Positioned for the Future

Located three hours northwest of New York City, Ben Weitsman & Son Inc., Owego, N.Y., has developed a formula for success that includes diversification, flexibility and customer service. And the company is currently installing a new super sized automobile shredder that will significantly increase the tonnage the operation can handle when it is up and running at the end of this year.

The company employs about 125 people at its five upstate New York locations in Binghamton, Vestal, Burdett, Ithaca and Owego, along with the new shredder site right outside of Owego. Given the current climate of strict environmental regulations, the company decided to put the shredder on a greenfield site with no history of industrial activity, according to Adam Weitsman, vice president and general manager. The site was also chosen because it comprises more than 20 acres and includes direct rail siding.

Ben Weitsman & Son’s main specialty is ferrous scrap processing, along with small amounts of nonferrous. But this will change once the new shredder is up and running. "Because so much nonferrous comes off the shredder, overnight that will turn us into a larger nonferrous player," says Weitsman.

The company is divided into four divisions: ferrous and nonferrous scrap processing, new steel, industrial gas and welding supplies, and commercial and residential real estate development. Many of these businesses are tied together. For example, when Ben Weitsman & Son sells scrap to mills, the company buys back new steel, which is then used for commercial building projects. And when peddlers come to sell scrap to Ben Weitsman & Son, they can purchase industrial gas and welding supplies.

Having so many different sectors helps keep the company’s cash flow stable despite fluctuating scrap markets, Weitsman explains. "If one area is weak because of the economy, hopefully the others come up to the task to cover that," he says. "If the iron business is soft, the other businesses can maintain cash flow so we can hold iron until the better times. We’re definitely a speculative company when it comes to pricing, meaning we’ll hold iron during the summer months going into the historically higher winter months. We can afford to hold material longer than other companies that might not have other avenues of cash flow."

Some of the company’s yards have enough space to accommodate holding scrap when necessary – the Burdett yard sits on 18 acres of land and the Owego yard on 20 acres. In addition, all of the facilities contain large warehouses for nonferrous scrap processing. "And we have a new steel division and a gas division at each of our locations, because we feel that being a one-stop shop improves our traffic flow for peddlers," says Weitsman. "The people who cut scrap also buy oxygen, acetylene and welding supplies, so we offer those, as well."

By the fourth quarter of 1997, when the company’s new Newell 120-104 Mega-Shredder will be operational, Ben Weitsman & Son will process about 35,000 tons a month, including all grades of nonferrous and ferrous. The super sized shredder was chosen for its larger capacity, says Weitsman.

"It’s the largest shredder available at the present time," he says. "We chose it because of our volumes. The company is growing so quickly on the ferrous end, we needed something we could grow into and not grow out of."

It won’t be hard to procure material to feed the shredder, he adds, because the company has an established feeder yard system, along with a large business in roll-off containers. "By January, we should have about 1,000 roll-off boxes," says Weitsman. "For a scrap company in our area, that’s a decent size. So we control a lot of the scrap – we don’t wait for it to come in, we bring it in."

Downstream, the shredder will be equipped with a Wendt eddy current separator for separating aluminum and copper. Disposing of shredder fluff, the nonmetallic residue left over after automobiles are shredded and the metals removed, is always a challenge and an expense for shredder operators. At first, the fluff from Ben Weitsman & Son’s shredder will be de-watered and used as daily cover in local landfills. But the company has other plans for the future, although they aren’t yet releasing details.

"We’re working on a couple of upgrading concepts where there will be some value added to the fluff – potential uses other than landfilling," says Gary Caldwell, vice president. "We are hoping for some innovative approaches to using it as a material source."

"We would like for the shredder residue not to be an expense, and that’s the direction we’re heading," Weitsman adds. "We’ve made a lot of headway with making it into a small value item."

Although installing a super sized shredder might seem like a response to the rapid consolidation currently taking place in the scrap industry, the company was planning the installation before the consolidation trend reached its current degree of development.

"We planned on the shredder before a lot of that consolidation, and we’re happy we did, because it takes a lot of planning to do a project this size," says Weitsman. "But I feel that the consolidation definitely helps a company our size. A lot of people in the scrap industry view it as a negative for their companies, but we view it as a plus, because we can do things the public companies can’t. These large merged companies have stockholders they have to answer to, and we don’t. They have specific margins and numbers they have to hit, which we don’t."

One niche may be to step in when smaller scrap companies that have had longstanding relationships in their communities for 60 years or more are forced out by the large, consolidated companies, says Weitsman. "That’s where a company like us, with our service, will step in. We definitely view it as a strong opportunity."

To augment its existing scrap supply, Ben Weitsman & Son plans to acquire two or three more strategically-placed feeder yards located within a 150-mile radius of its shredder by the middle of next summer, he adds. "We like to go into towns just outside the major cities, so we’re not battling with five yards in one city," he explains. "We like to be in a town where there’s not a lot of yards."

"We’re expanding, but we’re expanding into smaller areas where we can still maintain our level of service and so on," adds Caldwell. "This is just not an area of the country where there is tremendous industrial growth or tremendous interest on the part of the larger companies to move in. If we take care of business in our own back yard, we think there’s plenty of room for our continued growth."

The industrial base in the region has hit bottom, although it may be slowly starting to grow again. "We’re just trying to move and grow right along with that," he says.

Like many scrap processing companies, Ben Weitsman & Son has an interesting history that started in another part of the world. Weitsman’s great-grandfather Morris was a carriage maker for the Czar of Russia who came to America in the early part of the century and landed on Ellis Island. From there, he moved to Owego, N.Y., to work for The Champion Wagon Works. As time passed, he also opened a dry goods store in town.

His son Ben was offered a teaching job in Owego after graduation from college. But Ben soon discovered that his $600 a year teaching salary was not enough to live on. So he started his own used auto parts business in 1938, which later expanded to include scrap metal. In 1958, Ben and his son Harold incorporated and became Ben Weitsman & Son Inc. The business started with a focus on ferrous scrap, but soon expanded to include nonferrous, as well.

Harold, company president and Adam Weitsman’s father, is still very much the cornerstone of the company, Weitsman stresses. "My grandfather founded the company, but my dad’s really the one that pushed it to this level. My job is to grow it from here."

"He’s still very much involved and still very much watching over our shoulders," adds Caldwell.

His area of specialty is processing equipment, says Weitsman. "My father is very mechanically inclined," he says. "Equipment is his baby. He just has this knack of knowing equipment and knowing what’s wrong with it. As a result, we’re a very equipment-rich company."

Besides the new shredder, Ben Weitsman & Son operates 14 Komatsu excavators, LaBounty shears, numerous Sierra portable balers, a Sierra shear baler, Al-jon loaders, Komatsu loaders, rolloffs, tractors, trailers, hydraulic excavators, magnets, and grapples. Most of this equipment is fairly new and in top condition, according to Weitsman.

Although Ben Weitsman & Son is now pursuing more industrial scrap to feed its shredder, the company has traditionally been "a very large peddler company," according to Weitsman, and continues to enjoy a large across-the-scale business. "And we’ll drop containers wherever peddlers might be cutting," says Weitsman. "If they can’t come to us, we’ll go to them." The company also services small machine shops and other small accounts.

"Even in our new steel business, my father’s philosophy has been that you never turn away that smaller customer – this company was built on the smaller customer," Weitsman adds. "Smaller customers do more than just bring in scrap – they talk, and the best type of advertising is word of mouth. We try to cover a large spectrum, because every customer that comes in here has the potential to buy new steel or industrial gases, or maybe get involved with one of our residential or commercial real estate projects. Everyone is a potential customer for the future. So we never judge a book by its cover – everyone has to be treated like a king here. Because we like to be treated the same way when we go somewhere."

On the other end, Ben Weitsman & Son currently sells scrap to consumers in the Midwest, the South, and the East Coast. "There are enough new mill consumers that we’ll have good access to new consumers in the middle South and the Midwest, and we will be shipping by rail as well as by truck, so our access to those markets should be quite good," says Caldwell.

In the past, the company mainly moved material by truck, but this will be changing since the new shredder installation has rail access. "Because of the volumes it was very hard to find consistent trucking, especially in the winter months when trucks would rather haul salt than scrap," says Weitsman. "Salt and sand pay more and are easier on their equipment. The rail was a big plus for us [on the shredder site] because it gave us access to markets we were never able to access cost-effectively by truck."

In some cases, the company sells directly to mills, and in other cases they sell through large scrap brokers such as The David J. Joseph Co., Cincinnati, or Tube City, King of Prussia, Pa. Having access to sufficient gondola cars is not a problem when selling through these brokers, since they have their own fleets.

And although many scrap processors are concerned about the effect the acquisition of Conrail by Norfolk Southern and CSX will have on scrap shipments (see related story on page 80), the acquisition could end up improving rail service to Ben Weitsman & Son due to the company’s location in the Northeast, says Caldwell.

The company does some exporting – mainly of lower grade items – but not a significant amount, since there is no port within a reasonable distance.

The emphasis at Ben Weitsman & Son is on service, according to Caldwell. "Whether it’s in our steel business or in our recycling businesses, we just try to move a lot faster and provide a level of service that smaller processors are not able to provide," he says. "We cover our areas and markets rather thoroughly, we provide a level of service which is somewhat unequaled in this area, and we’re always looking for niches and advantages. We can provide expedited payment where necessary or we can provide equipment on very short notice to do unusual volumes and things of that sort. We work a lot with demolition contractors and the like to be able to handle large volumes in a short period of time."

Although the company is not located in the heart of a metropolitan area, adds Weitsman, the company has been able to entice some talented people from larger companies to locate to Owego. "Gary Caldwell was with Auburn Steel for 18 years, Jim Doyle was with Schiavone-Bonomo at the port for years, and Ben Pirraglia, who was just hired to run our new shredder, comes to us from Midwest Metallics," he says. "The cost of living is much lower here, and we try and offer a package that would be above the norm in the scrap industry."

Providing quality service for customers is the key to thriving in the scrap processing business, most processors agree, and Ben Weitsman & Son is no exception. "My dad’s philosophy is definitely customer service driven," says Weitsman. "In addition, we’re definitely a very aggressive company. We go after scrap with a vengeance."

"We have been successful and have grown our business because we’re generally younger and more enthusiastic," adds Caldwell. "We look for positive ways to grow and expand and do things better. We’re willing to try just about anything to meet that goal."

Making it easier to do business these days is a trend toward more cooperative relations with the state Department of Environmental Compliance (DEC) and the Environmental Protection Agency (EPA). "It’s more of a cooperative effort than it used to be – the agencies are recognizing the common problems and finding solutions that everyone can deal with," says Caldwell.

But Ben Weitsman & Son – like most scrap processors – has certainly made its share of changes to its facilities in order to comply with environmental regulations, from pouring layers of concrete over formerly exposed earth to monitoring stormwater.

"The owners here have always been conscious of the right way to do things," says Caldwell. "We’ve tried to stay ahead of the game and improve the yards so we were not put in a situation where everything had to be done at the last minute and all at once. Our yards have always been neat and orderly and there’s always been a plan to handle scrap materials as they came through."

The company has installed radiation detectors at all the facilities "not because we had to but because some of the mills had some problems and we wanted to make sure we were never tied into those problems," says Weitsman. "We try to always take a responsible position in providing the service that we do."

Diverse Backgrounds

Caldwell has been at Ben Weitsman & Son for two years. Before that, he was the general manager of purchasing for Auburn Steel Co., Auburn, N.Y.

"My experience helps me in the area of scrap quality and requirements of the consumers – what works, what doesn’t work, why specifications are created the way they are, and what you can and can’t do," he says. "So as we are training operating people out in the yard, we can further explain why we do things the way we do them."

In addition, the company has officials with strong marketing backgrounds to help break into new accounts, and others with strong financial backgrounds who help with that side of the business.

The company is making very significant investments in equipment to be able to produce the kinds of scrap grades the mills are looking for, Caldwell adds.

"And we are trying to find suppliers that generate better grade, better quality material," he explains. "We’ve been very successful in finding ways to upgrade the quality of of scrap that we do handle so that we minimize waste, improve the scrap quality and better serve the market that’s out there."

Ben Weitsman & Son doesn’t have exclusive supplier agreements with its consumers, but it does have many longstanding relationships, Caldwell adds. "In most cases, we do what we do and we do it better, and therefore earn the respect and the continued business of the consumers that we serve," he says.

Weitsman, who has been with the company for eight years, specializes in the ferrous side of the business. His background is in marketing and finance, and his strengths are in trading, marketing, and dealing with the financial aspects of the operation, according to Caldwell. Like many scrap processors, Weitsman also has a creative side, which he expresses through ownership of an art gallery (see sidebar).

But his primary goal was always to be in business with his family. "My father is my best friend, so it’s a natural," he explains. "That’s one of the reasons I wanted to be in this business. My sister’s also in the business. Even though it can be hard working with your siblings, my sister and I complement each other well."

Weitsman’s sister, Rebecca Weitsman Pawcio, branch manager for the Binghamton division, has been involved in the business for 10 years.

In the short term, Ben Weitsman & Son will be getting the new shredder up and running and acquiring additional feeder yards to obtain sufficient scrap. In the longer term, says Weitsman, the company has some ambitious goals for further vertical integration.

"In the coming years we definitely need to get into making steel ourselves," he says. "It’s a big plan for the future, but seven years ago we probably didn’t think we’d be building one of these mega-shredders. With Gary Caldwell’s experience from Auburn Steel, our ability to command that kind of scrap going into a mill, and our existing position on the retail end of new steel, it would be the perfect fit. But it would be a foundry or a smaller mill. We’re not talking about a giant mill like U.S. Steel."

There are several other scrap processors that have gotten involved in melting steel, so the idea has some precedent, says Weitsman. "We just have to make each step carefully and do the best we can," he says. "Once we are running our shredder operation profitably and correctly, we’ll definitely look to making that next step. But we still have to take it a step at a time."

The author is editor of Recycling Today.

Sidebar

From Scrap Metal to Art

In addition to helping run his family’s medium-sized scrap processing operation, Adam Weitsman, vice president and general manager of Ben Weitsman & Son Inc., owns an art gallery in New York City, which specializes in early American furniture and paintings. He is about to open another gallery, as well.

"I studied business in school, but I was always interested in art," says Weitsman. "I knew I would be in the family’s scrap processing business. But before I came here, I didn’t want any regrets, so I opened the gallery. It’s great, because I go to New York City every weekend. I can do this and wear my industrial hat, and go there and wear my creative hat."

Weitsman seems to be a born entrepreneur with a strong interest in art. He recently donated his $3 million collection of 19th century New York state stoneware, which he collected as a young person, to the New York State Museum in Albany, N.Y.

And on a broader scale, Weitsman also has a vision of helping to revitalize some of the downtown commercial districts where his company has scrap processing facilities. In Binghamton, N.Y., for example, through the company’s commercial real estate business, he is currently renovating several buildings, including a 72,000-square-foot former office complex which has been transformed into the Binghamton Arts Factory.

The complex features a small movie theater, a coffee house, shops, a gallery, artist work lofts, a dance studio and an independent film company in which Weitsman is also a partner. One priority of the development is offering rent subsidies to minority and women owned businesses.

Weitsman is in the process of doing the same sort of development with 12 more such buildings in downtown Binghamton. These efforts have numerous benefits to the community. "It’s a good thing for the city of Binghamton, and it gives opportunities to young people in the arts," he says.