Joe Krentzman & Son Inc.: Slow & Steady Style

This Pennsylvania processor believes in the tried-and-true principles of service, hard work, and financial stability.

By Kent Kiser

Kent Kiser is associate editor of Scrap Processing and Recycling.


Mervin Krentzman explains the success of his scrap firm, Joe Krentzman & Son Inc., by offering a favorite anecdote: When the company moved from its modest 5-acre plant in downtown Lewistown, Pa., to a 102-acre expanse out of town in 1978, a scrap colleague said to him, "Your company reminds me of the ant that swallowed an elephant."

"What do you mean?" Merv asked, as he'd never heard that expression.

"For years you were the small dealer in your section," the scrap man explained, "and before you know it, you've become the big dealer."

"Well, what do you attribute that to?" Merv queried.

"You're a plodder," the man said, "so no one paid any attention to you, and every year you kept getting bigger and bigger, and being recognized more and more, and all of sudden, here you are."

Merv, the firm's president, laughs when he recounts that story. He agrees with the first part of his friend's conclusion, asserting, "We are plodders, not hotshots." He disagrees, however, with the part about his firm's success being "all of a sudden." After all, Krentzman & Son has been around for 90 years, and it has built its business not through flashy corporate maneuvers, but rather through slow and steady progress. In the corporate race, it has been the tortoise rather than the hare.

But as with the tortoise in that fable, the company's plodding approach has made it a winner, establishing it as more than just one of the largest recyclers in central Pennsylvania, but also a player in the competitive Northeast scrap market.

Down on the Scrap Farm

History and tradition run deep in Krentzman & Son, five generations deep to be exact, dating back to 1903 when Nathan Krentzman and his son Albert--immigrants from Lithuania--began selling scrap out of their backyard on Main Street in Lewistown. Albert's son Joe-after whom the firm is now named-joined the business in the 1930s, and Joe's wife, Esther, and son, Merv, took over upon his death in 1946. Today, Merv's son, Stephen M. Krentzman, is the firm's executive vice president and heir apparent, and rumor has it that one or both of Steve's two sons may carry the firm into its sixth generation.

In those early days, the company was a country peddler-type operation, and Krentzman & Son still retains its rural character. No wonder: Its homebase of Lewistown is the picture of a pastoral town, an 8,000-person community in central Pennsylvania--"God's country," as Steve calls it--complete with farming valleys, rounded mountains. and hollows cut by streams, a place where it's not unusual for an Amish farmer to ride into the Krentzman & Son plant in a horse and wagon to sell scrap. "I like to think of us as sort of like the country farmer," Steve says. "We're in the middle of the country, and we grow iron."

In keeping with its rural nature, the firm views itself as a scrap general store, processing both ferrous and nonferrous scrap out of its plants in Lewistown and nearby Hollidaysburg, Pa., and selling primarily ferrous through its 15-year-old brokerage firm, Krentzman Metals Corp., which has offices in Lewistown and Morgantown. "Our customers range from firms that make baby carriages to companies that build railroad cars," Steve says. "Their needs are extremely different, so we have to be everything to everybody because we're the only full-service scrap yard in a few counties. We have to be a general store to best serve our region."

The firm's principal ferrous consumer--a specialty steel mill--is certainly well within the region, located only six miles away in Burnham, Pa. "We look where the best economies are," Steve explains, "and one way to economize is to reduce freight costs and ship as close as we can. So we try to target as much of our scrap as possible to our local consumer." Even so, the company doesn't hesitate to ship its ferrous to Pittsburgh, New Jersey, Philadelphia/Delaware, and other central Pennsylvania markets. In addition, it also sells some material to brokers in the Camden and Newark port areas for sale in the export market, which accounts for up to 30 percent of its revenues.

The company has a similar broad-based approach on the supplier side, purchasing at its materials from a significant industrial scrap base as well as retail suppliers. "We serve a lot of small industries in our region, and whatever they need, we do,” Steve says, noting that the firm finds its scrap primarily within a 100-mile radius of its processing plants. “Whatever they make in our part of the world,” he states, “we get the scrap.”

The Service Focus

If you ask the Krentzmans what they do best, they answer with one word: service. “We believe the old rules still apply,” Merv says. “Serve your market area well. Serve your customers well. And little by little, if you do enough things right, that will equal success. Our success has been built, as they say so often, one customer at a time.”

 One example of the firm’s focus on service is its just-in-time deliveries to three of its ferrous consumers, a service that “not every processor or broker offers,” says Bill White, the company’s treasurer. For Steve, the firm’s service philosophy comes down to the most basic of business principles: “We do what we say we’re going to do. We keep our word. It’s as simple as that. If we quote a price, we pay it. If we promise a pickup, we make it. If we say we can do something, we really can do it.”

Great service is a top priority for Krentzman & Son for a couple of reasons: First, as a central Pennsylvania processor, the firm doesn’t have the broad supplier and consumer base available in more urban areas, which makes long-term customer satisfaction and retention a make-or-break proposition, Merv notes. And second, there’s the more intangible element of being dedicated to service as a tradition. “In some cases,” Steve says proudly, “I’m serving the same companies that my grandfather developed.”

Working for the People

The Krentzman also apply their service philosophy to the firm’s employees, offering them such amenities as interest-free loans, scholarships for their children and relatives, overtime opportunities, a management training program, and annual bonuses based on company and employee performance. “I owe our people a company they can be proud of,” Steve states, “and I owe them the loyalty that I expect from them. I work for our people.” The firm even recognizes the fall hunting season as an official holiday, a veritable “sacred event,” Steve says, noting, “Our company goes to hell during hunting season, but the good news is that all my consumers and competitors are closed too.”

Employees also benefit from the firm’s policy of open communication with management, which not only means that they are told when business is good and when it’s bad, but also that they can suggest ideas to help the business operate better. “We listen to our people,” Steve remarks, “and we give them the opportunity to do it their way within our system.”

Providing a safe workplace is yet another way the Krentzmans look after their employees. “We train our employees first in how to be safe, then in how to be productive,” he says. As a safety incentive, Krentzman & Son gives away tickets to sporting events at nearby Pennsylvania State University as awards each month. “I like to make sure our employees and their families get to see as many Penn State games as possible,” laughs Steve, an alumnus and devoted Nittany Lions fan.

Above all, Krentzman & Son serves its employees by ensuring job security. “Our employees take care of our company, so we try to take care of them,” Steve explains. “We try to manage the financial side of the business responsibly to ensure that they have a job in the future.” The Krentzmans must be onto something because their company has never laid off a single employee, Steve says, asserting, “We don’t know what it’s like to say, ‘We don’t have work for you.’ We’ve sacrificed some potential growth, and the risks associated with it, to ensure a stable economic environment for our employees.” The rewards for this devotion have been high employee loyalty and low turnover. In fact, two employees have worked for the firm for an astounding 50 years, and Steve notes that eight relatives of retired and current employees work for the company. “We’re a family business in the fullest sense,” he says.

The Krentzmans’ conscientious treatment of their 100 employees is part of their effort to run their business “not only with our heads, but also with our hearts,” as Steve expresses it. And they carry this philosophy beyond the scrap plant into the community to such as extent that if Lewistown were ever renamed, it could rightly be called Krentzmantown. “The Krentzmans have truly helped shape Lewistown and Mifflin County in the past 90 years,” says Bill. In his 71 years, for instance, Merv has been a member or chairman of everything from the Lewistown City Council and Water Authority to the Mifflin County Industrial Development Corp. to the boards of a number of health-related associations. Even the humble Merv must admit, “I’ve been involved in just about everything that’s ever happened in this town.”

Among its ongoing community activities, the company sponsors kids’ sports teams, offers an annual scholarship to the outstanding student of a nearby vocational technical school, and sends its managers into the community to talk about opportunities in the business and explain scrap recycling to elementary school students. And recently, as part of its 90th anniversary celebration, the firm sponsored an art contest in which local students were invited to draw a picture related to scrap recycling after viewing a Krentzman slide presentation. The winning artist received a savings bond and had his artwork printed on T-shirts.

Hitting ’Em Where They Ain’t

A company that makes it to 90 years must be doing more than simply providing good service, and Steve explains his firm’s underlying business approach with an analogy: “How do you win at tennis? Hit ’em where they ain’t.” The company has adopted this strategy in its day-to-day business, avoiding overcrowded markets and pursuing “little niche markets” where competitors aren’t. “I think we’ve been good at reacting,” Merv says. “We try to look at our marketplace and figure how our services can fit it.” These niches--which Steve guards like a Penn State front lineman--include preparing specialty nonferrous packages for steel mills and making finished retail products out of aluminum alloys.

Another Krentzman & Son business emphasis has been its commitment to smart cost-management practices, including having a certified public accountant on staff--“unusual for a company our size,” Bill says--and automating its offices with computers about 20 years ago. Thanks to these efforts, Bill says, when the company closes its gates at 4 p.m., “we know immediately what we spent that day and what our average costs were. We think we have a better handle on our costs and operating expenses than a lot of recyclers do.” As Steve asserts, “We try to make the computer work for us,” adding wryly that “there are only two people in this company who don’t touch a computer--my dad and myself.”

Though he may not be a computer hacker, Steve keeps up with the latest technology to help his firm stay ahead, hinting that the day may soon come when his firm uses handheld computers for inventory tracking, production management, material identification, and more. This is only one illustration of the firm’s commitment to continuous improvement. “Every single thing we’re doing, we can do better, without a doubt,” Steve declares. “That’s why we communicate, because someone might have a better idea.”

The Krentzmans have also ensured the staying power of their scrap operations by diversifying into non-scrap businesses. In the 1930s, the company first branched out by selling structural steel, eventually becoming a bona fide steel service center. Then, in the 1940s, the firm entered the wholesale plumbing, heating, and air conditioning supply business, which currently operates as Krentzman Supply Co. Inc., with offices in Lewistown and State College. “My dad had the idea that every scrap dealer ought to have a sideline business,” Merv explains, “because the scrap business is always feast or famine.” Far from being mutually exclusive, the firm’s scrap and supply business complement each other in many ways, enabling the Krentzmans to buy scrap from their wholesale supply contacts and use their trucks to haul, say, plumbing or industrial supplies to a buyer and pick up a load of scrap at the same time.

More recently, Krentzman & Son has taken aggressive steps to ensure its future by squarely facing the threat posed by environmental regulations. To address what Steve calls “this trend toward massive overregulation,” the company not only appointed Bill White to be the firm’s in-house compliance officer, but also retains an environmental attorney and an environmental consultant/engineer. “If we want to be here in the future,” Steve says, “we can’t bury our heads in the sand.”

Working to Be a Winner

As the Krentzmans ponder their future plans, they throw out a host of possibilities from moving their aluminum sweat furnace from Hollidaysburg to Lewistown, building up their steel service center and wholesale supply businesses, possibly delving into real estate development or construction projects, and--perhaps--expanding their operations, either by using more of the Lewistown plant (it currently uses only about 55 our of 102 acres) or by establishing new operations in other areas. “We’re either going to have to grow, exit, or merge with someone else,” Steve says. “And I hope we’ll be the acquiring party as opposed to the acquired party.”

True to its nature, however, whichever moves the company makes, it “plans to take one step at a time,” Bill says, explaining, “It’s better to do a small job very well and complete the task than try to tackle a big job and do it poorly.” And as Krentzman & Son whittles the years away toward its 100th birthday, Steve concludes with characteristic modesty--and yet another sports reference--“We have a lot of faith in our industry, our employees, and our abilities as a company, and we think if we continue on the path we’re on, we might be able to be a winner.” •