In Pursuit of Total Service

Hundreds, maybe thousands, of U.S. scrap recyclers handle brass clippings, but how many also process grass clippings?

No, this is not a trick question. There really is at least one scrap processing firm that has added yard debris to the. extensive list of commodities that make up its trade. That company is Cohen Brothers Inc. (Middletown, Ohio), which, through a recent partnership with a group of agriculturists, has entered the composting business.

That may seem like a peculiar direction for a 67-year-old, family-owned scrap business to take, but, explains Ken Cohen, the company's president and chief executive officer, composting grass clippings, leaves, brush, and other materials-just like baling brass clippings, corrugated board, steel punchings, and more-is simply processing and marketing a recoverable product. Furthermore, he points out, composting materials that would otherwise be disposed as waste is becoming an integral part of providing "total recycling services," a long-standing Cohen Brothers objective.

It's that precept, in fact, that has secured the firm's many years of success, and will ensure its future prosperity, contends Neil Cohen, Ken's brother and the company's treasurer and paper division manager. In keeping with that steadfast principle, through the years, Cohen Brothers has broadened--and, on occasion, narrowed--its scope, as industry's and the public's recycling needs have dictated.

When Ken's grandfather and granduncle started the business in 1924, rags and paper shared equal importance with ferrous and nonferrous metals. Since then, the area's scrap generation has changed, and so has Cohen Brothers's business: The company has discontinued handling textiles, begun processing plastics and glass, and expanded its recovery of metallics, both in terms of tonnage and types. The result is that, today, the firm processes and brokers scrap aluminum, copper, glass, iron and steel, lead, nickel, paper and paperboard, plastics, precious metals, stainless and high-temperature alloys, and zinc.

And now, of course, there are the materials that have been added along with the composting business. It all started in the summer of 1990, when a team of agricultural and technical experts holding the U.S. Patents to an advanced German composting technology began searching for a suitable site on which to operate their plant. "As luck would have it, " Ken says, "we had a piece of property near the interstate for sale." The patent-holders called Cohen Brothers about the land and wound up signing on new partners, who brought to the deal decades of recycling experience. “We found out we had a number of common goals-there were a lot of things they thought we could help them with and we saw tremendous Opportunities in working with them," he adds. "So the natural thing to do was to join forces."

A pilot operation was installed in the truck bam at the Cohen Brothers plant in October 1990, and the partners set about demonstrating the technology to obtain regulatory approval. Permits in hand, the group opened its full-scale facility, Middletown Composting Co., just weeks ago.

The technology centers around a computer system that monitors and controls a group of rotating vessels (12 at the new facility), each reportedly with an annual capacity to compost 1,000 to 1,500 tons of yard debris, paper mill residues, and food-stream byproducts. The compostables are shredded and conveyed into a vessel, then the computer takes over, rotating the vessel to mix its contents as the temperature and chemistry prescribe. In 72 hours, Ken says, the process yields a chemically uniform compost, a product he estimates requires six to nine months to produce using the classic windrowing technique. The compost can then be sold in bulk or screened, bagged, and sold in garden supply stores.

The timing of the project couldn't have been much better: The Ohio legislature passed a law in 1988 banning the landfilling of yard debris beginning in December 1993. Thus, Ken points out, the composting operation offers communities a necessary service that also recovers a heretofore discarded resource at a cost lower than disposal (the facility charges. a tipping fee based on the type of material to be composted). The technology owners consider this service so valuable, in fact, that they plan to market the process not only throughout the state, but also to other parts of the country, particularly in the 11 states that have similar landfill bans.

This is not the first time Cohen Brothers has entered a partnership in pursuit of providing total recycling services. In 1970, in a joint venture with two Dayton, Ohio, scrap processing executives, the company started Metal Shredders Inc. (West Carrollton, Ohio), which specializes in car shredding. And in 1985, Cohen Brothers, along with Muskingum Iron & Metal Co. (Zanesville, Ohio), acquired Columbus Scrap Corp. (Columbus, Ohio), spreading its presence to yet another part of the state.

Another Cohen Brothers-affiliated scrap processing firm, Hamilton Scrap Processors (Hamilton, Ohio), is wholly owned by the Middletown company and managed by Neil. The Hamilton operation, located within eyesight of two paper mills, primarily processes paper scrap, but also handles other nonmetallics as well as ferrous and nonferrous scrap.

Composting is also not the first endeavor Cohen Brothers has made into business activities outside the realm of scrap processing. Thirty years ago, the company branched out to open a new steel division, which fabricates roll-off containers for Cohen Brothers in addition to containers, tanks, and miscellaneous "job shop" products for other customers. More recently, the company has been involved in used industrial equipment and usable steel sales. Ken is quick to point out, however, that all of the firm's diversification has been vertical-into industries that are closely related to scrap. "We stick with things we understand," he notes. "We've seen too many companies get into trouble by diversifying into areas they don't completely understand."

Through all these expansions, Cohen Brothers hasn't neglected its scrap roots. Although the company's principals decline to disclose how much scrap the firm processes, they do report that the tonnage handled increases every year and that, in terms of sales, ferrous scrap accounts for 50 percent of the business, nonferrous scrap for 40 percent, and new steel products for 10 percent. Because prices for nonmetallics have dropped to minuscule--and, in some cases, negative--levels, sales of paper, plastics, and glass are too low to register on the breakdown. Cohen Brothers continues to process them, however, as part of its commitment to total recycling.

Don't get them wrong. The company’s principals don't claim to be dedicated to that ideal as totally selfless saviors of the planet. Offering full-scale services is a prudent business strategy, Ken says. For example, he points out, handling scrap paper or glass generated by a potential customer that also generates a significant quantity of metallics is means toward obtaining the more valuable commodities.

Rendering a certain level of service is important to any scrap processing firm's ability to attract and maintain its customer base, but, according to Don Zulanch, senior vice president, providing complete service is particularly vital to Cohen Brothers because of its location.

Middletown isn't tiny-it's home to Armco Steel and more than a half dozen paper mills. Nevertheless, the amount of scrap generated within the town constitutes only 10 percent of the materials processed at Cohen Brothers, despite the fact that it's the only scrap processor in town. The remainder is purchased from within a 70-mile radius of Middletown, an area that encompasses parts of three states (Ohio, Kentucky, and Indiana), two major cities (Cincinnati and Dayton), and quite a few competitors that have the advantage of being the hometown scrap processors.

Cohen Brothers has overcome the handicap of being an out-of-towner with its own total-service advantage, Don says. Besides handling the complete spectrum of recyclables a customer might generate, the Cohen Brothers principle encompasses services that are made possible because it operates its own truck fleet. With 20 trailers, nine roll-off trucks, and more than 250 containers, the company can meet all kinds of special requests that it would have to reject if it didn't have these resources. For example, Ken points out, Cohen Brothers provides container service to its customers whenever it's needed-including after hours or on weekends.

It's all part of an ongoing process of preparing for the future by "paying more attention to the details than the next guy," says Chairman and Chief Financial Officer Wilbur Cohen, Ken and Neil's father.

This advantage Cohen Brothers maintains over its competitors, the company's principals agree, extends beyond customer service to two other specialties-integrity and financial strength-both of which, they believe, have also helped the company build its large base of suppliers, from industrial and commercial accounts (which provide about 80 percent of the scrap Cohen Brothers processes) to smaller dealers and retail customers (each accounting for approximately 10 percent of its supplies). As a complete package, in fact, Don says, customer service, honesty, and the ability to meet prompt payment terms are as important to the company's relationships with its scrap suppliers as the prices it offers.

Integrity and financial strength have also helped the company build its internal resources-the 60 employees who have made Cohen Brothers what it is today and who will determine what it becomes tomorrow. The Cohens, Don explains, "are as fair as you can get, and that's why they've held onto good people. " Don is a case in point: He's spent 23 years with the company, a tenure that few family-owned scrap firms can attribute to their nonfamily managers. Financial strength emerges in the form of a generous benefit package that includes a profit-sharing plan, which rewards people for their roles in ensuring the company's future. The result is that 40 of the 60 employees have worked for Cohen Brothers for at least 10 years.

In preparing for the future, Cohen Brothers seems to have extended its attention to service, integrity, and financial strength to every aspect of running the company. Serving its community, for example, Ken believes, is a responsibility every business has. “The successes or failures of a community are reflected in one way or another in the successes or failures of the business," he says, adding, "If you can help make the town You're operating in a better place, then you may just help draw new industries and people to that town and, perhaps, increase your own business."

Cohen Brothers fulfills its community service obligation through two primary routes. For one thing, all of the principals contribute their personal time to serving a number of community organizations. Wilbur, for instance, has been active on the Middletown Hospital board of directors for 25 years, Ken is vice president of the Middletown Chamber of Commerce, and Neil is completing a term as president of the Hamilton School Board. In addition, the firm Works with local civic groups that conduct recycling drives, supplying containers and collecting items, such as newspapers, plastics, and glass, that the company generally doesn't buy over the scale.

Serving the community has paid off in many ways, Ken says. In addition to providing a sense of personal fulfillment, he points out, it has allowed the company's principals to connect with key players in the local public and private sectors. These relationships, in turn, have resulted not only in new business, but also in a Positive government perception of the scrap industry. For example, he says, "One of the reasons the composting business is here in Middletown is because of the relationships that we've built in our community. It may have been more difficult to get the zoning or permits in another part of the state or country."

A similar strategy can be seen in the relationships Cohen Brothers has built with its consumers. "We've been through good times and bad times with these people, helping them when they were hurting and always putting forth that extra effort, " Don asserts. "What goes around, comes around, " he summarizes, emphasizing that it's not the type of alliance that's built overnight. The company has been forging relationships with its consumers based on mutual service, fairness, and financial accountability for decades, he says.

Perhaps the most important step Cohen Brothers has taken to prepare itself for the future is to put its profits back into the company. Not only has this strategy generated significant cash reserves that keep the firm ready for good times and bad, but it has enabled Cohen Brothers to upgrade its facilities and equipment, thereby preparing it for new regulations and increased business.

While enhancing the plant and machinery are ongoing aims at Cohen Brothers ("I'm a firm believer that equipment runs better with a fresh coat of paint," Ken says), and a certain amount of money is earmarked for annual site improvements, the company underwent a major facility upgrade in 1989, installing a drainage system, paving work areas and roadways, building a truck barn, erecting new fences, and moving some operations to more suitable locations within the 23-acre plant. The renovation, which received government and community recognition in the form of environmental and beautification awards, probably wouldn't have been possible without the company's financial strength.

The significance of the firm's fiscal foundation, built by continually reinvesting in the company, seems increasingly critical during these days of generally poor conditions in the scrap industry. Although Cohen Brothers has certainly felt the effects of the recession in terms of lower prices, for the most part it's been business as usual. Efficiency has taken on an elevated level of importance at the plant, but the company continues to process enough scrap that it hasn't had to cut hours or lay off employees. The firm also continues to take positions in marketing its nonferrous scrap, holding materials in its 15,000-square-foot warehouse when it predicts better prices on the way.

Furthermore, its dedication to enhancing its processing capabilities hasn't ceased. In the last two months, the company not only opened Middletown Composting and added another roll-off to its fleet, but it also bought a new hydraulic crane, bringing its total equipment list in Middletown to a shear, a heavy-duty baler, and a nonferrous baler, all manufactured by Harris, as well as a Systems Alternatives computer system, two hydraulic cranes, seven cable cranes, and many other pieces of material-handling equipment.

Why would a company that considers itself "fiscally conservative" make such expenditures during troublesome economic times? According to Ken, the explanation is twofold: During a recession, bargains on capital equipment are available, and Cohen. Brothers's reserves allow it to take advantage of those bargains without taking on any debt. In addition, he believes, survival requires using the same logic in good times and bad: If the company needs to acquire something during good times, why wouldn't it take advantage of buying during a recessionary period?

So what kinds of acquisitions is Cohen Brothers ready to take on--in good times or bad?

The answer goes back to that principle on which the firm was built: those things--processes, equipment, facilities, and people--that enable the company to provide total recycling services.  •

Providing complete recycling services has been the goal of this Middletown, Ohio, scrap processing firm for decades. Today, that principle is evident in a variety of company practices, including its recent venture into composting.