July/August 2002
In his 56-year career in metals, Morris Lefton has earned the reputation as an aluminum expert and, in the process, built a company from scratch into a $750-million enterprise.
By Si Wakesberg
Morris Lefton’s life reads like a Horatio Alger tale: He began life in a St. Louis orphanage. As a teen, he gained experience in the metals industry by working in a scrap yard. This experience led him to eventually cofound an aluminum-focused company—Metal Exchange Corp.—that now has annual sales in excess of $750 million.
This condensed rags-to-riches story is only the tip of the iceberg, of course. Morris Lefton’s business life—much of it as Metal Exchange’s CEO—has been a romance with aluminum, one that has led him into almost every segment of that industry.
Lefton began his career in metals in 1946 at age 16 when he went to work at Lefton Iron & Metal Co., a St. Louis scrap operation owned by Sam Lefton, a distant cousin. Aside from earning $25 a week (a raise compared with the $22.50 salary at his previous job as a shoe salesman), Lefton earned another payback by learning about scrap, knowledge that would help him later in his career.
Around 1958, Sam Lefton asked Morris to head a new venture named Aluminum Services Corp., which specialized in processing aluminum dross. That opportunity marked the beginning of Lefton’s romance with aluminum, a romance that has endured ever since.
In November 1968, Sam Lefton sold Aluminum Services Corp. to St. Louis-based Diversified Industries—a well-known conglomerate led by Ben Fixman—and Morris went along with the company, eventually becoming president of Diversified’s metals division. He worked there for six years, made many friends in the industry, and still speaks highly of Ben Fixman.
In November 1974, he and another Diversified employee, Howard Estabrook, left the company to establish Metal Exchange. “Curly,” as Estabrook was known, remained Lefton’s partner until his death in 1988. “He was a rare individual,” recalls Lefton, “one of three people who played an important part in my career. While we had different business styles, our approaches were complementary and that contributed to our success. He was a wonderful partner.”
And who were the other two important figures in Lefton’s career? One was Fritz Rosenthal of Associated Metals & Minerals Corp. (New York City)—“a good friend and a good businessman”—and the other was Jim Stine of Cressona Aluminum Co. (Pottsville, Pa.), who, in Lefton’s words, “was one of the most ethical and well-thought-of men in the aluminum industry, as well as one of my best friends.”
As you’d expect, it takes tenacity and ambition to build a fledgling company into a $750-million-a-year powerhouse, and Lefton has plenty of both traits, as the following anecdote shows: Early in Aluminum Service Corp.’s life, a large company expressed interest in the small firm. Two of the large company’s officers visited St. Louis to have dinner with Lefton. At the restaurant, the waiter handed the wine list to Lefton, who was mortified because he didn’t know one wine from another. The president of the other company asked kindly, “Can I help select the wine?”
That humbling experience made Lefton resolve to learn all about wines. First, he went to the public library, checked out an encyclopedia of wines, and began studying. Then he put his knowledge into practice—and educated his palate—by buying wines and tasting them. “Today,” he says a trifle modestly, “I have a cellar of 5,000 bottles of wine”—and you can bet he knows how to order a good wine at a restaurant.
This same tenacity and ambition helped Lefton build Metal Exchange into the large and imposing enterprise it is today. A privately owned company, Metal Exchange has grown from a small aluminum scrap trading company into an international metals trading organization, dealing in all types of aluminum—including scrap, primary ingot, billet, coil, dross, and remelt secondary ingot—as well as an array of magnesium and copper products. The firm’s subsidiary operations cover most facets of the aluminum business, encompassing Continental Aluminum Corp. (New Hudson, Mich.), a secondary smelter and maker of deoxidation products; two extrusion operations—Pennex Aluminum Co. (Wellsville, Pa.) and Tower Extrusions Ltd. (Olney, Texas); Electro Cycle Inc. (Madisonville, Ky.), an induction-melting facility for recycling light-gauge aluminum and turnings; Metal Recovery Systems (St. Louis), which granulates copper/aluminum coils and insulated wire to recover clean aluminum and copper chops; and two scrap processing plants in Madisonville, Ky., and Moulton, Ala. Also, Metal Exchange’s trading division serves as the exclusive North American agent for primary aluminum producers Comalco Ltd. (Brisbane, Australia) and Dubai Aluminium Co. Ltd. (Dubai, United Arab Emirates).
Despite the far reach and high profile of his company, Lefton himself has a reputation—in scrap circles, at least—as being largely invisible, a true “man behind the scenes.” There’s a simple reason for that, he says, noting that his business relations through the years have been mostly with consumers and producers of aluminum scrap rather than scrap processors.
“I agree that I haven’t been active in scrap circles or in scrap organizations, leaving that to others in the company, so some scrap dealers may not know me as well as they do some other Metal Exchange executives,” Lefton says. That helps explain why you’ll find him at meetings of consumer/producer groups such as the Aluminum Extruders Council and the Aluminum Association but not scrap-industry gatherings. That doesn’t mean, though, that he doesn’t know his scrap. One conversation with him is enough to reveal his comprehensive knowledge of the scrap industry, its history, its people, its needs, and more.
If you have conversations with Lefton’s colleagues, many of them will describe him as “all business.” As one St. Louis scrap executive states, “Morris is the hardest-working executive I know. He doesn’t let a minute go by without doing some work, and it’s said that he takes his office with him in his briefcase when he travels—it’s that heavy.”
While Lefton admits taking work with him, he politely denies that his briefcase is that heavy. As CEO, Lefton travels a good deal, a business habit that began during his tenure with Diversified. Smiling, he notes that his motto is: “If you don’t go, you don’t know.” Fortunately, Metal Exchange owns its own plane to make Lefton’s—and other company employees’—travel schedule less taxing. “I learned long ago to save time by plane travel,” he says. “Many years back, I had to go to Magnolia, Arkansas, from St. Louis—a trip that took about three days by car. When I rented a plane and came home the same day, it seemed to me a terrific deal”—even though it cost 25 cents a mile to rent a plane at that time.
“Talking about traveling,” Lefton continues, “I always take a slide rule with me in my briefcase. Recently, while using it on a plane, a young man sitting next to me asked: ‘What’s that thing?’ I guess that proves how fast time passes and, with it, the tools we thought would last forever.”
Time does indeed pass quickly, bringing with it many changes. “The aluminum industry has certainly changed,” Lefton says, looking back. “The days of entering the business with a minimum amount of capital have disappeared. Having a strong balance sheet and a solid relationship with a banking institution are critical to success now.”
Other significant changes have been the growing array of environmental laws affecting the metals industry and the increased use of the LME as a pricing reference, Lefton notes. As he explains, Metal Exchange “does not try to predict the direction of commodity prices, but we do react to changes of direction.” Asked about the LME’s new North American Special Aluminum Alloy Contract—or NASAAC—he says he hopes it will establish itself as a more effective hedging instrument for North American players.
Other business changes Lefton has seen include “more and more direct buying by consumers” and growing concerns about the financial solvency of one’s customers. He never thought he’d see the day, he rues, when his company would have to closely examine large companies—both producers and consumers—when extending credit. “We’re far more dependent on the efficiency of our credit department than ever in the past,” he states.
Looking ahead, Lefton stresses that companies in the metals business must implement the right kind of computer-based information systems to keep up in today’s global market. “Margins in all businesses are under pressure and will continue to be squeezed,” he explains. “Therefore, productivity gains, including trading, are an absolute necessity.”
For a private company such as Metal Exchange, succession of leadership is another important issue. Metal Exchange has a clear succession plan for the future that has been developed and approved by the company’s top management. That management team includes Bill Aronson, president and COO; Ed Merz, CFO; Tom Akers, executive vice president; and Michael Lefton, senior vice president, who will eventually succeed his father at the helm. “Our succession plan is critical to the retention of high-quality executives as well as to the future growth of the company,” states Lefton. “We’re truly fortunate to have an exceptional level of talent within the Metal Exchange organization.”
That last point can’t be emphasized enough, he says, affirming that all companies must “make sure that you have the human resources to conduct your business—that’s vital.” In fact, he says, the inability to find enough good people has held Metal Exchange back more than any other business factor.
Despite appearances, Morris Lefton isn’t all business. He’s also a family man, happily married to wife Marlene for 45 years. In addition to son Michael, they have two daughters—Amy, a talent agent for a catalog modeling agency in Chicago, and Evan, a special-education teacher of handicapped children in St. Louis.
Though St. Louis is Lefton’s hometown, he also has a home in Aventura, Fla., where Marlene and he go to escape the Midwest winters. No matter where he is, though, his heart and his attention are never far from his beloved aluminum and the company he helped build into a major player. Though it’s been 27 years since he founded Metal Exchange, Lefton still talks about aluminum with the enthusiasm of someone who just discovered a gold mine—and even now, at 72, he continues to dig deep in that niche. •
Si Wakesberg is New York bureau chief for Scrap.
In his 56-year career in metals, Morris Lefton has earned the reputation as an aluminum expert and, in the process, built a company from scratch into a $750-million enterprise.