Repeat Business

Anyone who owns a scrap yard knows the importance of developing customer relationships. While gaining new customers is critical to growing a business, keeping old customers is just as vital.

At Hitchcock Scrap Yard (HSY) in Canton, Ill., Account Executive Bob Spangler tries to call on his customers at least once prt month to make sure they are receiving good service. He knows there are other scrap yards in the area that could be vying for that same business and he wants to make sure his customers keep coming back. “We are selling against all the same markets. It’s the value added. It’s the customer service that makes the difference,” he says.

HSY serves about 85 industrial accounts at its central Illinois-based facility. One of those accounts, located 30 miles to the northeast in Peoria, Ill., happens to be one of the largest machine and engine manufacturers in the world, Caterpillar Inc.

“We handle a lot of Caterpillar scrap,” says HSY Owner Mike Hitchcock. “We have a destruction agreement where we dismantle machines for Caterpillar out on their proving grounds, destroy them and show proof of destruction.”

Industrial scrap makes up about 60 percent of HSY’s material intake. The primary product it receives is skeletal scrap. “A lot of companies around here make parts for Caterpillar and John Deere, so that is a big part of our feed,” says Spangler. HSY serves about 95 percent of the industrial accounts within a 100-mile radius, according to Spangler.

The company purchased its first shear back in 1977 to cut the skeletal scrap and make it into a product suitable for a nearby mill. Seven years ago HSY installed a Sierra 750 shear/baler that allowed it to go after more peddler scrap and nearly double its production.

An Obvious Solution
While a shear has been a necessary component to HSY’s business, no scrap yard is thoroughly equipped without a machine to transfer metal scrap onto a conveyer or into a shear/baler. As one of HSY’s biggest customers, Caterpillar seemed like the obvious choice to provide scrap handling equipment to the facility.

“I just took the position [that] if they are going to be giving us this business, then we should be running their product, and they do have a class-act product,” says Hitchcock. “You can tell it by the hours on the machines here. It’s been a good relationship both ways.”

According to Spangler, one of HSY’s Cat scrap handlers has 25,000 hours of use. Others have upwards of 18,000 or 20,000 hours of operating time. HSY has a repair shop on site where it performs maintenance on its machines.

“We take those machines at 12,000 hours and we put them in our shop. We put in new engines, pumps and motors,” says Spangler.

He estimates HSY spends approximately $60,000 on new parts and within three or four days a machine can be back in operation and as good as new.

“These machines may have a few scratches on them, but inside the cab and out looks really close to the first six months operating,” Spangler says. “They look that good.”

Multiple Expansions
Hitchcock purchased his first new Caterpillar machine in 1995. In 2012, HSY spent $1.5 million on new equipment from Caterpillar. The core of the business now revolves around five Caterpillar material handlers, two of which are wheeled 325D LMH models. HSY also has two articulating haul trucks, four wheel loaders, eight other excavators with shears and attachments and 12 other pieces of Cat equipment, including a tele-handler, bulldozer, track loader, skid steers and fork trucks. The company also operates nine Caterpillar semitractors, which Spangler describes as the first Cat fleet in Illinois.

Adding new equipment was not done to replace existing equipment, rather to help meet the demands of the growing operation. HSY has operated at its current location for 18 years. In that time Spangler says the fence line has moved four times to accommodate the company’s expansion.

“We’ve been expanding this business for several years. We are in the process of tearing half of this plant down possibly this summer and building a 30,000-square-foot building with a new nonferrous baler inside,” says Hitchcock.

HSY also plans to add another material handler from Caterpillar to its equipment fleet this year, he says. Caterpillar recently introduced the MH3049 and MH3059 to the marketplace. The material handler that HSY is getting will be comparable to those machines in design but smaller in size. HSY will be the first scrap yard to use this model.

Jerry Risley, market professional for Caterpillar’s Industrial & Waste Division, says this particular machine will come to market in February 2014. “We are building the first pilot machines, and Mike’s going to be privileged to have that to give us good feedback,” he says. “That will be our trial period to prove it out.”

As HSY expands and takes in more scrap, Cat’s material handler product line is growing right along with it. Risley says Caterpillar has a full line of material handlers planned for the future that will all have a similar design to the MH3049 and MH3059. These additional models will roll out over the next two to three years.

As HSY expands, it has not forgotten its commitment to its customers, including Caterpillar. Hitchcock says he tries to stay ahead of the competition environmentally and by keeping the yard clean. “We do that just a bit better than most, we believe,” he says. “Anybody can pay a dollar more per ton, and there is always that type of competition, but I think everything we do right, and buying their machines keeps us in business with Caterpillar.”

The author is a managing editor for the Recycling Today Media Group and can be reached at ksmith@gie.net.

To watch a video report about Hitchcock Scrap Yard’s relationship with Caterpillar, visit www.RecyclingToday.com/hitchcock-scrap-caterpillar-video.aspx.