Creating Nonferrous Niches

As Ansam Metals Corp. turns 30 this year, it has cause to celebrate its achievements in developing specialized nonferrous processing markets.

By Eileen Zagone

Eileen Zagone is an associate editor of Scrap.

A collection of coins from around the world sits atop a bookshelf in Sam Kahan’s office. It’s not that he’s a coin collector in the usual sense of the word. Rather, his company—Ansam Metals Corp. (Baltimore)—is a recycler of nonferrous metals including, over the years, some obsolete coinage from destinations as far afield as Scandinavia and South America.

The coins, displayed in small, labeled bags, are just one example of Ansam’s global reach as well as the nonferrous niche markets it has developed and become known for in its 30 years.

Today, walking through the firm’s operations, you see a panoply of nonferrous scrap being processed—everything from cupro nickel and insulated cable to nearly countless varieties of brass, copper, bronze, and more. And Ansam’s business interests don’t end with its nonferrous niches. The firm also has a solid foothold in real estate. It owns 23 acres surrounding its Baltimore facility, including 250,000 square feet of developed industrial space, as well as undeveloped land around its satellite plant in Decatur, Ala.

Diversification, say Ansam’s principals, is one of the keys to its success, along with serving its varied customers with personalized service and taking a conservative approach to finances.

From Clothes to Copper

Unlike the familiar scrap industry story of growing up in a family processing business and inheriting the company from the previous generation, Sam Kahan started out during the 1950s as the owner of a women’s clothing store in downtown Baltimore. When the store and others around it were displaced to make way for a new high-rise office complex, Sam was prepared to relocate.

Instead, the scrap industry caught his attention, which wasn’t surprising given that his wife’s family owned and operated K. Hettleman & Sons Inc., a Baltimore nonferrous processing company. It was a logical choice, and Sam started working for the firm in 1955. When it was sold to a larger company in 1962, he was the only family member to stay on. By that time, Sam recalls, he’d developed good relationships with many of the firm’s customers and built a good share of the business for the new owners. A few years later, in 1968, he decided to start his own company so he could travel less and spend more time at home.

Ansam Metals—the name is a combination of his wife Ann’s name and his own—was born in a 5,000-square-foot facility. “The shop was tiny—really just a converted garage to which I added windows,” he says. Though the company started with only a few staff members, its business was bolstered by the many customers who followed Sam to his new venture. “In those days,” he recounts, “our ability to buy and sell material far exceeded our plant capacity and pocketbook. Today, our ability to buy and sell is limited only by the metal available.”

Marrying into the scrap industry, as Sam did, is something of a tradition at Ansam: Brothers Jack and Ben Zager married two of Sam and Ann’s daughters and now serve as senior vice president and vice president/CFO, respectively.

Jack has been with Ansam since 1978, when he was hired to augment the management staff—composed of Sam and one other person who together handled all the company’s trading and management duties. Shortly after Jack began his management training—which consisted of a year rotating through every job in the plant—a fire destroyed about a third of the facility. Ansam was forced to consolidate operations at the plant and move some activities to a rented warehouse across town. “I’m proud to say that we never missed a shipment during the six to eight months we were cleaning up,” Jack says. Plus, he adds, the “trial by fire” gave him good experience in crisis management and forced Ansam to examine its plant’s material flow to maximize efficiency when the facility was renovated and expanded following the fire.

Jack’s brother, Ben, meanwhile, joined Ansam in 1989, bringing several years of accounting experience to the company. Today, he and Jack join Sam and Barry Stein to make up Ansam’s trading department.

Developing Specialties

While Ansam started out as a processor of mainstream nonferrous scrap, over the years it has distinguished itself from the pack by developing and becoming expert in specialized nonferrous processing niches. “One thing we do well is finding an area of specialty and developing it,” says Jack. “When we identify a market of interest, we find out everything we can about it through research, dealing with its trade associations, targeting potential suppliers, and preparing ourselves to penetrate that market and blanket the industry.”

Among its various niche markets, Ansam is particularly known for processing utility cable. The company has developed a cable “dereeler” and cutter that automatically unwinds cable from large spools, cuts the cable to uniform size, and strips the plastic insulation off the cable. Employees can then separate the copper for further processing in the firm’s two furnaces that burn off the cable’s insulation.

Ansam is also good at what Jack calls “application of metals.” As he explains, “we try to find out what our customers are making and offer our expertise in metals to help them achieve it.” Sometimes, for instance, customers may call looking for a particular metal, but Ansam may be able to recommend and sell them another metal that will “do the same thing,” Jack notes.

Of course, a key to supplying customers with the exact metal they need is sorting and identifying material properly, and this is another area in which Ansam excels. All incoming material is given a tracking number and metallurgical analysis that stays with it through the processing operation to its final destination at the customer. Ansam’s employees use a variety of testing methods to achieve as close to a perfect analysis of the material’s metallurgy as possible, says Steve Steinbach, vice president of plant operations, who says Ansam’s superior testing capabilities enable it to give customers a “uniform item that meets very tight specifications.” For example, he says, one of the company’s specialties is processing cupro nickel alloys, which come in a wide array of alloy combinations. Through testing the material, Ansam can specifically identify the material to meet the stringent quality demands of consumers of this metal.

Ansam’s 135,000-square-foot facility is all under roof and includes a sorting area as well as specialized equipment to process its niche market materials. “We’re very proud of the equipment roster the firm has developed,” says Sam. “We’ve designed or modified much of the equipment in operation today to meet specific needs.”

Offering an example, Steve notes that one of the firm’s specialties is processing oversize material, including tube bundles. Ansam has a 30-ton-capacity travel lift that moves the large material to a vertically mounted saw that the operator can move across the material to cut it much faster than with a torch.

The saw’s efficiency has prompted other processors who have seen it to ask about purchasing one from Ansam—to no avail. It’s a unique piece of equipment the company developed for itself.

Among the other specialized equipment Ansam operates are a granulator for shredding shell casings from the U.S. government, a shear for cutting tube, pipe, and plate into uniform sizes, and shotblasting equipment for cleaning debris from certain material.

Pretty soon, Ansam’s pursuit of quality will be official. It has been pursuing ISO 9002 registration since the middle of last year and hopes to earn the distinction by the end of 1998, says Anatoly Mendelson, a metallurgical engineer in charge of the company’s environmental, quality, and safety programs. So far, he says, Ansam is doing well managing the “paper tiger”—a reference to the heavy documentation required by the ISO quality standards. In fact, he says, the process has brought Ansam together in some positive ways. For example, he notes, all of the firm’s 40 employees are involved in developing the standard operating procedures. And while they’re being developed, everyone goes over them and makes comments until a consensus is reached. “Only then does it go from draft form to final form,” Anatoly says.

The next step is to train employees at different levels to serve as internal auditors and experts in the firm’s quality management system before bringing in an external auditor. The crux of ISO, notes Anatoly, is to “say what you do and do what you say. Right now we’re almost done with the say-what-you-do part, then the internal auditors will check to make sure we’re doing what we say.”

Besides the obvious competitive marketing advantages ISO will give Ansam, it will help the firm continuously streamline its processes. “Continuous improvement is required for survival and ISO helps make sure a company will continue to improve,” Anatoly asserts.

An Honest and Open Approach

Aside from its specialized processing abilities and its attention to quality, dealing honestly and openly with customers is another trait that Jack feels sets Ansam apart from its competitors. When dealing with customers, “we explain the whole situation to them,” he notes. “If we can’t get a particular type of material for them, we will explain why, when we might be getting some, and also see what else we can do for them. When you’re honest with a customer, they appreciate it.”

Loyalty is yet another closely held value for Ansam, with Jack stating, “we’ll always remember how we got here.” For example, he notes, Ansam may have a steady customer for a certain amount of a particular material but then receive an inquiry for the same product at a higher price. “We’ll talk with our established customer first and see if we can work something out,” he says. “We don’t want to lose the customer that’s been loyal to us even if it means making a little more money on one sale. We strive to develop long-term customers and build relationships, not deals.”

Good communication doesn’t stop with customers though. Every day, all of Ansam’s employees meet with management to “make sure we’re on the same page,” says Jack. It may seem like a lot of meetings, but they’re brief and, he feels, necessary to make sure all employees see the bigger picture.

The company involves the entire staff in other aspects of its day-to-day operations as well. For instance, four employees are elected to serve for a year on the safety committee along with Steve and Anatoly. The group meets monthly to discuss any issues regarding safety, and then the whole plant meets once a month for safety and quality training.

Employees also enjoy a 100-percent employer-funded profit sharing plan. Ben credits this plan for helping Ansam retain 80 percent of its employees more than five years and enabling some long-time employees to amass handsome retirement packages. Plus, the company tends not to lay off employees even when business is slow, Ben says, adding, “we go far and wide to keep everyone at work.”

David Among Goliaths

As for what Ansam’s future holds, the firm’s principals say they aren’t actively looking to expand at the moment—but they add that they’re always willing to look at an opportunity.

Such an opportunity came knocking in the late 1980s when the firm won a contract for a large quantity of scrap from a supplier in the South. The material only needed to be repacked, so it didn’t make sense to ship it all the way to Baltimore. Instead, Ansam looked for a place to have the metal repacked, ultimately renting warehouse space in Decatur, Ala. The company then hired a couple that owned their own moving and storage business to both repack and store the metal. In 1990, Ansam decided that Decatur would make a good location for a satellite facility and an official branch of the company, so it bought some land, built a warehouse, and installed processing equipment there. They also hired Tim and Brenda Cooper—the former moving business owners—to serve as plant and office manager of the facility, respectively. Today, the 45,000-square-foot facility can process everything the Baltimore plant can except cable.

Notably, Ansam’s business interests in Alabama go well beyond its scrap processing plant there—it also owns the 50 acres of land surrounding the facility. Currently, the land is undeveloped except for Ansam’s facility, but the company plans to develop it into industrial warehouses to meet the needs of the area’s growing economy.

As Ansam develops its Decatur property, it will be echoing its diversification into the real estate business in Baltimore. In 1991, the company bought 23 acres and 250,000 square feet of building space adjacent to its Baltimore facility, with an eye toward expanding its operations into one of the vacant buildings. As it turned out, Ansam didn’t need more processing space, but it decided to upgrade the main building and several other structures on the site anyway. Ben, who wears the hat of property manager, is proud to say that the site is now fully leased. And that accomplishment will free up more energy to develop the Decatur property soon, he notes.

Real estate has been a good diversification for Ansam. The opportunity was there at both locations, and the results seem to be paying off. The company has no mortgages, owns all of its equipment, and when the scrap markets are weak, real estate becomes a very important part of Ansam’s overall business, Ben says.

 Ansam’s management expects its diversification into real estate to help in the future too, especially as consolidation sweeps the scrap industry and the giants augment their holdings with more nonferrous processing operations. “We’ll continue to be a viable business because we’re financially strong and diversified with our real estate business,” says Sam, adding, “our ability to act quickly and make decisions about a customer immediately will help us survive as David among Goliaths.”

Aside from growing its real estate business, Ansam is continuously seeking different ways to expand its customer service principles in its scrap processing operations. “I see us partnering more with our suppliers and consumers,” notes Jack.

Ansam’s experience in finding and developing new market niches—as well as branching out in its existing ones—will always keep new options within reach.

“I want our customers to think of us for other things besides our specialties and look to us to create opportunities,” Jack declares. “We go way beyond what we’re known for.” •