Family values

The nonferrous scrap processing company S.I.C. Recycling Inc., Riverton, Ill., may be relatively new, but it is well-rooted in a tradition of best practices and a business philosophy of honesty and integrity that extends to its parent company, Sloan Implement Co., a full-line John Deere dealer headquartered in Assumption, Ill.

Founded in 1931, Sloan Implement is owned by Tom and Larry Sloan, who serve as CEO and chairman of the board, respectively. The company, which is one of the largest John Deere dealership groups in the United States, has 17 locations in Illinois and Wisconsin and a staff of nearly 400 people.

A company of that size has substantial resources to offer, and its wholly owned subsidiary, S.I.C. Recycling, has been able to benefit as a result, says Rhett Schrock, who serves as marketing manager and a metal trader for the nonferrous scrap processor.

In addition to S.I.C., Larry also has an ownership interest in Ecovery LLC, Loxley, Ala., a Responsible Recycling Practices (R2) certified electronics recycler and processor of a range of nonferrous and precious metals as well as a processor of plastics recovered from electronics.

Schrock says that while S.I.C. Recycling, which was founded in 2011 and began processing operations in 2012, and Ecovery operate as two separate legal entities, they share best practices and business philosophies. “The two family-owned businesses are guided by the core values and fundamentals that have driven the growth of Sloan Implement Co. since its inception in 1931 and created GSI in 1972,” Schrock says, referring to Grain Systems Inc., a former Sloan family business that manufactures corrugated steel storage bins for the farming industry. “Through these values and substantial resources, the family is focused on continuing to invest in technologies and infrastructure improvements to better serve our supplier and customer bases in all of our businesses ranging from agriculture-related products and services to the scrap metal recycling companies,” Schrock continues.

S.I.C.’s association with Ecovery lends other advantages, according to Brady Bird, president of S.I.C. Recycling. “We undoubtedly would not be where we are today without our relationship with Ecovery,” he says, noting that the companies have a “tight relationship” and operate similarly. He adds that S.I.C. and Ecovery share marketing and sales efforts and jointly call on customers and supply sources.
 

Founding principles

Bird says by forming S.I.C. Recycling, the Sloan family was able to add a Midwest processing location with a slightly different focus than Ecovery as a separate legal entity, though the two companies would share a common underlying business philosophy with their parent company. “The values and fundamentals given to us from our parent company, Sloan Implement, include, among other things, honesty and integrity,” he says. “These are of utmost importance to us here at S.I.C. We always do what we say we are going to do, and we do it quickly, correctly, efficiently and without surprises,” Bird adds.

“The motto for Sloan Implement is ‘To do the very best we can for our customers,’” Schrock adds. “Here at S.I.C. Recycling Inc., we have adopted this philosophy as well. We strive to do the very best we can for our consumers and suppliers.”
 

Bird adds that in light of the nature of commodity businesses and given that S.I.C. is a relative newcomer to the scrap processing industry, he knows suppliers and consumers have alternatives. “The customer experience is a way to differentiate our company. The easier you are to do business with, the more likely they will be to come back,” he says. “If you don’t provide them with a good experience, they are not going to come back to you.”

S.I.C. processes approximately 3 million pounds of material per month and has the capacity to process in excess of 30 million pounds annually, Bird notes. The company specializes in copper and aluminum radiators, insulated copper wire and wire harnesses and aluminum-conductor steel-reinforced (ACSR) cable. Bird says, “We find materials that we think we can add value to through processing.”

The company’s 80,000-square-foot facility in Riverton is home to two processing lines that feature size reduction and separation equipment that allow the company to produce five primary products, Schrock says: No. 1 copper chops, No. 2 copper chops, aluminum shred, Grade 1 aluminum briquettes and EC (electrical conductor) wire chops. S.I.C. is in the process of expanding its processing capabilities by adding a third line, Schrock says. “We expect the new line to be running at maximum capacity when we ring in [2014],” he adds.

Schrock adds, “Our company operates state-of-the-art shredding and processing equipment and is capable of meeting specific consumer requirements for mill-ready products.”

An in-house spectrometer assists with quality control, helping S.I.C. ensure that it is meeting specific customer requirements, Schrock says.

The company purchases scrap material from wholesale sources. “We buy scrap metal from a host of different scrap facilities and sell our mill-ready products to a number of different consumers,” Schrock says. “We buy and sell at wholesale volumes and don’t have any dealer or foot traffic at our facility. We currently do business with a number of companies located in 25 different states.”

One of S.I.C.’s priorities is continually investing in technology and infrastructure and seeking operational efficiencies, Schrock says. “Endlessly being at the forefront of what’s next and looking for new material to process is of utmost importance. As a result of our ownership structure, we are well-capitalized, allowing us to constantly invest in these improvements in technology and infrastructure,” he says.

“If we are not good at what we are doing today, we are not going to be able to invest and grow,” Bird adds.
 

Investing in capacity

While copper and aluminum markets have been relatively soft since S.I.C. began processing material in 2012, the company has been able to gain market share as well as increase its sales and processing capacity, Schrock says.

“We understand the competition is tough and the market in early 2013 was as tight as it had been in many years, but we were able to excel and gain market share each month through that period of time,” he says. “Our order books grew then and have continued to grow. Obviously, we’re happy about that, and we look forward to continued growth ahead.”

Bird says that like many scrap processors, S.I.C. experienced a shortage of scrap in the winter months of 2012-13. “To resolve that moving forward,” he says, “we focused on purchasing more inventory of raw materials over the summer months when scrap metal is more readily available to ensure we can best take care of our consumers and cover their future orders. Again, being well-capitalized through our parent company paved the way for us to accomplish this.”

S.I.C.’s managers also took advantage of this slower period to invest in the company, Schrock says, so it would be ready for a market rebound. In addition to investing in the third processing line, S.I.C. doubled the size of its facility.

“We’ve reinvested our earnings to position the company for growth,” Bird says. “We are not your typical startup. We have the benefit of a stable, multigenerational family business that provides liquidity, access to financing and back-office operations that allow us to make those investments.”

These investments have helped S.I.C. maintain a stable to improving operating margin despite softer markets for aluminum and copper, Schrock says. While the company’s gross margin is tighter, he says the ability to share back-office functions and expenses with its parent company has improved S.I.C.’s operating margins.
 

Focusing on growth

Organic growth is definitely a goal for the management team at S.I.C., Schrock says. The company is on the lookout for additional materials that it can process using the equipment it has in place presently. “We are really focused on becoming more and more efficient in processing materials, investing in the existing business and company,” he says.

Bird adds, “While our focus will be on growing organically, we are always in the market looking for opportunities.” He predicts that S.I.C. will double its capacity again in the next one to five years.

Schrock adds, “We believe if you’re not growing, you’re dying, and to ensure our growth, we will continue to invest in infrastructure and equipment and look for ways to be better processors. We are long-term operators with a long-term vision for S.I.C. Recycling Inc., and we will continue to reinvest when opportunities arise and, also, we will continue to put more and more people to work.”

He continues, “In addition to becoming the best processors we can be, evolving our product mix and expanding our processing capabilities are vital to our ability to grow earnings and ensure our long-term success.”

The author is managing editor of Recycling Today magazine and can be contacted at dtoto@gie.net.