Maximum Efficiency

We’re sort of a Horatio Alger story,” says Kevin G. Gershowitz, executive vice president of Gershow Recycling.

Kevin tells the story of how in 1964 his father Sam decided to go into business for himself and bought an old boom truck. Sam later opened his first yard and purchased the first portable car flattener in the New York City-Long Island region. He then began contracting with municipalities for their abandoned cars and scrap metal.

Sam went on to do more than that. In 1972, Gershow Recycling installed its first baler, in 1974 its first shear, and in 1980 its first shredder. In 1985 Gershow opened its Bayshore yard. In 1991 it purchased the Lindenhurst shredding facility and in July of 1996 it purchased its New Hyde Park location.

The Medford facility, which serves as Gershow’s corporate headquarters, has an automobile shredder, a 1,000-ton Harris shear, a Harris TGS baler for producing tin can and industrial bundles, a Harris HRB baler for nonferrous metals and a wire chopping plant.

The Lindenhurst facility has an automobile shredder and supplies unprepared heavy melt grades. The Bayshore and New Hyde Park facilities act as feeder yards supplying light iron, auto bodies and unprepared heavy melt grades. All of Gershow’s facilities buy nonferrous on a retail basis.

Between all of Gershow’s facilities the company has an equipment inventory of 23 hydraulic cranes with grapples, magnets or mobile shears, 21 payloaders (some with buckets and forks), 14 forklifts with squeeze attachments and several Bobcats with various attachments.

UP TO THE TASK

Eventually, all equipment needs servicing and Gershow is up to the task. At the Medford location there is a 15,000 square foot maintenance shop and a 4,000 square foot welding shop.

The maintenance shop has four full-time day mechanics, two full-time night mechanics, a machinist, a full-time electrician and a shop foreman. In addition to servicing Gershow’s recycling equipment, the shop takes care of the company’s truck fleet.

“We run 23 to 25 trucks daily,” says Joe Bertuccio, vice president of operations. The company’s truck fleet is exclusively dedicated to picking up scrap. The trucks are left at landfills, industrial accounts and other entities that provide scrap.

The welding shop, along with the company’s onsite machinist, can fabricate parts of all kinds. “We don’t have to wait days for parts,” says Joe. “We can produce a part immediately and many times we can produce it cheaper than buying it on the open market.”

LAST BUS TRIP

Gershow handles all kinds of ferrous and nonferrous materials. “If it’s ferrous scrap, we can handle it,” says Elliot Gershowitz, vice president and Kevin’s twin brother.

Among the things Gershow recycles are automobiles, I-beams, rebar, light steel and galvanized steel.

One of the more interesting sources of scrap for the company is New York City buses. As any New Yorker or former New Yorker will tell you, riding on a New York City bus can be an “interesting” experience. But perhaps the most interesting ride these buses go on is their last.

“We handle about 400 buses from New York City per year,” says Kevin. “We have our special trailers pull the buses out to Medford. They get about 15 to 17 years out of a bus.”

“Basically, we wind up shredding the buses,” says Elliot.

ELECTRIC MOTORS

As Gershow has looked to expand its horizons, diversify and grow, it has become a specialist in the recycling of electric motors, armatures, shredder pickings and similar copper bearing items. Gershow is able to recover the encased copper using a proprietary process it has developed.

“We buy the motors and arrange to receive them by truck or rail,” says Roger Levine, vice president. “We buy motors from 25 to 30 states.”

MULTI-STATE MARKETS

Although Gershow’s historical market focus has been Long Island and the tri-state area—New York, New Jersey and Connecticut—the company has a national and international reach. Its Medford facility has a rail siding. From there, gondola cars are loaded and scrap is shipped to Pennsylvania, Ohio and the Carolinas among other destinations.

More ferrous is shipped to the Southeast as more mills open, says Roger. Rail shipments by Gershow are expected to increase since Conrail sold to CSXT and Norfolk Southern. This will mean enhanced rail service to the New York area, according to Roger.

“Our scrap goes all over,” says Elliot. “We try to find the best market and ship the scrap at the cheapest rate.”

From the Port of Newark (New Jersey), Gershow exports shredded steel to such countries as Turkey, India, Pakistan, Malaysia, South Korea and Mexico, says Roger. Nonferrous scrap is shipped to Asia.

INNOVATION PAYS OFF

From the company’s beginnings, Gershow has always been an innovative company.

“Dad went to landfills on Long Island to buy scrap,” says Kevin. “He was one of the first to pay municipalities for metal from their landfills. The recycling of metal on Long Island was pioneered by Gershow.”

Sam enjoys telling the story of how he used to go around to landfills on Long Island offering to buy cars for $1.00 each. “The landfill operators wanted to know what was the catch,” laughs Sam. “At the time, they were offering people $5.00 to $10.00 to take the cars away from the landfills.”

On the high-tech side, Kevin proudly points out Gershow’s handling of copper scrap.

“We spent a fortune on research to develop a processing technique to remove copper from electric motors,” said Kevin. “We’re innovative. We want to have the best technology possible. We’re always looking for ways to reduce our unit costs.”

SERVICE COUNTS

No company can survive indefinitely on technology alone. You can have the best technology on the market, but if your customers are unhappy it will show up in your bottom line. That’s why Gershow places a very high priority on customer relations.

“We’re nice guys,” says Kevin. “Most people like doing business with us. We pay our bills quickly.

“When you do business with Gershow Recycling, it’s like putting money in the bank,” says Elliot. “Most of the scrap we buy is paid for within three to four days of receipt. We don’t know what the ‘30-day’ rule is for paying bills.”

GOT TO THINK GLOBALLY

As with others in the industry, Gershow watches the markets very closely.

“When you speak market conditions, you have to speak globally,” says Elliot. “Maybe 20 years ago a company could think of markets from a local perspective only, but not today”

How does Kevin see today’s markets? Copper has been on a downward trend for the past two quarters. Aluminum has been fair and relatively steady. The ferrous market has been fairly decent and stable for the past six to twelve months.

Sam believes that the relative stability in the markets accounts for the flurry of consolidations in the scrap business. He notes that the scrap business has been good for the past five years. Gone are the peaks and valleys.

Gershow also purchases cardboard and paper, bales it, and then sells to consumers. But Elliot is quick to note that when it comes to paper, “you don’t know from one day to the next. It’s a crazy market.”

AWARENESS AND RECOGNITION

Gershow is also very aggressive in an area that others in the industry would do well to emulate. Public relations and marketing are big items on Gershow’s agenda.

“Not enough of the public and even government understands what scrap recycling means to the country,” says Kevin. “We’re not just, and I hate to use the term, a ‘junk yard.’ As an industry, we don’t let the public know what we do.”

As one example, Kevin recalls about ten years ago, a government agency wanted to know to which landfill Gershow was disposing the “shredded steel.”

To reverse this trend, Gershow publishes its own newsletter. It also has an aggressive public relations program whose main focus is to obtain positive media hits.

“We’re constantly getting articles in local newspapers,” says Kevin.

REGULATIONS MANDATE CHANGE

One of the biggest challenges confronting Gershow—and for that matter the entire scrap industry—is the role of government, particularly when it comes to regulations. And, while the role of government regulations may invoke daily philosophical debates on Capitol Hill and in the halls of state legislatures, Gershow takes a practical approach to them.

“As laws change, we need to change,” says Elliot. “Whatever needs to be done, we do.”

Kevin notes, for example, that all of Gershow’s facilities are “concreted.” “We work on concrete, not on dirt,” he says. “This is what we’ve done to protect our land.”

One problem Kevin sees with respect to government regulations is uneven enforcement.

“Laws are not enforced equally on everybody,” says Kevin. “If the agencies went to everybody, it would create a level playing field. Some businesses don’t comply with regulations and never get monitored. Enforcement needs to be applied more evenly.”

As for the future, Kevin sees more regulation coming down the pike. And these regulations will be more difficult to comply with. However, Kevin notes that “companies that have intelligent people who can comply with the regulations in a cost-effective manner will do well. You’re only kidding yourself if you think otherwise.”

Municipalities that put in more regulations actually help Gershow. “We can meet the regulations,” says Elliot. “We do things on the up and up.”

Adds Sam, “You have to run a clean operation.” He also notes that regulations keep the “fly by night” operators out of the scrap business.

Adhering to government regulations can have its lighter moments. Kevin notes that all of Gershow’s facilities are equipped with state of the art radiation detection equipment. Recently, a truck hauling scrap set off the alarms at one facility. The truck was passed through the equipment several times and even underwent hand-held equipment checks. Despite the best efforts of Gershow personnel, the “offending” material could not be found. Finally, some one thought to check the driver. It turned out that he had undergone a diagnostic procedure that used radioactive material.

“We had a ‘radioactive employee’ who was registering as hazardous waste,” laughed Kevin. “Gershow has never cut hours or laid off employees. We just let this one ‘cool down’.”

GOOD AS YOUR EMPLOYEES

A key to Gershow’s success is its employees, notes Elliot.

“We pay our employees very well,” says Kevin. “Our turnover is low. The average person has been with us for 10 to 16 years. Some people have been with us as much as 25 to 30 years.”

Joe Bertuccio says that he is always looking to hire good help who have new ideas.

Roger Levine, who did business with Gershow for 15 years before coming to the company 2 ½ years ago emphasizes that “the company’s word means something.”

KISS OF DEATH

Standing still in the scrap business is the kiss of death. That’s why Gershow is constantly looking to increase its efficiency and keep costs down.

“We’re very focused on cutting costs,” says Elliot. “This is where we will have a competitive edge. That’s the future of the industry.”

Gershow has consistently over the years attempted to cut costs. In 1990 it installed a pedestal-mounted crane in its Medford facility to feed its shredder. The crane is powered by a 100 horsepower electric motor. It has a 75-foot reach and can stack materials more than 80 feet high. The crane saves Gershow considerable costs. First, the company doesn’t need to rely on payloaders to push material to the shredder and secondly, it avoids using a hydraulic crane, which can burn 150 gallons of fuel per day.

Most recently Gershow purchased two Benlee roll-off trailers. Gershow has a fleet of some 400 roll-offs in the field. The largest container it had was 45 yards. The new trailers can accommodate roll-offs up to 80 yards, which effectively reduces the company’s transportation costs by almost doubling the weight of material being transported.

“There is a cost savings to be found when you look for it,” adds Kevin. “If you have high operating costs, you’re a dead duck.”

“Cost efficiencies are key to the company’s survival,” says Elliot.

One of the ways Gershow is keeping costs down, notes Elliot, is through contract purchasing. For example, during the recent “friction” with Iraq when there were fears that the price of oil would go up, Gershow was comfortable knowing it had locked in its fuel costs with a contract.

Gershow also has contracts covering its purchases for other materials such as motor oil, tires, filters and parts. “We let the suppliers warehouse the material until we need them to deliver it to us,” says Elliot.

“If you don’t update equipment it becomes useless,” says Elliot. And, this applies to office equipment as well as “yard” equipment. Gershow is presently updating its computer system, in part, to manage costs.

“The paperwork and administration costs for complying with regulations can be more costly than the regulatory fees themselves,” says Elliot.

Joe Bertuccio explains that the new computer system will enable Gershow to monitor inventory using a bar code system. This system would work similar to that used by rental car companies. An operator would run a scanner over the bar code on a piece of equipment. A computer would then keep track of where the equipment is, what it’s being used for and when it needs maintenance.

LOOKING TO EXPAND

Sam emphasizes that Gershow is in an expansion mode. “I’m not laying down and dying,” he says with a laugh. “I’m looking for facilities.”

“We’re also looking to upgrade our equipment and we’re always talking to people about mergers and acquisitions,” says Elliot. “We’re in a hiring and buying mode.”

Roger adds that there is considerable pressure on Gershow and other scrap companies to find new ventures not necessarily in the scrap business.

“The Northeast in general is not a growth area,” says Roger. He points out that the number of places Gershow buys scrap from is decreasing as firms move down South.

“There has been a loss of industrialization in the Northeast,” says Roger. “The pie is getting smaller.”

BOATING ANYONE?

Gershow is involved in at least one lucrative non-scrap business—boating. The firm owns the Star Island Yacht Club in Montauk, located on the tip of Long Island. The Club, which sells 20- to 80-foot boats, has 170 slips to moor boats, a restaurant, a marine store and a repair facility.

“Dad has been involved in the marina for 11 to 12 years. His hobby developed into a business,” says Elliot.

Is Sam tempted to leave the scrap business to concentrate strictly on the boating end of things?  Not yet, says Sam. He still keeps an active hand and eye on the scrap business.

SCRATCHING FOR NICKELS

What of the future? Kevin is confident that Gershow’s is a bright one. He recalls his father telling Elliot and him over and over that, “you guys don’t know what it is to scratch for a nickel.”

“Well,” says Kevin, “we’re not scratching for that nickel...or dollar.”

Given Gershow’s proactive responses to a changing scrap industry, that’s not surprising.

The author is editor of Recycling Today.