Making the Grade

There’s also a saying around Schupan & Sons, that "without a good army, the company is nothing." The army, of course, is the employees, and Schupan has taken the approach that if the company takes care of both its people and its customers, then growth and profits will follow.

Apparently, this approach has worked. Today, Schupan & Sons is an $80 million company, and sales are expected to top $100 million for the first time this year. The company currently has six processing facilities throughout Michigan and two just over the border in Indiana, along with a brokerage office in Chicago. The company employs up to 200 people with temporaries. Schupan & Sons handles mainly nonferrous metals, as well as some ferrous; plastics, paper and glass are handled as an added service for customers. Of the nonferrous segment, aluminum is the company’s main focus, and it is the aluminum side of the business that Schupan continues to grow to improve its bottom line.

Collecting, processing and selling aluminum constitutes the majority of Schupan’s efforts. The company handles a variety of aluminum scrap, from window framing and scrap from recreational vehicle manufacturing operations, to aluminum used beverage containers returned under Michigan’s deposit law or peddled in Indiana. In fact, the company claims that it controls 70 percent of the aluminum UBC market in Michigan, handling 80 million pounds of UBCs yearly or about 2.1 billion cans.

To control such a high percentage of the UBC market in Michigan, Schupan has acquired and built three dedicated UBC processing plants that sort, clean and bale UBCs; and has placed 65 portable densifiers in the field by establishing partnerships with beverage wholesalers and soft drink companies. Since Michigan is a deposit state, UBCs are returned to the wholesaler or soft drink company which must, in turn, move the cans along to be processed and sold for their metal value. To accomplish this, densifiers supplied by Schupan to the distributors are used to compact the cans into manageable bricks. The bricks are then palletized and picked up by Schupan, or delivered to a Schupan site, and then held until sold by the company’s brokerage office in Chicago.

 The wholesalers and soft drink companies can also bag their cans and have them delivered to one of Schupan’s three UBC processing plants. "Either way it’s an efficient way to handle the bottle bill,"says Dave Healy, chief financial officer of Schupan. "The wholesalers are satisfied with the system that we have put together for them."

Of the 80 million pounds of UBCs Schupan sells, about 50 million pounds are cans that Schupan processes, and the other 30 million are cans that other recyclers collect and process and Schupan brokers.

"Since we control the quality of processing for the Schupan cans, we can get a better price for those UBCs," says Emil Kane, Schupan’s Chicago-based UBC broker. "Brokered cans are those that come from other dealers. We never take physical control of those cans, we just do the paperwork to find a customer and transfer the material."

Schupan’s venture into the UBC market is no accident, according to Tom Emmerich, operations manager of the company’s largest volume UBC processing plant in Wixom, Mich., near Detroit. "We went after this market nine years ago," he says. "We were up against some big players, but we gradually took the UBC business away from them in Michigan. That’s because this company went above and beyond the call of duty in terms of service."

Contributing to the shift toward Schupan was better equipment, according to Emmerich. The company employed newer densifiers in the field that were quieter and easier to handle, while other companies were still using can flatteners with noisy blowers. "We also provided around-the-clock service and did whatever it took to keep the equipment on line," he says. "It was really the level of service that counted, and the word spread. The challenge now is to continue that level of service and anticipate the customer’s needs."

Part of that challenge may include siting another processing plant in Michigan to capture even more of the UBC market, along with the company’s increased presence south of the Michigan border in Elkhart, Ind., with a facility that opened at the beginning of the year. Since Indiana does not have a bottle bill, containers in that state are harder to collect, and the quality is not as good, according to Schupan.

"The difference between UBCs collected in Michigan, which has a deposit, vs. Indiana which does not, is huge," he says. "First, the material in a deposit state is cleaner because it does not come from the roadsides. Second, it is not sold by the pound, so nothing is put into the containers to increase the weight, which sometimes happens in non-deposit states. And third, more people are handling UBCs in a non-deposit state, thus quality will vary. So, we approach each area differently."

In Michigan, handling UBCs is more capital-intensive for Schupan because it must invest in millions of dollars worth of equipment to process the cans. There’s also the cost of having to service the equipment and constantly be on hand if there is a breakdown in the field. In Indiana, the emphasis is more on getting the peddler to deliver the UBCs to its facility. That’s done through advertising and making the recycling facility as user friendly as possible.

But the new Elkhart site does much more than process and store baled UBCs. The company built the 50,000-square-foot, 10-acre site for processing ferrous and other nonferrous material besides UBCs, as well as handle any other recyclable material that the customer wants to sell or peddle. It is also a hub for industrial scrap – the company has placed numerous hoppers and roll-off boxes throughout the area to collect material for processing.

Schupan’s Elkhart site is designed for efficient material processing, as well as environmental compliance. The facility has plenty of outdoor room to store and process ferrous metal, and also has two rows of large, free-standing bins. Each bin is capable of holding several tons of scrap material that may be contaminated with oil, such as machined turnings. The semi-covered bins are on a sloped concrete slab that tilts toward a collection tank. All runoff from the scrap is captured and stored for further processing. Future plans call for an evaporation system that will boil off the water, leaving just the oil.

"We want to keep ahead on the environmental side, not keep pace," says Marc Rose, vice president of scrap operations for Schupan.

Inside the Elkhart facility, there’s a baler, a shear, some densifiers and more bins that tower from floor to ceiling. Both the bins inside and outside make the material easier to handle and segregate, making the operation more efficient. Items such as scrap from the manufacture of aluminum windows and recreational vehicles are segregated in the bins. Oversized entry doors make it possible for trucks to enter and discharge their loads near the bins and the baler.

"As time goes by, we see ourselves as a processor and packager that supplies material to the mills that they can use right away – material that is segregated properly, and provides a more consistent melt. That’s where we fit in," says Schupan.

Also at Elkhart, there are two scales – one for the large trucks that are common with industrial recycling, and a smaller scale for the peddler. "We are now advertising on the radio and in the newspapers to increase the peddler side of the business," says Schupan. "We want to service peddlers as best we can, and that includes providing room for material drop off in a covered space, and their own scale. We want to be as full-service as we can."

On the ferrous side, the Elkhart facility will also help Schupan capitalize on the strong local market for steel scrap. With numerous mills and foundries in the surrounding region, plus three new minimills being built in Butler, Ind., Delta, Ohio, and in Iowa, Schupan is confident that his company can also grow this part of the business. The company has another ferrous scrap site in Kalamazoo.

"Traditionally, we were in nonferrous, but as time went on we needed to do both," says Schupan. "With the advent of the electric arc furnaces, there will be a continuous demand – and at prices that will allow for profits."

With an existing, smaller Schupan facility already in Elkhart, called Dana Metals, and start-up operations at the newer facility barely a year old, there is plenty of room for Schupan to grow in the geographical area. The newer facility is only at about 35 percent capacity.

With aluminum scrap, Schupan has truly closed the recycling loop with its distributorship of new aluminum. The company collects industrial scrap from various locations, processes it and sends it to mills for melting into unfinished goods such as bars, plate, sheet and other products. These unfinished grades are then bought by Schupan, which resells and distributes them to manufacturers to make finished products. In all, the company, which is a member of the National Association of Aluminum Distributors, stocks and sells more than 1,800 different types of aluminum products.

"It’s a true ‘close the loop’ operation," says Schupan, "and we stress the service end, not the price."

"Service is very important to a company that is making a piece of machinery or building a prototype and needs a piece of aluminum immediately. So, we want to get that material to them as fast as we can. We understand if we serve their needs, that next time – even if there is not an emergency – the company will still come to us, or at least consider us as their supplier."

According to Healy, UBC recovery and new aluminum sales, which constitute about 80 percent of the company’s business, are the fastest growing segments of the company. In fact, the aluminum distribution segment has grown three-fold in the last four years.

In another arrangement, Schupan sends industrial aluminum turnings and drosses to S&R Enterprises Inc., Wabash, Ind., to be melted into sows. The purpose of the melting operation is to produce a grade with exacting qualities and characteristics, measured through spectrographic analysis.

"By taking the extra step to melt the aluminum into sows, we are able through material analysis to do a better marketing job, and it opens up new consumers for us," says Schupan. "The customers get a higher quality product that does not need any more processing."

Like others in the scrap recycling industry, Schupan credits much of the company’s success to the high quality of its employees. "I really have great people working for me," he says. Through the years, he has been able to effectively cultivate employees through the company ranks or lure executives from other industry-related companies.

"I think part of my success to date was that I was able to surround myself with very good people who have skills in areas that I do not possess," says Schupan. "That, plus treating employees and customers the way I would want to be treated."

Another key to the Schupan success story, says Kane, is that the owners have a definitive game plan. "When times were good, Marc reinvested the earnings back into the company, expanding operations and sharing profits with employees. He is planning for the future – not only for himself, but for the entire company and its customers."

Today, every company has unique and special ways to reward its employees for their service and hard work, and Schupan & Sons is no different. Beyond the medical and dental benefits, and the 401K and pension/profit plans, there’s also a program with a local credit union where the company will back loans for employees. And every year, Schupan rents an amusement park for a family picnic.

The dedication to employee morale has a cascading effect that Schupan believes makes the company more customer focused. "If you take care of your employees, then they will take care of the customer," he says. But Schupan admits it is much more than that. "You have to also anticipate and provide for the needs of your customers," he says. "So, over the years I have tried to anticipate where the market is going. I tell my people, ‘Go to where the puck will be, not where it is,’" paraphrasing a comment once made by hockey star Wayne Gretzky.

Schupan & Sons keeps growing, and more opportunities are on the horizon.

"We certainly are seeing more opportunities than ever before," says Healy, "but we have to analyze those opportunities to pick the best ones. Some fit, some don’t. Certainly, we will continue to grow, and I think that maybe we will add another facility in Michigan in the near future. I am sure that there is a ceiling to our growth and success, but I just do not see it yet."

"We like win-win situations in business," adds Schupan. "We do not believe that you should go out and just increase your market share – that doesn’t make sense at all. If you are not profitable, you won’t be able to provide for the needs of your customer."

As for equipment, the company may add a baler to its operations, and it is currently developing a recycling-specific computer software program to help manage the business better. The program may also be marketed to other recyclers to help them run their operations more efficiently.

Schupan & Sons has taken the approach of the consummate recycler, taking part in all forms of recycling, even in those areas that are not the company’s focus. If plastic or paper comes in, they’ll process it and sell it. "We want zero waste," says Jay Sherwood, administrative director.

"If it’s recyclable," he continues, "we’ll handle it – anything to satisfy the customer."

The author is managing editor of Recycling Today.