A Friendly Neighborhood Scrap Company

From his second-floor office window, Mike Silverman, owner and CEO of Great Western Recycling Industries Inc. (St. Paul, Minn.), can look out over a collection of nearby single-family homes. There are also apartment buildings along the western edge of the 13-acre scrap processing facility, separated from the scrap piles and equipment by little more than railroad track.
  Such proximity to a residential neighborhood represents both Great Western’s strength and its ongoing challenge—coexisting with its surroundings while also running a profitable scrap operation. As Silverman concedes, “It’s highly unusual for a business as large as ours to survive in an area like this for as long as we have.”
  Great Western hasn’t just survived. Nearly 75 years old, the company has thrived for more than 30 of those years at its current site. Over those years, the ferrous and nonferrous processor has increased its work force tenfold, added ever more machinery and trucks, and enjoyed almost exponential growth in material shipped.
  Great Western did all this by caring about its community, its customers, and its employees, company executives say. And it did it in a rather quiet manner, without much fanfare or showboating, says Andy Staebell, president, who adds with Midwestern modesty, “We’re just a little scrap yard on the edge of town.”

Building on a Good Foundation
Of course, that “little” designation more accurately describes Great Western’s first two sites in St. Paul, which were both smaller than an acre.
  Founded by Ben Gordon and Morris Rolnick in the late 1920s, the company was originally named Great Western Iron and Metal after the nearby Great Western rail line. The firm changed its name to its current
form in 1991 to emphasize recycling.
  A genuinely small business for decades—by 1967, it still had only five employees—Great Western began to grow in the post-World War II economy, buying its first crane in 1948 and first baler in 1951. The company itself was bought by Sherman Gordon, Ben’s son, in the early 1950s. By the early 1960s, it had moved to a slightly larger facility before finally settling at its current site in 1967.
  That same year, Mike Silverman, Sherman Gordon’s son-in-law, joined Great Western—first as a truck driver, then crane operator, shear operator, and other positions, eventually taking over day-to-day operations as Gordon neared retirement. Silverman, who bought the company in 1987, credits his father-in-law with establishing a “good foundation to build on,” noting, “We’re now reaping the benefits of all his hard work.” 
  Silverman and Great Western’s current management team—with Andy Staebell overseeing the ferrous business and Jerrold Bader, vice president and general manager, handling nonferrous—have also worked hard to keep the business growing. And there are notable signs of success. From its staff of five in 1967, for instance, the company now has 50 employees. Where 30 years ago the firm shipped perhaps one carload of ferrous scrap a week, today it sends out almost 50 times as much.
  Nonferrous shipments have also grown impressively, so that today the company enjoys a sales volume that Staebell describes as a “chocolate-vanilla twist” of roughly 50/50 ferrous and nonferrous.
  Great Western’s customer base is also mixed, with about half its material coming from commercial and industrial accounts and the other half from retail traffic. In fact, the company’s efforts to build its retail trade have tipped the scale slightly in favor of the retail traffic, with as many as 400 customers a day dropping off material, Staebell notes.
  The company draws most of its material from a 50-mile radius around the Twin Cities of Minneapolis-St. Paul, but its reach extends as far as North and South Dakota, Wisconsin, and parts of Iowa. Though the St. Paul skyline is visible from Great Western’s property, the plant is also within an easy drive of rural communities. That explains why the company receives a lot of obsolete farm equipment, from tractors to dismantled grain silos.
  The company sells its scrap throughout the Midwest, into Canada, and—thanks to its proximity to the Mississippi River—all along that waterway, as far south as New Orleans. Great Western also exports certain grades of brass and copper to Asia, says Staebell.
  The company ships its material by truck, rail, and barge—and sometimes a combination of methods—depending on the economics of each shipment. On the barge side, Great Western bought a local bulk commodity barge loading facility in 1996 that it now operates as a separate division called Great Western Dock & Terminal. Great Western doesn’t own any barges itself, but instead loads and unloads barges for other companies, handling material such as coal, petroleum coke, salt, steel, and pig iron. Great Western also ships its own scrap from the facility, though its scrap shipments represent less than 10 percent of the terminal’s business.

Part of the Neighborhood
Great Western’s commitment to its community, its customers, and its employees takes many forms, including a corporate environmental statement that’s posted right on the plant gate: “It is Great Western’s policy to abide by all environmental rules and regulations to safeguard the environment for all our employees, neighbors and the community at large.”
  And while there are occasional complaints from some of the neighbors, Great Western prides itself “on being part of the neighborhood rather than an adversary,” Silverman says, noting that some company employees live within walking distance of the plant.
  Great Western also tries to assist local citizen organizations, sponsoring one group’s newsletter, raising funds for flood relief (the plant and neighborhood lie in the Mississippi’s flood plain), “adopting” a portion of the local highway, and working together with local residents on mutual problems, Staebell notes. For instance, both the community and the plant must cope with roads that sometimes get blocked by backed-up trains, making it difficult for some people to reach their homes or for Great Western customers or employees to drive in or out of the facility.
  In another goodwill gesture, the company regularly opens its plant to tours for schools and community groups such as the Boy Scouts. Natalie Shermeta, Mike Silverman’s daughter and a scrap buyer, conducts an average of five to 10 tours a year.
  While the normally low-key Great Western doesn’t set out to make headlines with its community support, it did once nearly get into the Guinness Book of World Records. That was in 1996 when the company collected what is reportedly the largest number of tabs from aluminum beverage cans to be gathered in one location. Some 28 tons—or roughly 70 million individual tabs—were collected at the nearby Mall of America as part of a charity fund-raiser for the Twin Cities Ronald McDonald House, which helps the families of children undergoing treatment for cancer and other serious diseases. Great Western has been collecting tabs for Ronald McDonald House since 1987.

Hard Evidence of Customer Service
While some companies might boast that they roll out the red carpet for customers, Great Western has put down something far more practical: blacktop.
  Beginning in 1994, Great Western started putting down asphalt, first around a new, landscaped entrance and special facility for collecting aluminum cans, then back to the office and shear. Today, roughly 30 percent of the plant’s 13 acres is under blacktop, with another 25 percent or so covered by concrete.
  Great Western owns a commercial-style street sweeper to keep those hard surfaces clean of debris and has added environmental liners under storage bays for turnings, dirty motors, and other material—with double liners where necessary—to control environmental runoff problems. And steel rails were set in some of the concrete so that pushing scrap metal into piles would not tear up the surface.
  This was all part of a major redesign of the facility during the mid-1990s that included constructing a 15,000-square-foot building just for handling Great Western’s aluminum business—especially UBCs—and adding a second entrance for the exclusive use of retail traffic.
  Previously, all customers entered Great Western through the same gate, which meant that a supplier who just wanted to drop off a bag of aluminum cans had to wait in line behind semis, with big cranes working all around. The ground was muddy and the chance of puncturing a tire on a piece of metal was rather high. It wasn’t unusual to “bring in $5 worth of cans and leave with a $10 flat, which we’d pay for,” says Bader.
  But now, with the separate entrance and designated aluminum receiving building, “a housewife in pumps can drive in here with two bags of cans and not worry about the noise or walking through mud or dust”—or getting a flat tire, Staebell notes.
  What’s more, she doesn’t even have to leave her car. The can receiving area is located in a drive-through structure attached to the aluminum building, which allows customers to drop off their cans even during bad weather. Cans are weighed right there and customers receive a ticket, which they take to a nearby drive-through window and exchange for cash without stepping out of the car.
  “We cater extensively to the aluminum can market,” Staebell says, “and have seen steady growth ever since the new facility was put in.”
  What does he mean by “cater”? Each April, Great Western offers higher-than-usual prices for aluminum cans during Earth Week, the days surrounding Earth Day. This much-anticipated event stems from a one-day special that was offered in 1990—the 20th anniversary of Earth Day—when Great Western paid roughly twice the going rate for aluminum cans.
“People were lined up for five miles down the road,” Silverman recalls. “The police nearly gave us a ticket because we hadn’t called them to say we’d have traffic like this—but we hadn’t known either. It was wild.”
  That event earned Great Western headlines as far away as Seattle. Now, by spreading the special offer over a week, the company still attracts a huge volume of cans—some customers save their cans all year for the event, Silverman says—but under more controlled conditions.
  And though it’s a hectic week (during which no employee can take vacation), it can also be a fun time, with Great Western encouraging a carnival-like atmosphere by bringing in clowns to entertain waiting customers as well as handing out hot dogs and balloons. 

Commercial Considerations
A scrap company can’t succeed, of course, unless it has its commercial act together, so to speak. And Great Western does.
  On any given day, the firm has some 400 containers—boxes, luggers, roll-offs, and others—at commercial suppliers throughout the Twin Cities. A computerized tracking system provides a weekly report on the location of all containers as well as the length of time between pickups. The system reports help schedule service and payments, says Staebell.
  Great Western’s fleet of six trucks—kept clean and well-maintained, Staebell stresses—provide ready service to industrial accounts and demolition sites. Meanwhile, the company’s three outside sales reps roam the Twin Cities, connected to the home office by cell phones and voicemail as they call on existing clients, troubleshoot customer complaints, and scout out new business prospects.
  “If someone calls in to say, ‘I’m taking down a building in south Minneapolis and will have 20,000 pounds of copper,’ then we send over a sales rep to look things over,” explains Bader.
  For commercial customers who bring material to Great Western’s plant, a two-scale system—equipped with traffic lights and video cameras—was installed about two years ago to facilitate the movement of trucks in and out of the commercial vehicle gate. A three-person sales staff in the office helps direct the incoming material to its proper destination.
  In its plant, Great Western has separate warehouses for aluminum and red metals, which can be weighed at the inbound truck scale or on platform scales at the appropriate nonferrous building. Ferrous scrap is unloaded in the plant near the equipment that will process it.
  Information on incoming nonferrous material is entered into a computerized system that electronically records data such as weight and commodity, prints a customer receipt, and produces a bar-code tag for inventory tracking. 
  It’s essentially a paperless process, with certain documents produced only as backup, Staebell notes. Ferrous customers, in contrast, are used to receiving grading and weight tickets, so that paper-heavy system will likely continue for the time being, he says.
High Expectations, Low Turnover
  To emphasize its commitment to employees, Great Western proudly points to a recent safety milestone: In 1999, it completed one year without a single lost-time accident or injury in any department. And some departments are going on three years or more, which “is a big tribute to our people and their conscientious effort toward safety,” Staebell asserts.
  Beyond promoting safety, Great Western also believes strongly in promoting from within. One of its outside sales reps, for instance, began as a truck driver while another worked in the plant, Staebell notes. Plus, there’s a former receptionist/cashier who’s now an assistant office manager, and an employee who moved from the accounting department to become vice president of administration.
  Add to that philosophy company benefits such as a profit sharing plan, year-end bonus, and 401(k) with company match, plus gestures like passing out turkeys at Thanksgiving, and the result is a stable work force with low turnover. It’s so stable, in fact, that there are crane operators with more than 20 years’ experience, plus an 82-year-old employee working in the plant and another 80-plus office employee. And everyone at Great Western remembers the somewhat legendary figure of Sam Miller, who used to be Sherman Gordon’s right-hand man and who worked until about a week before his death at 87.
  But while Great Western tries to treat its employees well—like family, says Mike Silverman—it also sets high expectations. Ask how many of the company’s 50 employees are responsible for maintenance or customer service or quality control—or just about any important function at the plant—and the answer comes back: All 50.
And though there’s now an incentive program for truck drivers to avoid damaging tires—a monthly bonus if they don’t have any damage—the plan includes a penalty: Money is deducted from that bonus for each flat or for any tire damaged beyond repair, explains Jim Janovec, plant superintendent who also overseas operations and maintenance.

Weathering Well
Coping with Minnesota’s legendary winters is an annual fact of life for Great Western, which has a cold weather policy that says plant employees don’t have to show up when the temperature falls to 10o or more below zero. The maintenance building also features a heated bay for storing trucks overnight, while hydraulic equipment features engine and hydraulic fluid heaters. Another wintertime rule says that equipment must be run for one full hour before being used for work.
  While the winters are undeniably hard, the warmer weather—with its resulting thaw—isn’t always an improvement. This decade, Great Western experienced two so-called 100-year-floods within a five-year period, notes Staebell. In the spring of 1997, for instance, the firm’s office was under 2 feet of water, equipment had to be evacuated to higher ground, and even its Earth Week aluminum can event had to be postponed until the aluminum warehouse and drive-through facilities dried out.
  There are also man-made problems to contend with, such as St. Paul’s prohibition against shredders, which limits the type of material Great Western can take in.
  But for the most part, this little scrap plant on the edge of town is quite content with its record of success and optimistic about the future. The current management is capable of running the business for “a long, long time,” Silverman says. And while the company has no definite plans for further expansions or acquisitions like the barge terminal, Staebell concludes: “We’ve always got our ear to the ground for growth.”