Gensco: An International Equipment Marketplace

This Canadian firm has developed a niche in supplying North American scrap recyclers with processing equipment made around the world.

By Jeff Borsecnik

Jeff Borsecnik is an associate editor of Scrap Processing and Recycling.

"We like to be able to supply whatever people need. If that means going far afield to do so, that's what we do." That, says Shelly Zelunka, is the simple reason why Gensco Equipment (1990) Inc., a Toronto-based distributor of all sorts of recycling equipment for customers across North America, specializes in importing and reselling processing and material handling equipment from Europe. But Gensco's mission also means the company doesn't look only to European products, says Shelly, one of three brothers who own and operate the firm. In fact, it also distributes some U.S.-made products, manufactures its own line of lifting magnets and replacement parts, and buys, rebuilds, and sells a variety of used equipment-all with a total staff of 15 people.

A 'Scrap Yard Supermarket'

Many North American companies import recycling equipment--Gensco has no shortage of competitors--but few apparently try to cover the same range of products. A partial scrap-processing shopping list that Gensco could satisfy includes lifting magnets and grapples, grapple-magnet combinations, cable strippers and choppers, alligator and guillotine shears, balers, rotary shear shredders, plastic perforators, and magnetic separation equipment. "We like to be a 'scrap yard supermarket,"' says brother David Zelunka, who denies he has any formal title but specializes in finding new product lines, public-sector sales, and advertising for the company. "We hope that if we sell a guy a good-quality shear, he'll remember us and come back when he needs to buy a magnet or a grapple or a cable stripper." As with other equipment firms serving the relatively small and closely knit scrap recycling industry, return customers are the "whole basis of the company," says David. So to keep its customers coming back, Gensco has continually expanded its product lines, even moving beyond recycling-related equipment in response to requests from some of its customers.

Besides offering an unusually broad range of products, Gensco sells more than one brand of some types of equipment, especially scrap-handling magnets. Alan Zelunka, the eldest of the three brothers and company president, says, "Our strongest point is that we are independent. We buy, pay for, and sell to whomever we want." Because Gensco is not limited to one or two lines of equipment, he explains, not only can the company offer more choice to its customers, but it also enjoys protection from dependence on any one manufacturer and insulation from the vagaries of swinging currency exchange rates.

Gensco's relationships with foreign manufacturers--it represents a core group of about a dozen, plus others occasionally--vary from a grant of exclusive rights to North American sales to simple direct purchase on invoice for resale, but in all cases, the company buys the equipment from the manufacturer and resells it and stocks nearly all of the products it sells, warehousing them in Toronto or the company's U.S. affiliate near Atlanta, Gensco America Inc. (Lithonia, Ga.). Though this ties up space and capital, Alan explains, it's necessary in the scrap processing industry: "Scrap dealers don't want to wait. You can't sell from empty shelves."

In and Out of Scrap

Its specialty in importing and reselling European-made processing equipment is a long way removed from Gensco's origins--though the company traces its founding to a European import, Joseph Zelunka. This Polish immigrant came to North America around 1890, landing in New York City and ending up in Toronto, where he established a business as a secondhand materials dealer operating an automobile wrecking yard and eventually an automobile parts retail shop. The auto parts venture suffered financial calamity during the Depression, and Joseph turned his attention to scrap with a company he called General Salvage Co.

Under Joseph's son, Louis, General Salvage moved its operation to the east side of Toronto in 1959--Gensco's current site. Louis, who had inherited his father's taste for machinery, also moved the business more and more toward usable equipment, especially processing machinery, and away from scrap recycling. In the early 1960s, he completed the shift, shutting down the scrap operation to concentrate exclusively on new and used equipment sales, incorporating as "Gensco"--a diminutive of the original name--to reflect the change.

Gensco's move into manufacturing developed gradually as its business evolved, beginning with a need for small replacement parts for used machinery the company rebuilt. Then, when the current generation of Zelunkas were still children, Louis began experimenting with building magnets. The company still manufactures its own line of magnets, called CanMags, although the small shop where the first ones were built is today relegated to parts storage and dwarfed by a much larger, better-equipped manufacturing and warehouse building added adjacent to it in the early 1970s. (For years, Gensco had performed large-scale operations outside--a challenge in Toronto winters!)

Beyond assembling magnets, Gensco's business of rebuilding many kinds-not to mention generations-of used processing equipment requires it to be expert in a broad array of manufacturing tasks, including electric, hydraulic, and mechanical work. These abilities also allow the company to alter much of its new imported equipment in-house to meet the preferences of its Canadian and U.S. customers. "We try to 'North Americanize' our products, so just about everything we sell has homegrown electrics on it," says Shelly, who manages Gensco's parts-and-service operation and helps with sales. The electric conversion modifies imported equipment to match U.S./Canadian voltage requirements, availability of replacement parts, and customer familiarity. The company also modifies other equipment, such as configuring its slow-speed shear shredders to match the customer's needs.

Knowing the Right People

The emphasis on European equipment among Gensco's lines was more natural evolution than plotted development, as the small company looked for products to sell in North America that could compete with those of established Canadian and American manufacturers. The company needed “something different” to win a share of the market, Alan explains: "Americans--and Canadians to a certain extent, too--will not buy a foreign product unless it's something unique, at a much better price but able to do the same thing as an American product, or has very good quality built into it. It's almost got to be better than an American-built product before they'll look at it."

Finding the right equipment and manufacturers has been a painstaking process, says Alan. "I don't want to put our name on a machine unless I'm certain it's a good machine, so we start slowly, bring one over, examine it. We look, touch, feel, put it out in the market, and if it goes well, then we go to step No. 2, but we've got to be very careful. There are lots of European manufacturers, and--like American manufacturers--some are good, some aren't so good."

As a result of this slow, careful effort, Gensco has established a network of "intelligent contacts and friends from around the world who we can trust and can trust us," says David, who considers this community a key to the company's success. In fact, says Shelly, the company gets calls all day long from people looking for certain kinds of used equipment because Gensco is likely to have it or know where it can be found.

The Demands of International Trade

Success in its niche as an importer relies on Gensco's ability to handle myriad details, like tracking containers, making complicated financial arrangements, working with shipping agencies, and being aware of many other factors, notes Shelly. "A dock strike in Finland, for example, could affect us," he explains.

Furthermore, the company must handle parts and service for very different types of equipment manufactured in different countries. "Obviously, if we sell it, we must be able to service it," says Shelly. "That means manufacturing a lot of our own parts in-house or locally because you can't rely on someone in Italy to send you a part in 24 hours." The company has also established relationships with firms expert in fields like hydraulics that it can call on to help provide service in the field.

Another challenging aspect of the trade is wrestling with exchange rates, which determine the relative value of imported goods. In most cases, managing exchange concerns is simply a matter of keeping on top of things, monitoring rates on a daily basis, Alan says. But when ordering big-ticket items with long lead times, the company sometimes uses forward contracts. "If you know it's going to be three months before a machine is ready and it costs 100 million lire, you buy the 100 million lire today for delivery in three months," he offers as an example. "Since you sold the machine at x number of dollars based on that 100 million lire today, if the lire goes up, you don't make the extra, and if it goes down, you don't lose."

Extending Gensco's Reach

"Gensco was founded in Canada, so, naturally, at one time or another we've sold to virtually every scrap dealer in Canada," says Alan. "But in some years, especially 1991 and 1992, you couldn't make a living out of Canada."

Fortunately for the company, its U.S. sales have grown steadily for years, boosted since its 1987 decision to site a U.S. branch. "Today, we sell to customers everywhere from Sitka, Alaska, to Miami to Cornerbrook, Newfoundland, to San Diego," boasts Alan.

Gensco has also found sales further south to be a new bright spot. "Mexico over the last two to three years has been booming when we were very very quiet here in scrap," notes Shelly, calling the Mexican business a pleasant exception to the sluggish North American scrap industry in recent years and--along with the rest of Latin America plus the Southwestern states--a chance for Gensco to further extend its international market. •