September/October 1996
A mixture of specialized niches, vertical integration, and customer service has been the recipe for success for this Indiana-based nonferrous recycler. And its future plans call for more of both vertical and horizontal growth.
By Kent Kiser
Kent Kiser is managing editor of Scrap.
A glass candy jar sits on Larry Adelman’s desk. But the jar isn’t full of candy. Instead it holds glittering bits of copper—“chops,” it turns out, from a scrap wire processing machine.
Adelman’s desk also sports several zip-lock bags full of shiny copper and brass balls, some the size of golf balls, others closer to handballs. The shimmer of copper and brass, in fact, is all over the office.
This makes perfect sense, of course, once you learn that Admetco (Fort Wayne, Ind.)—the company Adelman runs with co-owner and brother-in-law Tom O’Neill—specializes in processing nonferrous scrap, especially copper and brass.
And though the company is not “high profile” and “kind of a quiet company in terms of publicity,” Adelman, president, and O’Neill, vice president, assert that Admetco is a “major factor” in the Midwestern nonferrous scrap scene. As proof, they note that their firm processes around 7 million pounds of nonferrous scrap a month, or 84 million pounds a year—most of it (60 to 70 percent by volume) copper, but also significant quantities of brass, aluminum, zinc, and stainless steel.
“We handle a lot of material,” Adelman understates. “When people come here, they’re quite surprised at our volumes and the size of our operation.”
In attaining these levels, Admetco has shown off a knack for developing specialized tolling and processing niches, as well as its capabilities in vertical integration—that is, manufacturing products (such as the copper and brass balls) out of its own scrap. And as these ventures grow, so does the company’s performance—evidenced by 1995, its best year ever in both sales and volume of material handled. This stellar performance has not only spawned ambitious expansion this year, but also given the firm momentum as it ponders its moves for the future.
The Road to Fort Wayne
Admetco—a loose acronym for Adelman Metal Co.—was founded in 1977, but the company’s origins in the industry extend back to the early 1900s, when Simon Adelman, Larry’s grandfather, immigrated to the United States to avoid conscription into the Russian military, first finding work in the scrap business in Chicago, then relocating to Greencastle, Ind.
Following this family lead, Jack Adelman—Simon’s son and Larry’s father—borrowed $1,000 from his parents and in-laws after World War II to start a scrap operation in Clinton, Ind., and by the early 1950s had also opened an aluminum foundry there.
Around 1958, however, he saw better opportunities elsewhere—namely Richmond, Ind.—so he moved and purchased Associated Iron & Steel, along with two partners. In 1966, he moved once again—and for the last time—to Fort Wayne, where he and Larry worked at a local scrap company before venturing out on their own in 1977 to form Admetco. O’Neill came on shortly thereafter, in 1979, jumping from a career in child welfare administration to become an equal partner in the fledgling scrap firm.
From the outset, Admetco’s three principals had definite ideas about their company’s focus. For starters, they decided to specialize in nonferrous, in part because Jack (now deceased) had more experience in that area, but also because they had little capital for large ferrous-processing machinery and they liked the idea of working indoors, especially during Fort Wayne’s often-harsh winters. They also decided that Admetco would be a wholesale rather than retail processor, drawing its supplies from industrial generators and other scrap dealers rather than over-the-scale customers—a focus it maintains to this day.
Admetco began life rather humbly in a 12,000-square-foot building with restrictive 12-foot ceilings. The firm quickly outgrew these quarters as its volume grew, however, prompting it to move in 1981 to Lincoln Industrial Park in southwest Fort Wayne, first filling up a 4.5-acre parcel—its current headquarters and site of what’s referred to as Plant 1—then purchasing an additional 9-acre tract across and down the street—now known as Plant 2.
Today, as you pull up to Admetco’s headquarters, the only indications that this is a scrap recycling plant are the scrap-bearing trucks rolling in and out, and the colorful bales of wire piled outside Plant 1. Otherwise, the company appears to be some generic manufacturing operation. Maybe that’s because every inch of Admetco’s plants is paved and immaculate. Maybe it’s that virtually everything is under cover, contained within 75,000 square feet at Plant 1 and 60,000 square feet at Plant 2. Or maybe it’s the relative quiet, with the only constant sounds being the backup beeps of forklifts and loaders, and the droning whir of the firm’s wire chopping line.
Seeking Out Niches
Though Admetco started out like most other nonferrous processors, the firm’s executives decided fairly early on that the key to long-term success lay in pursuing specialized tolling and processing niches. And the company has steadfastly adhered to that philosophy ever since.
“We try to look for better markets for our material,” says Adelman. “That’s why we focus very much on specialty markets, the nontraditional users of nonferrous scrap, and different ways to supply them and get a premium for special packaging, processing, and sorting that caters to what they need. That allows us to be more competitive when we go out there and buy.”
Admetco delved into its first specialized venture in the mid-1980s when it began cleaning copper wire for the world’s largest manufacturer of copper foil for use in circuit boards. The opportunity arose like this: The foil maker’s materials manager was frustrated because incoming copper scrap wasn’t meeting the firm’s quality standards—a big issue in copper foil production, which requires pristine feedstock that can be dissolved rather than melted. Looking to serve this need, Admetco worked closely with some chemical companies to develop a proprietary wire cleaning process that Adelman calls “very unique.”
The result? Admetco became—and remains—the foil maker’s sole processor of bare bright copper wire. The consumer purchases copper wire scrap, ships it to Admetco, and Admetco cleans and prepares it for consumption. “We’ve become their quality control department,” O’Neill says. “They rely on us to make sure their feedstock is clean.”
Under the agreement, Admetco also serves as the foil maker’s inventory manager and just-in-time supplier. “All their raw material inventory is here,” Adelman notes. “We ship it as they need it, including weekend shipments. They rely on us very much for their feedstock.”
Admetco has also become a specialist in processing copper and aluminum magnet wire, perhaps an inevitable move considering that Fort Wayne can lay claim to being the magnet wire capital of the world, with most of the major producers represented there.
The challenge with magnet wire—predominantly used in electric motors—is that it is coated with enamel or lacquer, which precludes its use by mainstream copper consumers. To meet this challenge, Admetco developed processes that reportedly open up better markets for the material. Though these processes are largely proprietary, Adelman and O’Neill reveal that the firm produces specialty castings from the material. (More on that later.)
Admetco’s quest for processing and tolling niches also led it into the world of wire chopping in the late 1980s. At the time, the company was handling a fair amount of copper wire and knew there was much more available in its region, but it was having to sell the material to existing choppers or pay them to toll-process the scrap for it. Clearly, there was a processing opportunity for Admetco somewhere in that scenario.
So in 1989, the firm took a calculated gamble and installed a chopping line. In the intervening years, wire chopping has become “a solid, core piece of our business,” O’Neill says, noting that the chopping line—which operates 24 hours a day, 51/2 days a week—currently processes about 30 to 40 percent of the scrap Admetco handles.
In keeping with its niche aim, Admetco has strived to offer specialized services within the already-specialized niche of wire processing. In addition to tolling, for instance, the firm offers a material handling service in which it pre-packages copper chops for consumers in an effort to ease their material handling activities and increase their furnace-feeding efficiency by letting them know exactly how much scrap they’re charging. Though this service may seem like a small detail, “it can make a big difference in the consumer’s operation,” O’Neill says.
Going Vertical
Around the same time that Admetco was becoming a wire chopper, it was presented with another opportunity, one that would take it in a completely new direction—namely, vertical.
This opportunity involved Indiana Copper, a Marion, Ind., producer of copper shot and one of Admetco’s copper scrap consumers. In 1989, the melting operation’s owner found himself in a quandary—he wanted to retire but had no family to assume the reins. So he approached Adelman and O’Neill with a sale offer they couldn’t refuse.
To Admetco’s principals, acquiring Indiana Copper made great sense for several reasons: Not only were they familiar with its business, but the operation would enable their firm to step beyond scrap processing into manufacturing—that is, vertically integrate—without departing from its nonferrous focus. “The melting operation created another niche for what we do,” O’Neill says. “It enabled us to turn our scrap into a product.”
So Admetco bought Indiana Copper and forged ahead with shot production for four years. Around 1993, however, Adelman and O’Neill realized that the shot they were producing was, in effect, competing against their wire chops since both products can serve the same markets. As a result, they stopped shot production, modernized and reengineered the 15,000- square-foot plant, installed two new induction furnaces, and began producing, first, secondary copper and brass sows, and, more recently, specialty copper and brass products.
While Indiana Copper was Admetco’s first foray into vertical integration, it’s unlikely to be its last. In fact, the company is currently exploring the idea of adding melting capabilities to its Fort Wayne operations by installing a gas reverberatory furnace in Plant 2, which it would use, in part, to melt enamel-coated magnet wire into specialty castings.
A Customer Focus
While providing specialized services and vertically integrating is all well and good, that’s not what Admetco is truly all about. Customers—or more specifically, satisfied customers—are at the heart of the company. “Our customers are our business,” Adelman says, expressing the firm’s customer philosophy in a nutshell.
To Adelman and O’Neill, the key to ensuring customer satisfaction is a mix of service, integrity, solid relationships, and price—what they like to call “the Admetco Advantage.” Says O’Neill: “Our business is a service business. What we’re selling is that service.”
What that means, Adelman explains, is that Admetco makes sure it understands what its customers need and what makes their lives easier, asserting, “We really try to go the extra mile for our customers.” The result, he says, is that Admetco “seldom loses a customer for any reason, but hardly ever because they’re dissatisfied with our service or the way we’ve treated them in any way.”
Providing such service must be a team effort, of course, and Adelman and O’Neill give their 110 employees much of the credit for the firm’s excellent customer relations. Admetco has built its employee team methodically, taking into account not only each new hire’s professional skills, but also more subtle elements such as personality, chemistry with the group, and attitude.
The result is a team of employees who mesh well, know exactly what’s expected, and—equally important—are given the trust and freedom to make their own decisions and, yes, mistakes. “We are not holler-and-scream bosses,” Adelman says. “We encourage people to strike out on their own and not come to us with every little decision. We don’t create a pressure-packed environment where you produce or you’re out the door. That’s not us. We want people to grow with the company.”
And grow they do, thanks to Admetco’s practice of promoting from within, as well as its heaps of benefits and incentives, which keep its employees dedicated and motivated. It’s more than just the firm’s profit sharing, retirement plan, and health insurance. It’s rewards such as “Admetco Dollars,” which supervisors give to operations employees for above-and-beyond service, exceptional attitude, and more. When employees earn $50 in these rewards, they can exchange them for a prize, with the top five recipients being eligible for a year-end award.
In a similar vein, Admetco gives semiannual ACE awards—short for Admetco’s Commitment to Excellence—to three employees who have excelled in attitude, attendance, and performance. Winners get their names engraved on a plaque that is permanently displayed in the company’s executive offices. Admetco’s drivers, meanwhile, are also eligible for their own semi-annual award.
Aside from these job-focused programs, Admetco also takes a non-job-focused, personal approach with its employees. In addition to sponsoring golf outings and providing tickets to professional sporting events, for instance, the firm holds quarterly employee lunches (with managers serving as cooks), a paid remedial education program, and a casino night during which employees and their families can dine, gamble with play money, and bid on prizes with their winnings.
Remaining Fresh and Ripe
Since posting its best year ever in 1995, Admetco has been in a serious growth mode, installing a Lindemann two-ram baler, a preshredder on its chopping line, three new alligator shears, and several pieces of ancillary equipment in 1996 alone. The baler’s primary purpose is to boost the firm’s aluminum processing business, while the preshredder will expand its chopping capacity and potentially enable it to increase its currently limited tolling volume as well as branch into aluminum wire processing, Adelman says. In these and other ways, Admetco continues to expand horizontally, broadening its processing abilities and the materials it processes.
Amidst these horizontal maneuvers, however, Admetco is continuing to keep a strong eye on further vertical moves as well. “We’re looking at manufacturing products out of aluminum, copper, and brass scrap to create new opportunities there,” Adelman says. “That’s a big part of our future, to be able to take the scrap that we’re handling and make it into a product.”
One new potential vertical niche for Admetco lies in recycling the plastic residues from its chopping line. Traditionally, Admetco—like most choppers—has disposed of this material, but in recent years the company has been “working hard at recycling that material so we can eliminate it from going to the landfill altogether,” Adelman says. Though he offers no details about these efforts, he reveals that the firm could make progress toward this goal later this year or next.
Another of Admetco’s goals—neither horizontal nor vertical—is implementing a quality assurance program at its Fort Wayne and Marion operations. Though already a quality-conscious processor and melter, the company recognizes the benefits of implementing a formalized quality control program. “I see a quality assurance program as more of a management tool than a certification,” O’Neill says. “It encompasses more than just making sure a load meets the requirements, it means how you manage the whole operation in order to make sure that load is up to quality. It’s not something that sits in isolation. It’s something that’s part of a larger picture.”
And speaking of Admetco’s larger picture, Adelman and O’Neill say they have no rigid vision for the company—no predetermined revenue or volume level they long to reach, no specific number of operations or employees. The only definites, they say, will be a continuing focus on customer service and an openness to all potential new directions. “We’re always looking for opportunities because our business is always in a state of change,” Adelman says. “We go with the flow. You have to keep yourself fresh and ripe by looking for other opportunities that are out there.” •
A mixture of specialized niches, vertical integration, and customer service has been the recipe for success for this Indiana-based nonferrous recycler. And its future plans call for more of both vertical and horizontal growth.