May/June 1988
Australia’s Simsmetal Acquires California’s LMC .
By Gerry Romano Spruell
Gerry Romano Spruell is editor of Scrap Processing and Recycling.
He won 't get Richter-scale specific, but the head of a new Northern California recycling firm, formed by a recent acquisition, calls the sale "the largest" of a scrap metal recycling firm "in a long time" and projects the impact on his company's business: "We have a future full of opportunity," says Robert Lewon, president of the new LMC Metals. The Richmond, California, business was established February 1 through the acquisition of LMC Corporation (formerly Levin Metals Corporation) by Simsmetal USA Corporation, which is owned by Australia-based Simsmetal Ltd.
Simsmetal USA purchased LMC's ferrous and nonferrous recycling plants in Sacramento, Stockton, and San Jose. The purchase also included LMC's shredder in Redwood City, export plant in Richmond, and steel distribution center in Santa Clara. Richard Levin, who owned LMC Corporation, retains control of the former company's marine bulk terminal operation, ship, and gold and silver alloying operation.
According to Simsmetal Ltd. Director and Chief General Manager John Crabb, Simsmetal approached Levin after deciding to expand their recycling operations into America's West Coast and spending more than a year researching the market. "We chose LMC as a company that would be compatible with our needs." Crabb says the similarities in product lines, domestic and foreign market positions, target markets, and reputation "ensured an excellent fit." Both companies processed ferrous and nonferrous scrap, boasting multiplant operations with shredders, shears, balers, and wire choppers. Both were involved in brokerage functions and owned steel distribution centers and usable outlets. Both operated truck fleets and ocean-going vessels, acting as major domestic suppliers and transporters to Pacific Rim markets.
A difference that made the purchase appealing to LMC was Simsmetal's involvement in refining, smelting, waste hauling, and manufacturing, "good growth areas for LMC," Lewon says.
Lewon notes that while the business was not actively for sale, Levin was looking for a change. "At the same time, he was concerned that the company live on and continue to grow. Simsmetal was the perfect company to ensure that LMC remain a viable, successful company."
Lewon and Crabb agree that the resulting LMC Metals can't lose. Its success formula, they say, combines LMC's local expertise and position as the largest scrap metal processor and exporter in Northern California, with Simsmetal's international marketing position, financial strength, and aggressive, growth-oriented management. They also underscore Simsmetal's desire and ability to diversify into other areas of recycling and emphasize the company's concentration on customer service.
From the combined assets, Crabb and Lewon forecast total estimated volumes from Australia and U.S.A. operations: ferrous, 1.5 million tons per year; nonferrous, 150,000-200,000 tons per year.
"Years to come" may bring expansion of LMC Metals beyond Northern California, Lewon says. "It's certainly in our medium- to long-range plans." But for now they are working on the business at hand, which includes a recent supply agreement with Barbary Coast Steel, a division of Birmingham Steel. Existing supply agreements with U.S. Pipe and Steel Foundry and other mill customers, Lewon notes, make LMC Metals "one of the largest domestic suppliers in California." He also mentions a new agreement with Pacific Gas & Electric for the purchase of their ferrous and nonferrous arisings--"another exciting development for my team."
The team includes all previous LMC Corporation staff. (Lewon was executive vice-president of LMC.) Vice-president of LMC Metals is Alan Ratner, formerly director of Simsmetal Ltd. Vice-president of finance is Bob Rouse, from Judson, an affiliate of Simsmetal. LMC's Gene Kaplan remains as vice-president of nonferrous marketing, and David Marco remains as general manager of ferrous trading.
LMC's employee roster may have hardly changed with the acquisition--Ratner and Rouse are the only additions--but the company inherited a couple of big brothers. According to Ratner, in addition to its ferrous and nonferrous recycling, Simsmetal Ltd. has operations in copper and aluminum smelters, producing semifabricated products, and in lead smelters, producing specified ingot product for the battery industry. The company also is involved in plastic recycling, new and used steel sales and distribution, industrial and domestic waste collection, bulk shipping, and analytical laboratories. Its parent company, Peko Wallsend Ltd., an Australian public company, has extensive mining interests in copper, uranium, and iron ore, worldwide investments in oil and gas, and trading and industrial operations.
With this kind of backing, LMC Metals appears on firm ground in its recycling territory.
Australia's Simsmetal Acquires California's LMC