Eyes Forward

The scrap recycling industry is full of company owners, managers and employees who have tried their hands at other trades but inevitably find themselves drawn back toward the industry they know and love.

The fourth-generation recycler grew up working around his father’s scrap yard, but then obtained a law degree. He both practiced law and was involved in real estate development in Manhattan earlier this decade.

In 2007, however, after an invitation from his father Richard and Richard’s business partner David Serls, Ben left Manhattan to return to southeastern Pennsylvania and plunge back into the scrap industry just in time to watch pricing hit historic peaks.

Ben’s great grandfather (also named Benjamin) founded the enterprise that would become B. Abrams & Sons Inc. in 1904 in Harrisburg, Pa. The story of CSR involves more than just the Abrams family and its Harrisburg business, however.

CSR was formed in 1999 when Harrisburg-based B. Abrams & Sons merged with L. Lavetan & Sons Inc., a York-based scrap company with roots tracing back to 1897.

The two companies shared similar roots involving immigrant founders who started as scrap peddlers and collectors and whose subsequent generations helped the companies evolve as processors of ferrous and nonferrous scrap.

In the case of the Abrams family, the Benjamin Abrams of 1904 left Lithuania and soon bought a horse and wagon and went into the scrap collection business.

One initial setback for Benjamin involved having his horses killed at a train crossing in the early years of his business. After successfully petitioning the railroad for compensation for his loss, Benjamin was able to get back into business. In 1907, he purchased a parcel of land in Harrisburg.

Though he spoke no English, Benjamin was able to communicate with the heavily German-American population in eastern Pennsylvania thanks to his knowledge of Yiddish, a language spoken by Central and Eastern European Jews derived in part from German dialects.

The business started by Benjamin was eventually handed down to his sons Hyman and Samuel, and over time to Samuel’s son Richard E. Abrams, the current chairman and CEO of CSR.

Richard was at the helm in the mid- and late 1990s when a wave of mergers and consolidation was sweeping through the scrap industry.

By the time of the 1999 merger that would create CSR, L. Lavetan was owned by the Serls family, owners of the brass and bronze ingot maker Colonial Metals Co. of Columbia, Pa. The Serls family remains part owners, along with the Abrams family, of CSR.

In general at that time, Harrisburg-based Abrams & Sons was focused on obsolete scrap, while York-based Lavetan & Sons concentrated on serving industrial customers.

"During the wave of scrap mergers and acquisitions in the late 1990s, the Abrams and Serls families talked and thought a merger of their companies might make a lot of sense in large part because the mix of industrial and obsolete scrap complemented one another well," says Ben Abrams.

"They decided to put the two companies together and install a shredder in Harrisburg," he continues. "They effectuated the merger in July 1999, and about six months later placed an order for a 98/104 Texas Shredder with a 4,000-horsepower Alstom motor and downstream system."

Ben notes that the project took two years to design and build, and by January 2002 the shredder was up and running. "It was about the bottom of the scrap markets at that time," he recalls. "The first month, CSR sold shredded scrap delivered to the steel mill for $87 per gross ton."

As of mid-2008, the ferrous shred produced at CSR’s Harrisburg plant is fetching a great deal more than $87 per ton.

The booming market for scrap metal has confirmed that CSR’s leaders made the right decision to see beyond the gloomy market of the late 1990s and install the shredder in Harrisburg.

"It’s done pretty well for us," says Richard modestly. "It has basically made our company what it is today. We couldn’t have survived as CSR the way we would have wanted to without it. You’re either going to have a shredder or you’re going to feed a shredder," he states.

Most of the current challenges faced by CSR are those involving keeping up with opportunities as opposed to scrambling to produce black ink during a trough of rock-bottom pricing. (Richard recalls the latter scenario from the opening years of this decade.)

In the past four years, CSR has been acquiring or attempting to acquire additional land near its shredder in Harrisburg (the company currently has a 28-acre parcel there) as well as at its efficiently-managed but squeezed-for-space Princess Street location in York.

This former Lavetan & Sons location sits within a city block in York and serves as a staging area for scrap that is either baled and sheared for shipment to a consumer or directed to the Harrisburg shredder yard.

Ben credits CSR President and Chief Operating Officer Eric Verman for his attention to operations at the cramped site, where inventory is turned around quickly. "This location helps boost our inventory turnover rate—it’s a real tribute to the people running this yard," he comments.

For his part, Verman (who also markets CSR’s ferrous scrap) credits employees such as Operations Manager Scott Goodman and Central Dispatcher/Scale House Operator Deb Schaale for their dedication to serving customers quickly and accurately as their incoming loads are weighed, inspected and paid for.

The Princess Street location is one of several CSR facilities that operate to some degree in tandem with the shredder yard in Harrisburg. The others are:

Similar to the mid- and late 1990s, when CSR was born, the past two years have seen a vigorous pace of large-scale mergers and acquisitions within the scrap metal industry.

Ben Abrams says the scale being achieved by the largest companies is impressive, but not necessarily intimidating, and he did not re-join the family business to see it lose its independence.

Since re-joining the company in 2007, Ben has been working with others at CSR to concentrate on maximizing shredder production and efficiency as a way to make sure CSR processes and ships greater volumes of scrap within quicker turnaround times.

"We’re not speculators," he stresses. "We’ve got to keep turning inventory to maintain cash flow and to mitigate market risk."

A visitor to the shredder yard in the summer of 2008 could see considerable stocks of both unprocessed scrap and finished shred awaiting shipment.

Ben says scrap buyers such as Steven Marcus, who has been with CSR and Abrams & Sons since before the merger, have kept the inventory pouring into the Harrisburg shredder yard. "Steve took the opportunity he had to build CSR’s shredder feedstock buying network and he ran with it," says Ben. "He has done and continues to do a fabulous job."

CSR’s officers and buyers maintain solid relationships with scrap generators and smaller dealers, says Ben, and current pricing has allowed CSR to reach out further geographically to procure scrap.

But with the opportunities have come the challenges of promptly serving the trucks arriving at the Harrisburg site; of the shredder maintaining production to match the incoming shipments; and in securing rail cars and trucks to ship outbound product.

"It’s been a challenge to keep the yard clean and to service trucks promptly," Ben acknowledges. "We’re currently in the midst of expanding our operating hours for the shredder—we have to in order to control our inventory."

On the outbound side, a lot of the company’s shred is shipped via trucks to nearby mills in Pennsylvania. Rail cars, says Ben, "are hard to come by, but if you’re shipping long distance, it pays to ship by rail."

The company sends some shred to break-bulk export yards on the East Coast, but has done very little ferrous exporting in containers. "Some overseas buyers want container loads, but they don’t want to set it up," says Ben.

Amidst all the challenges are the parts of the job that Richard, Ben and the others at CSR still enjoy.

"We have terrific employees who are dedicated to this company and to the work they do," says Ben. "It’s important for us as managers to be committed to their safety and to let them know they’re appreciated," he comments.

In the year that he has been back at CSR, Ben has enjoyed working with his father to ensure the company remains just as dedicated to the employees and to the health of the company.

On working with his father, Ben says, "We have a shared vision for the company: We want to see it be innovative and we want to see it grow. I think my father enjoys seeing me back in the business, and I know I’m enjoying being back here."

With one acquisition being undertaken in 2008 and an industry that shows few signs of slowing down, the leaders and employees of CSR have an array of opportunities to build on the company’s 100-year heritage.