ONE-MAN SHOW

Although no one can truly predict the future, some come close enough to profit. In the early 1970s, Stanton Moss saw enough growth potential in aluminum to justify starting his own aluminum scrap brokering business. At that time, there were few aluminum brokers and the aluminum can was just beginning to catch on.

"I thought aluminum was the metal that was really going to grow, and I was proven right," says Moss of Stanton A. Moss Inc., Bryn Mawr, Pa. "Aluminum has grown tremendously, and the consumption of aluminum in the automotive industry is finally taking place. Starting about 20 years ago the pounds-per-car has increased gradually, year by year. Now it’s really exploded and I think it will continue to grow in the next couple of years."

Aluminum has advantages over other materials in automotive construction, says Moss, as it is lighter than steel and more proven in performance than plastics.

"One problem with plastics is that they’re oil-based, and everybody’s afraid of price escalation because of the oil situation. I think aluminum is definitely winning the battle. Magnesium is giving it a run, but the availability of magnesium is limited because it’s only produced by a certain number of producers, and the recycling of magnesium is a problem because magnesium turnings are very volatile and a match can blow up your plant."

At the time he chose to specialize in aluminum trading, Moss had already built a solid background in nonferrous metals from his years at George Sall Metals Co., a secondary aluminum smelter and brass and bronze ingot maker in Philadelphia.

"I worked in the plant for about two years learning everything that was possible, then I went out on the road buying scrap, covering the whole Northeast," Moss explains. "Then I became an ingot salesman for the same company, covering die casters and foundries in the Northeast and the whole East Coast, and eventually I became sales manager. I worked myself up to general manager."

Then in 1972, the company experienced severe labor problems. Under the direction of George Sall’s parent company, Diversified Industries, Moss liquidated George Sall Metals after a year of attempts to resolve the dispute. The following year, Moss went into business for himself as a trader, broker, and merchant of nonferrous metals. There was little temptation for him to start his own processing facility, for several reasons.

"I was really very upset with labor, and I made a commitment to myself that I didn’t want to have any labor problems like we experienced at George Sall Metals. And I also saw that Philadelphia was slowly losing its position as a consumer of nonferrous metals," Moss explains. "At one time, Philadelphia was a tremendous nonferrous consumer."

By the time Moss started his brokerage business, many longstanding Philadelphia scrap processors and smelters had closed their door for good, partially due to labor disputes and partially due to new environmental regulations, says Moss.

"I knew a lot of people, I was active in NARI -- the predecessor to ISRI -- and I knew a lot of consumers and a lot of die casters and foundries. I felt there was a good niche for me to take scrap and have it converted and sell the ingot, the finished product. I did that and I also traded metals, selling to all kinds of consumers, the primaries, the secondaries, the consumers."

PERSONALIZED SERVICE. Moss is a one-man operation, who, with the help of a secretary, operates out of one location. "We’re not the biggest, but we compete with the biggest. I’ve grown every year and my sales keep growing," he says proudly.

"This has worked very well, in my opinion," he adds. "I’m able to give very personalized service. When there’s a problem, I’m on top of it. It means working very hard but I don’t mind doing it. I’ve had many customers for the full length of time I’ve been in business for myself, and I still have some customers I had when I was at George Sall Metal."

But there is a down side to being a one-man show. It requires a high degree of personal financial responsibility, Moss explains.

"I buy in my own name, I sell in my own name," he says. "If there’s a bankruptcy with one of my consumers, it’s Stanton Moss that takes the hit. I pay all my customers within the terms we’ve agreed upon, whether there’s been a bankruptcy or whether I’ve ever been paid or not. So we watch everything very closely."

With all the merging and consolidation that the scrap industry has undergone over the past few years, being a small operation is not easy, says Moss.

"It’s a big challenge because I’m competing against some very large companies that keep growing and growing. Not that I will never merge — maybe I will merge sometime, but I haven’t thought about it. I’d rather stay on my own where I call my own shots and I’m my own boss and if I make a mistake it’s me that makes the mistake — I can’t blame it on anybody."

Working with other people is not entirely out of the question, however.

"I have a son who’s in his first year of law school, and when he finishes law school we’ll see what happens," says Moss. "It all depends on what he wants. I would love to have him in the business if he wants to learn it. And he’ll learn the same way as I did. He’ll work in a scrap yard, which he has already done for a couple of summers, and also work at consumer’s, to see both sides. That’s very important. I don’t want him to be like some young people in the business now who are just telephone jockeys."

Being active in various industry trade associations keeps him abreast of the latest trends despite working solo, he adds. Moss serves on the national board of the Institute of Scrap Recycling Industries and is vice chairman of ISRI’s Convention Committee. For many years, he was also chair of the nonferrous division. He is also active in several other trade associations, including the Die Casters’ Association and the American Foundry-man’s Society.

MARKETS. Based in Pennsylvania, Moss mainly buys from East Coast sources from Maine to South Carolina, although he sells to consumers in the Midwest as well as the East Coast and overseas in various Pacific Rim countries.

"Those countries have great growth potential," says Moss. "But they have to learn about the use of scrap and they have to get their environmental problems straightened out.

"China probably has the great growth potential. But meanwhile, the domestic growth is there."

Most of that domestic growth is in the automotive sector, of course, due to the volume of aluminum that industry consumes.

"Where else do you get a market that sells 10 to 14 million units per year?" says Moss. "Houses are great but they don’t sell 10 million houses a year. As long as the economy is up, you’ll sell lots of cars. And you have built-in obsolescence with cars. I think that you will see the growth in automotive continue for a couple of years. And even if the economy slackens — which it will, I think maybe in late 1995 — and cars sales drop, the pounds per car keep going up, so I think there will be an offset there, and the demand will still be good."

Although Moss chose not to trade in the aluminum beverage can as a commodity, he is amazed at the growth the aluminum can has seen during the past few decades and predicts that other forms of packaging will be converted to aluminum in the future.

"The growth of the aluminum beverage can is unbelievable," says Moss. "When I was chairman of the Philadelphia Metals Association Phoenix Award Committee, we gave David Reynolds the Phoenix Award for really advancing the aluminum can.

"But that’s just the tip of the iceberg," he continues. "I think you’re going to see many other types of packaging going to aluminum, because of the tremendous saving of energy in recycling it. Aluminum is where municipal recyclers make their most money — for a while, they couldn’t afford to recycle paper because they weren’t getting enough money. But aluminum is there, even in a down market."

Despite his enthusiasm for the aluminum can, Moss himself does very little trading of aluminum used beverage containers.

"There are a lot of intricacies in the UBC market I chose not to get involved in," he explains. "It’s harder to trade in volume and there are a lot of problems with moisture, with rejections. I was asked to handle it by some of the primaries, some of the consumers, but I chose not to."

EXPANSION. The aluminum scrap market has expanded considerably over the past few years, with the increased use of scrap by consumers as well as secondary smelters, says Moss.

"Many years ago, the largest consumers of aluminum scrap were the secondary aluminum smelters, the ingot makers," he explains. "They used to consume over 75 percent of all the scrap. Now their figures are under 50 because the primaries have gotten involved and the die casters are now using scrap to make their metal and bypassing the secondary smelter. There are some rolling mills that are making a product out of scrap the same way they did out of pure metal. The primaries want to get involved in value-added product so they would rather use their prime in value-added product — extrusion, plate, sheet, forging — than sell prime."

This means there is more competition for each pound of scrap, says Moss. "This can be good for brokers, but it all depends on the market. When the market is tight, it’s good for the broker. When the price is weak and there’s plenty of scrap around, the broker usually suffers."

Aluminum trading on the London Metal Exchange has also changed the aluminum market, says Moss.

"It has opened up many opportunities for hedging. I also feel that it’s hurt the aluminum business because we don’t control our own destiny. A contract on the LME can be bought by mutual funds, by investment funds, and by the dentists and the doctors. That’s hurt the aluminum industry because it’s artificial."

So much investment in metals markets by speculators is an unknown quantity, says Moss, as they will probably abandon the metals markets at some point, but it is impossible to know when they will do so.

"And what happens when they get out?" says Moss. "How badly will the market fall? How badly will the people get hurt? But this kind of speculation is something that’s here to stay. We’ve seen it in copper with the COMEX. I guess you learn to live with it. But to me, it doesn’t help the industry."

There are also many more aluminum brokers in the marketplace than there were twenty years ago when Moss first opened his brokerage business, which is partly due to the expansion of the scrap market.

"And a lot of companies have closed and the employees of those companies have become brokers, because it doesn’t take much to become a broker," says Moss.

ENVIRONMENT. Like most other members of the scrap industry, Moss observes that environmental issues affect the industry more than any other factor present today, and this is not likely to change any time soon, he predicts. Although he does not have his own processing facility, environmental issues, by association, still play a role in his business.

"If my customers go out of business, that affects me," says Moss. "And I could get caught in the chain of PRP. We worked hard to reauthorize Superfund, but it got caught in a political seesaw. Reform of that legislation is necessary for the survival of the scrap industry."

The scrap industry has a responsibility to regulate itself and make sure it is complying with all the pertinent environmental regulations, says Moss.

"If we do a good job then I think the government will allow us to exist," he says. "The environment needs the scrap industry. Where else would the scrap go? The landfills are getting filled, and this stuff is too valuable to send to the landfill. That’s why I’ve tried so hard to be active in the association, to give something back to the industry rather than going to these meetings just to be seen. I think it’s very important that we have an association like ISRI."

Increasing the quality of the product is also critical, according to Moss. "There’s some new technology coming out in the industry that’s going to be very helpful and improve the product. You have improvement of balers, improvement of separation systems that allow the dealer to ship a better product. I think the dealers themselves are more interested in quality. And it’s very important that the dealers realize they have to sell a product."

HONESTY AND KNOWLEDGE. Knowing the business backwards and forwards, dealing in an honest way and providing a personal touch are the most important aspects to a successful scrap metals business, says Moss.