March/April 1998
With consolidation creating giant corporations to dominate the scrap industry, it might seem foolishly old-fashioned to launch a one-man aluminum trading firm. But for Michael Kirk, the chance to build his piece of the American Dream was a golden opportunity he couldn’t miss.
By Eileen Zagone
Eileen Zagone is an associate editor of Scrap.
Golden Metals Trading L.L.C. (Littleton, Colo.) is a perfect example of that old saying about “all that glitters is not gold.” For it isn’t a precious metal that’s helped this new trader/broker shine in the scrap industry, it’s an everyday product—aluminum. In fact, the only rare commodity that Golden Metals specializes in isn’t metal at all—it’s the company’s founder and sole employee, Michael Kirk, who seems a throwback to the scrap industry’s early days when a lone businessman could craft his version of the American Dream from hard work, entrepreneurial spirit, and a pile of scrap.
Golden Metals opened its doors just over a year ago—just as the industry’s current consolidation craze was heating up. To strike out on one’s own in the face of such a changing marketplace seems either an act of immense confidence or great foolishness. But armed with a professional background in marketing and aluminum trading, Kirk is fashioning his business to suit the changing needs of today’s scrap processors and consumers.
Gaining Experience
Kirk’s introduction to aluminum trading came in 1987 when he joined Golden Aluminum Co., the UBC recycling division of Adolph Coors Co. (Golden, Colo.). Working for Coors had been Kirk’s goal since his days as a general business and sports medicine major at the nearby University of Denver. After graduating in 1981, he spent a short time with a pharmaceutical company in Arizona and then moved back to the Denver area when he was recruited for Coors Biomedical Co. (now called CeraMed Corp.). There, as national sales manager, he worked on all aspects of ceramic medical products, from developing the product to packaging and marketing it around the world. Ushering a product through from the ground on up was “wonderful business experience,” Kirk says.
Unfortunately—or perhaps fatefully—Coors sold off its ceramics division in 1987. Kirk didn’t want to move to another city to work for the new owners, and clearly Coors didn’t want to lose his talents. “Basically they said: ‘There are 23 companies within Coors. Go find a job in one of them,’” Kirk recalls.
That search immediately drew him to Golden Aluminum, where he was impressed by a unique continuous-casting technology the company had acquired for its aluminum consuming operation in San Antonio.
“I saw that as a real avenue of growth for the coming years—especially since [Coors Brewing Co. Chairman] Bill Coors was always a proponent of the aluminum can and a promoter of the new mill technology,” Kirk explains.
As Golden Aluminum’s business development manager, Kirk procured aluminum cans primarily to feed the company’s San Antonio mill. “That’s when I really started to cut my teeth on the negotiation and brokering side of the business,” he says, explaining that the experience introduced him to the minutiae of financial planning, the LME, contracts, hedge positions, and even equipment leasing, marketing, and advertising.
In 1995, Coors decided that Kirk and other staff should relocate to the San Antonio mill, which the company also decided to put up for sale. Since he didn’t want to move to San Antonio—and an uncertain future with a new owner—Kirk was forced to look elsewhere. But by now he’d discovered a passion for aluminum trading.
“I had to ask myself, ‘What do I want to do when I grow up?’” he says, adding that he “did a lot of soul searching.” For a brief period in 1996 he took a job as managing director with a database marketing company in the Denver area. Although he enjoyed learning more about marketing, he obviously didn’t love it because, as he notes, “here I am back in the metals business.”
His return began in the summer of 1996, when he learned from some former customers that they weren’t getting the high level of service or the close, trusting business relationship they’d had with him at Coors. “That planted the seed” to get back into the aluminum business, Kirk says. And that seed took root when he realized that he was traveling so much for his marketing job that he was missing out on the chance to watch his new baby grow.
So he asked himself practical but difficult questions: “How can I get back to the industry that I really understood and really liked—aluminum? How can I spend more time in Denver with my family?” He also wondered what he could offer the industry: “As a broker, how can I differentiate myself from the rest? If I’m the same as everyone else, then what’s the point? What special skills and knowledge do I bring to the table?”
The answers kept pointing him in the direction of starting his own aluminum trading business. “I had enough confidence in my abilities and knowledge of the industry—plus I really had the entrepreneurial spirit,” he says. He also knew he could tap his former coworkers from Coors—most of whom had stayed in the Denver area—to make his one-man operation run as well or even better than larger trading companies.
“I have the core competencies of Golden Aluminum right here,” Kirk says, adding that he attributes part of his success to the willingness of those ex-coworkers to share their expertise.
As he considered starting his own business at age 38, Kirk realized that this move was vastly different from simply taking another job with a new boss. “I knew that this wasn’t a whim—that I’d be in this business for the long term and I wanted to enter the business with a long-term commitment.” His family’s support made the decision easier. “When I first mentioned the idea to my wife,” he recounts, “without hesitation the first thing she said was, ‘When are you going to start?’”
By November 1996, Kirk had decided to start his own company. And Golden Metals Trading officially opened its doors in February 1997.
Building a Business
Looking back on his first year in business, Kirk says he’s met or exceeded all the goals he’d set for those first 12 months in terms of pounds brokered and revenue earned. Much of that success can be attributed to his solid experience in aluminum trading as well as marketing. From these he knows only too well that he must know who his customers are—scrap processors and aluminum consumers alike—and what they need from him. Moreover, he recognizes that these factors change over time.
“Not every transaction is going to be a smooth deal,” he concedes, noting that each deal depends on the alingment of a multitude of factors—including transportation, metal specifications, and payment, just to name a few. “In this business you rely on so many other services that ultimately reflect on you. If I were on the other side, I’d want to have 100 percent confidence that my broker will go to the nth degree for me,” he says.
Kirk also knows that today’s fast-paced and multifaceted business world means that “a broker can’t just be a broker anymore.” For instance, Golden Metals receives a direct satellite feed from the LME so Kirk can keep customers informed on market changes throughout the day. “Traders have to know what’s going on at the exact moment. Not even a 30-minute delay is acceptable anymore,” he says.
Kirk uses this and other market information to great effect—and to his clients’ and potential clients’ benefit—in two self-published newsletters. His Metal Matters, which Kirk sends to a small group of targeted companies he’d like to have as clients, provides highlights of general industry trends. His current clients receive the more detailed MetalsPLUS, which contains more “information of the moment,” including prices.
In terms of the other special services Kirk provides his clients, he prides himself on his familiarity with aluminum smelting operations. Understanding both sides of the aluminum recycling industry makes him better-equipped to match buyer and seller so both get what they need, he asserts. For instance, he always tries to match a scrap processor generating a particular specification of aluminum with a mill that needs just that specification. Likewise, a mill with tight specifications will get just the aluminum products it needs for its operations. Kirk even acts as a go-between by helping mills requalify suppliers that may have had problems meeting the mill’s demands—a growing concern as aluminum production becomes more complex, leaving less and less room for feedstock contamination and quality problems.
Such value-added services, which make Golden Metals as much an agent as a trader, also bolster the firm in the highly competitive trading and brokerage arena, where margins are traditionally thin. “To differentiate Golden Metals from other brokers and traders, I don’t work on just making the sale,” Kirk explains. “I want to be able to help grow my scrap processing clients by examining their businesses and advising them on what they can do to improve, be it through better marketing, pricing, or value-added processing—all so that they can meet the needs of their consumers.”
Kirk provides this broker/adviser service to several scrap processing clients, and sees it becoming increasingly important in the future. “The whole industry is evolving and changing through consolidation,” he notes. “I think there’s definitely the ability for large and small scrap companies to coexist, but to stay competitive the small players will have to tailor their operations to meet the needs of their customers.”
Consolidation is shrinking the base from which traders and brokers draw their customers, Kirk notes, especially as more and more mills go straight to the large processors and eliminate the broker entirely.
But one aspect that hasn’t changed about the scrap industry is the emphasis on relationships and face-to-face interaction. “I’ve found most people in the industry even more receptive than I expected,” he notes, adding that sometimes he’s still taken aback by the warmth and acceptance he’s felt in the last year. “You just don’t see that in other industries. It’s a family business in the greatest sense of the word,” he says.
Being part of that scrap family for Kirk also means participating in ISRI. When he started Golden Metals, he wondered if ReMA membership was valuable enough to justify the expense. “I had to ask if I was going to see that return on investment,” he notes.
But he quickly found that participating in the trade association gives him a face-to-face contact with clients that is largely missing from his home-based office, where the telephone provides his principal link to the world at large.
Working by himself was “the hardest thing to get used to,” Kirk notes. For one thing, it means always being at work and never taking vacations. And people think he never has to wake up to an alarm clock—which is only partially true. “I wake up before it,” Kirk says, noting that he often starts his day at 3 or 4 a.m. He also always keeps a pad of paper and pen with him in the evenings to jot down ideas and brainstorm.
Customers benefit from having him work from home, he adds, because when a mill or other client calls with a problem early in the morning, they often discover that he’s working already. “We can solve the problem right away before it’s too late, and that gives my clients an added sense of security,” he says.
But while it didn’t make sense to pay for an office when he was starting up his company, Kirk does miss the social nature of going to work. Since his company has no other employees, there are no chats around the coffee maker or lunches out with office friends. On the other hand, he jokes, “there are no meetings either.”
Looking Toward the Future
Despite the long hours, Kirk feels content in the knowledge that he’s building a strong and successful business of his own design. He may even someday hire an employee to help share in the work, although right now he doesn’t think he could trust anyone to be as conscientious with the company’s clients as he is. And one day—he’s not sure when—he and his family will take a vacation together.
In the meantime, Kirk is fueled by the necessities of entrepreneurial success: constant drive, determination, and a lot of coffee for those early mornings. Since business was brisk last year and he’s equally optimistic about the year ahead, Kirk has already set some new goals for Golden Metals: “I want to penetrate all aspects of the aluminum packaging industry,” he declares, “and work on a deeper level with the mills by providing them exactly the material their metallurgists need when they need it.”
And if you have any doubts whether Michael Kirk will meet those challenges, just give him a call and ask him. Anytime. He’s probably up, right there by his phone. •
With consolidation creating giant corporations to dominate the scrap industry, it might seem foolishly old-fashioned to launch a one-man aluminum trading firm. But for Michael Kirk, the chance to build his piece of the American Dream was a golden opportunity he couldn’t miss.