monthly meetings of each division/workgroup. "It’s basically a quality system for safety," says Hummelstein. "It involves making sure your paperwork is right, making sure you’re doing your documentation correctly, and making sure you’re doing your education and awareness properly. Then, obviously, making sure the actual work is done in a safe manner, and that you’re doing things the way that they should be done. And you have to keep your lost time accidents below a certain level to even stay in the program."

Hummelstein Iron & Metal has had the attitude that it is better to be cooperative with government than adversarial, since the time that Lee Hummelstein, Sam’s father, was runnning the company.

"He told me, 26 years ago, that it’s a lot cheaper for a lawyer to keep you out of trouble than to get you out of trouble," says Hummelstein. "I think that’s true for most things, whether it’s safety or environmental compliance – basically, it’s just a proactive state of mind. It has served the company well."

STRONG MANAGERS

A certain number of scrap dealers seem to have musical talent, and Hummelstein is one of them. A long-haired college music major in 1970, he was a member of a rock and roll band, and had aspirations to become a band director or a famous rock and roll musician. What happened? For one, he says with a laugh, his wife Marilyn Hummelstein, vice president of the company, had a good influence. And, as often happens in a family business, he was needed in the company.

"I was between semesters and my grandfather became ill and was going to be off work for – we thought – a month, and I came down to help out," says Hummelstein. "My grandfather was recuperating from surgery and I sat with him hour after hour, day after day, week after week. He was too weak to work, but he was at work, and he basically taught me the business, and it was my first opportunity to really get to know my grandfather."

His grandfather Abe took longer to recover than expected, and Hummelstein never went back to school. He jokes that he transferred his "keyboard fetish" from the piano to the computer, and today he has a great interest in technology and doing business online.

Elswick also has an interesting – and partly musical – background. He is a saxophone player who used to be in a jazz band and still plays. Before joining

Hummelstein Iron & Metal seven years ago, he was in hotel management in Florida. He decided to move to Arkansas because it was a better place to raise children, and joined the scrap business looking for a profession that would allow him more time with his family.

"Lester hired me as an accounting clerk for the recycling division doing invoicing and inventory, and then as time passed, I took on more responsibility," he says. "Eventually Sam named me manager of recycling. This job is just a lot of fun, and I really enjoy it."

Lester Davidson, company controller, has also been with the company for seven years. He got an accounting degree and worked for a CPA firm in Jonesboro for about 10 years, and Hummelstein Iron & Metal was one of his clients. "When they got ready to hire somebody, I had worked for them for a long time and they trusted me and I trusted them," says Davidson.

Characteristic of the employee-centered management style at the company, both Elswick and Davidson have had the opportunity to take on challenges they might not have been exposed to in their former jobs, says Hummelstein – Elswick in recycling operations and Davidson in a variety of things.

"Lester is controller by title, but he does a lot more than a typical controller," says Hummelstein. "He has been very involved in computerizing our operations, along with the marketing of scrap, human resource issues, and quality issues. It’s unusual, but he often goes with us when we call on industrial accounts. A lot of times you’re dealing with someone who is in finance, so there’s a great connection there. Hands-on might be the term – everybody is a lot more involved in a lot of different areas."

It’s particularly helpful to have a strong management team during the time that Hummelstein is fulfilling his duties as second vice president of the Institute of Scrap Recycling Industries, the scrap industry’s national trade association.

"Let’s face it, if I’m going to be involved at the national level in ISRI, I’d better have two guys like this to help run the recycling business," he says. "Marilyn is managing the steel service center and Dad, though retired, is still available when needed. All of this makes me feel comfortable when I need to be away on ISRI business. It’s hard to put a dollar figure of value on being involved in ISRI at that level, but we get to bring back a national perspective on the industry. Does that help us? Only history will tell. It has certainly forced us to develop an organization that has greater management depth."

In addition to expanding the nonferrous and nonmetallics operation, over the last three years Hummelstein Iron & Metal has made significant investment in upgrading scrap processing and computer equipment and processes.

"I anticipate there will be a major change in the way we do business over the next two to three years," says Hummelstein. "Electronic commerce is going to be here. Being the techno-junkie that I am, it’s interesting to me, but on the other hand, as a businessman you’ve got to say ‘What’s the cost-effective way to implement new technology?’ Is it technology for technology’s sake, or is it going to help the way we do business?"

The company is looking for new opportunities and exploring joint ventures, but nothing they are ready to talk about, says Hummelstein. He emphasizes the need to stick for the most part with doing what they do well. "You can get too far from home, and we’ve seen companies do that and live to regret it."

The author is editor of Recycling Today.