March/April 1998
By Robert L. Reid
Robert L. Reid is Managing Editor of Scrap.
When Industrial Metal Processing Inc. wanted to locate its new headquarters in Spartanburg, S.C., it chose a brownfield site—contaminated land that had to be cleaned up before it could be recycled into a state-of-the-art scrap processing facility. It sounds like a lot of work, but to this processor it’s just like a game.
When you approach the main office of Industrial Metal Processing Inc. (IMP) (Spartanburg, S.C.), it’s hard to tell you’re at the state’s largest scrap metal processing operation. It looks more like a manufacturing plant, with a set of low buildings off the paved parking lot and large patches of grass with trees and bushes near the entrance. There’s only a hint of tall cranes behind the buildings and no sign of the towering mountains of scrap often visible in scrap operations.
The impression is deliberate. Talk with IMP’s four owners—Jimmy Knight, president and CEO; Ted Davis, vice president and COO; Mike Munafo, vice president and CFO; and Larry Seay, vice president of sales—and they’ll explain that while they’re proud to be in the scrap industry, they don’t like the traditional image many people have of a scrap plant—that it’s a dirty, muddy, junk yard.
So when they decided in 1994 to build a new headquarters for IMP, the four partners knew they wanted something different, something that would make an immediate statement about its quality, commitment, and environmental consciousness to customers, bankers, even government regulators.
The result is IMP’s Spartanburg site, a state-of-the-art scrap processing facility that rose like the mythical phoenix from the ashes—and slag, used oil, and contaminated water—of a bankrupt secondary aluminum smelter. It’s a story that combines modern information systems and environmental cleanup techniques with the oldest rule in real estate: location, location, location.
First-Generation Passion
IMP’s origins date back to 1951 when Sam Rosenberg founded the firm in Anderson, S.C., near the Georgia border, later moving it to Greenville, about 35 miles from the present site. Sam’s son Jerry eventually took over and built the firm into South Carolina’s largest independent scrap operation. The company now processes some 130,000 tons of ferrous scrap and more than 40 million pounds of nonferrous annually, Knight says. It also hopes to chop as much as 10 million pounds a year of scrap wire, thanks to its recent acquisition of Baker Metal, a Greenville wire chopping operation.
All four of IMP’s owners joined the company during the Jerry Rosenberg years. Davis has the longest tenure with 19 years, while Munafo is the most recent, joining some eight years ago. Their backgrounds ranged from Davis’ prior experience owning a scrap company and Munafo’s work with a Big 6 accounting firm to Knight’s years as a local police detective and Seay’s dual career as a retail tire salesman by day, oldies singer with a local band by night.
When Jerry Rosenberg retired in 1993, they purchased the company, approaching this new challenge with more than 50 years of scrap experience between them as well as “first-generation passion,” Knight says. “We were lucky to buy a good, solid business, and we felt we had the ability to take it to a new level.”
Sports analogies play a big role in understanding the new level these new owners wanted to reach. “Everybody likes to play games, and that’s kind of what we are—game players,” Davis notes. “But in order to enjoy the game, employees have to know what the rules are, and they need to know their progress down the field. You’ve got to be able to move that ball, to proceed toward an ultimate goal.”
To that end, the new owners established rules about specific job descriptions, monthly production goals, and mandatory safety equipment such as hard hats and safety glasses.
To measure their distance to the goal line, they also began preparing detailed business plans each year, holding weekly meetings to assess progress or problems, even entering daily inventory and production data into an integrated computer tracking system. “And then whenever you do score, when you do get across the goal line,” Davis says, “everybody likes to jump up and have a big time.” At IMP, such victories are celebrated with a monthly production bonus.
Although the new owners first tried out these efforts at IMP’s Greenville site, they were hampered by the unpleasant conditions there. Mud covered much of the site, and there was little incentive to keep the plant or equipment clean. Trucks bringing in scrap often had to wait in long lines because there was only one way to approach and leave the company’s shear. Plus, the site had rail access to only shortlines, which meant expensive switching charges to reach the main carrier, CSX.
Betting on a Brownfield
Working at that old site was sort of like “playing at night without lights,” Davis notes. It soon became clear that IMP’s team needed a new “stadium” if it wanted to expand.
Luckily, there was a familiar site available in nearby Spartanburg: Batchelder-Blasius Inc., a secondary aluminum smelter, had gone bust a few years before and its site sat idle, unwanted because of environmental contamination. IMP knew Batchelder-Blasius well. The smelter had been a good customer for years. And the site itself remained promising.
For starters, it was strategically located near interstates and sat directly on a main CSX line. The old furnace building offered a large, covered structure—more than 80,000 square feet—that could protect stored scrap and torchcutters from the rain. Several acres of concrete already covered the ground, giving IMP a chance to lift its operations out of the mud. The site also had its own oil-water separation system, and the nearest neighbor was a landfill that seemed unlikely to complain about a scrap operation moving next door. And with 45 acres, there was plenty of room to grow.
Of course, there were also plenty of problems, Davis says. The site’s oil-water system was heavily contaminated and needed to be cleaned up, as did contaminated dirt around the site. There were more than 600 drums of used oil sitting around, along with 22 above-ground tanks containing used oil or other wastes. Plus, there was an on-site landfill with an eroding cap that had trees growing through it.
Davis recalls bringing his wife to see the site. She cried and said it reminded her of the set for a Freddy Krueger horror film.
But IMP also found some powerful support for its idea of reclaiming the site: Both the U.S. EPA and South Carolina’s Department of Health and Environmental Control were promoting the idea of brownfield projects, which encourage the redevelopment and reuse of dormant industrial sites.
So in March 1996, with state and federal indemnification from liability for all previous environmental problems at Batchelder-Blasius, IMP began cleaning up the site.
As fate would have it, the Southeastern Environmental Resource Alliance (Aiken, S.C.), a nonproft organization working to help small to intermediate-sized businesses with environmental issues, was looking for a brownfield test case at the time. So the Alliance helped finance IMP’s efforts with a low-interest loan and provided two trained specialists to help with the work. Alliance staffers handled the most environmentally hazardous tasks, while IMP’s employees handled the basics, such as cutting up 22 large storage tanks and other metal structures to be sold as scrap. As part of the brownfield agreement, IMP also repaired the cap to the on-site landfill and periodically monitors it to be sure there is no leakage.
Although the cleanup was originally scheduled to take until October 1998, IMP finished the major work more than a year ahead of schedule and dedicated its new headquarters processing facility in May 1997. An open house welcomed customers, CSX, and the community to tour the state’s first brownfield project. And IMP’s doors remain open: More than half of the company’s customers have seen the site, notes Seay, who oversees scrap purchases and wants all his customers to stop by for a visit.
After all, the site serves as free advertising. “We wanted to create an image for our industrial customers,” says Munafo, “to portray a company that’s environmentally conscious so that our customers don’t have to worry about any environmental problems coming back to haunt them.”
Scrap ‘Partnershipping’
Servicing its customers is one of IMP’s chief goals, with relationship-building—what Seay calls “partnershipping”—being a critical part of its game plan. When IMP’s new owners took over the company, they inherited the good customer relations built through the years by Jerry Rosenberg, notes Seay.
IMP’s pitch for scrap focuses not on price but on value-added services. “We try to be creative with our customers, to do things differently,” Seay notes. For example, IMP recently assigned one employee to work on-site at the Caterpillar engine plant in Greenville, handling all of the plant’s scrap-related needs. It’s a scrap management service IMP expects to repeat with other customers. “We try to be hands-on, looking for things to help with,” Seay says. “If the customer has a problem with pallets or plastics or other recyclables, we work with them, help them define solutions. Our job is to be problem-solvers, to go above and beyond.”
But as IMP grows, it’s also discovering that not all accounts can be accommodated. The company tracks information on each customer, looking at data such as tons purchased by commodity, prices paid, and number of trips made for pickups. This information helps determine the profitability of each account. Put simply: If the account doesn’t contribute enough to the bottom line, IMP can’t justify doing business with that customer. As a result, some accounts must be dropped, Munafo notes. Other customers who previously were paid for their material must now pay IMP to haul it away. And some accounts are put in touch with members of IMP’s network of smaller scrap processors, who can sometimes service those customers’ needs more economically.
Building that network of small processors required overcoming barriers of secrecy as well as old fears that doing business with a competitor was a sign of weakness, Seay notes. But by offering to sell material to them first, IMP eventually established links to many local scrap firms that now ship it a steady stream of material that it might not otherwise see. And interestingly, IMP’s relationship with one of these smaller operations—Baker Metal, the wire chopper—ultimately led IMP to acquire the firm.
Processing the Just-in-Time Way
About 50 percent of IMP’s scrap—both ferrous and nonferrous—comes from industrial accounts, with another 30 percent supplied by its network of smaller processors. The remainder comes from the peddler trade, explains Seay. IMP draws its scrap from a roughly 70-mile radius around Spartanburg, which includes portions of both North Carolina and Georgia. The company maintains a fleet of 15 trucks to collect scrap from industrial suppliers, as well as some of the smaller processors for whom transportation can be a problem.
IMP’s old Greenville site and its recently acquired wire chopping operation serve as feeder yards for the Spartanburg plant. Scrap rolls through the gate there and heads for one of two scales, which are divided by the railroad tracks that connect with the CSX main line just outside the plant. While all material enters the site by truck, about 60 to 70 percent later leaves by railcar. A three-person traffic office, headed by the ironically named Billy Scales, transportation manager, keeps a computerized record of all requests for pickups and information on incoming scrap shipments, such as the type of material and size of container.
Peddlers and non-IMP trucks can dump their scrap directly at the firm’s shear, which is accessible from two sides for better traffic flow. IMP drivers, on the other hand, simply drop off their trailers filled with scrap and hitch up to an empty trailer to head right out again. IMP used to unload its trailers with a crane, Scales explains, but that forced its trucks to waste time waiting to be unloaded. Now, a special tractor with a dumping fifth wheel takes the full trailer over to the shear and raises up the trailer to empty it out. One person handles all dumping, and IMP’s drivers are free to pick up more loads. According to Scales, the portion of pickup time that drivers spend in IMP’s yard has fallen from 45 to 25 percent thanks to this and other innovations at the Spartanburg site.
Scrap that shouldn’t get wet or that may contain oil or other liquids that might contaminate storm water or soil is stored in IMP’s warehouse—the former furnace room—in one of 18 bins installed to segregate material by grade. Each bin has a sloped bottom that is connected to the site’s double-lined collection system, which in turn is connected to the oil-water separator adjacent to the warehouse. The warehouse also contains a rail scale to help make sure railcars are loaded to capacity.
In back of the warehouse sits a roughly 4-acre hard-surfaced area where IMP installed its shear and ferrous baler. In converting the property to a modern scrap facility, IMP poured about $200,000 of new concrete, adding to the nearly $1 million worth of existing concrete. And though it takes about $25,000 a year to maintain that concrete, IMP strongly believes that “concrete doesn’t cost—it pays,” says Davis.
For instance, IMP used to own a locomotive engine for moving railcars around its old site. But the level surface of concrete at the Spartanburg facility lets a special front-end loader do the same job—at a savings of $60,000 a year, Davis boasts. The concrete also gives every piece of equipment access to every portion of the yard and makes it easy to clean up the site and equipment on a regular basis. In fact, one day a month is devoted just to cleanup—something that was never feasible at the muddy old facility, he says.
IMP processes its ferrous scrap in a Harris baler that can produce up to 400 high-density bales a day and a Harris shear that can generate 720 tons of cutting force.
Nonferrous scrap is handled inside a separate part of the warehouse building, where a Harris HRB baler produces a low-density bale of either red or white metal. Each bale is tagged according to the computerized inventory system that indicates weight and grade, as well as when it was processed and by whom. But the inventory doesn’t sit in the warehouse for long. IMP turns its inventory 18 times a year—a 50-percent improvement compared with the old site, Davis notes.
Avoiding a huge inventory of scrap—even the ferrous piles in the plant aren’t very high—is part of IMP’s desire to be a just-in-time scrap supplier to its consumers. “We don’t speculate,” Seay explains. Instead, IMP sells aggressively, and then if it runs out of inventory, it buys more material in the current market, he says. The company’s information systems aid this just-in-time approach by giving IMP an accurate record of what it buys and sells each month, which helps the company plan its future scrap needs.
Inventive Incentives
Although many companies talk about how important their employees are, IMP has found some practical and inventive ways to prove it—such as shutting the company gates.
IMP accepts incoming scrap only from 8 a.m. to 4:30 p.m., Monday through Friday, Davis notes. By 4:45 p.m., the gates are closed for the night. “It’s hard,” he concedes, “but if you’re always letting in one more truck, then you’re always unloading one more truck. Our employees mean a lot to us, which is easy to say. But the only way to prove it is how we treat them.”
Of course, IMP employees have been known to put in 12- and 13-hour days, as well as the occasional weekend work. But IMP’s owners seem determined not to make it a habit.
A card entry system on the gate was also designed with employees in mind, to keep the plant more secure. And employee safety was a key factor in eliminating most cash purchases for scrap—it’s almost all done by checks now. “If you have $15,000 in cash on hand for buying scrap, you can be a target for robbery,” Munafo explains.
Money, however, is seen as a great advantage in motivating IMP’s 70 employees. The company began offering a monthly production bonus about five years ago, Munafo says, “and we think it’s done as much as anything to help us retain quality people, empower everybody, and maintain some consistency in production.” IMP’s production used to fluctuate widely—6,000 tons one month, 9,000 the next—but has settled at a fairly consistent 10,000-ton-a-month average.
The monthly bonus is running at about 40 percent of pay and is based on aspects of work that each employee can control. For instance, the shear operator’s bonus depends on how many tons of material the shear processed that month. For truck drivers, the monthly bonus is based on the number of loads they pick up. Meanwhile, the bonus for transportation staff depends on a goal for freight rates, and so on.
At some businesses, such a lucrative bonus might lead to unsafe practices as employees put production ahead of safety. But IMP’s safety record speaks for itself—three years without a lost-time accident. To encourage safe work behavior, IMP also offers employees an extra day of vacation for each six-month-period without a lost-time accident.
The safety bonus used to involve shutting down the whole plant for a day off, Davis adds, but that threatened the production bonus—until an employee suggested the extra-vacation-day approach and earned $100 as part of another employee recognition effort.
IMP also sought employee input when designing the new site, asking for suggestions about how best to design their work areas. In one case, Davis even had a 13-foot tower built so the baler operator could determine the best location for his operating booth.
Thanks to these and other employee initiatives, turnover is low at IMP, with most employees staying an average of five years or longer, Davis says.
To work at IMP, potential employees must have either a high school diploma or GED certificate. Once in, employees receive benefits such as a health plan and 401(k), with employee contributions matched by IMP. The company also pays all but a small portion of the cost of employee uniforms. And there’s a concerted effort to promote from within, explains Ray Sarmento, the operations manager who has himself been promoted twice. In addition, most IMP supervisors rose from the hourly ranks. The nonferrous supervisor, for instance, used to be a sorter while the manager at the wire chopping operation once drove an IMP truck.
Looking Ahead
Although IMP used to operate a shredder at its old Greenville site, the machine was retired before the move to Spartanburg. That shredder was old, Knight explains, so the choice was to either make expensive repairs or purchase a new supershredder. But there didn’t seem to be enough material to operate a huge shredder in the Greenville/Spartanburg area, Knight says. So IMP’s owners have put their shredder plans on hold for the time being.
IMP does intend to keep growing its business, though, and making itself a presence in other local cities. Knight sees IMP’s network of small scrap processors as a model for how medium-sized firms and smaller companies can cooperate to better compete against today’s publicly financed scrap giants. And as its purchase of Baker Metal indicates, IMP is itself open to growing through acquisitions.
As Knight comments, “we could take some of our principles to another yard, put these practices in place, and make it far more profitable.”
And why not? They already know they’ve got a good play book. •
When Industrial Metal Processing Inc. wanted to locate its new headquarters in Spartanburg, S.C., it chose a brownfield site—contaminated land that had to be cleaned up before it could be recycled into a state-of-the-art scrap processing facility. It sounds like a lot of work, but to this processor it’s just like a game.