Larry’s Legacy

November/December 2015

In his 50 years in the scrap metal industry, Larry Kripke has experienced his share of ups, downs, and drama, but he’s enjoying the fruits of his labor at the top of his game.

By Kent Kiser

There’s a timeline on an office wall at Kripke Enterprises Inc. (Toledo, Ohio) that shows the business history of the Kripke family since 1965. The timeline stretches 12 feet, an apt reflection of the family’s long presence in scrap processing and brokerage as well as other businesses. The timeline could extend back even earlier, to 1942, when Sherwin Kripke became a scrap peddler, charting his family’s course for the next 73 years—and counting. “I’ve been very proud of everything we’ve done from a business standpoint,” says Larry Kripke, KEI’s 72-year-old CEO and one of Sherwin’s three sons. “We’ve had a lot of successes, and we’ve had some failures, but Kripke Enterprises is probably my greatest pride.”

KEI is the latest corporate entry on the timeline and the culmination of Larry’s 50-year career in scrap metals. After starting the aluminum brokerage company in 1993 with his wife, Joan, and one assistant, Larry and his eldest son, Matt, the president of KEI, have grown the company to a 17-employee enterprise with $144 million in sales in 2014. KEI’s current success and smooth sailing belie its dramatic start, however. Larry suffered a life-threatening health crisis shortly after founding the firm, putting its future in jeopardy. The Kripke family pulled together, however, and turned that potential business failure into another success—and Larry’s proudest career achievement.

Finding Success in Scrap

Larry Kripke’s career in the scrap metal business almost never happened, even though he grew up immersed in it. His father, Sherwin, started his working life in his family’s clothing store in Toledo, but he shifted to scrap by accepting a job at local recycler Kasle Iron & Metal. “My dad was very bright,” Larry says. “He saw the kind of money being made in the yard, and he thought, ‘This isn’t so bad.’” In 1942 Sherwin bought a dump truck and became an independent scrap peddler. He soon added a second truck and a partner, but in 1944 he was called up for military service in the Philippines. His wife managed the company in his absence.

When Sherwin returned in 1945, he decided to focus the company on nonferrous metals—a move that would affect Larry’s future scrap career. At first, Sherwin hauled metal to Detroit—about an hour away—every day. Then Harry Linver of Linver Steel offered to let him rent space in his Toledo warehouse so he could store metal until he accumulated a full truckload. Sherwin accepted his offer, and that relationship led to a partnership—Linver-Kripke—in the early 1950s, with Linver focused on ferrous and Kripke on nonferrous. In 1955, the company moved from downtown Toledo to an industrial suburb, and Sherwin and Harry decided to part ways. Later that year Sherwin founded Sherwin Metal Reclaiming Co., his own nonferrous scrap company. Harley Kripke, Larry’s older brother, joined the company after graduating from the University of Michigan in 1961.
 
Larry recalls visiting the plant as a teen. He started working there in the summers, sorting metals, loading and unloading scrap, and driving a truck on local routes. “I was always fascinated by the business,” he says, “but I hadn’t given any thought to whether it was what I’d do for my professional career.” Larry headed off to college in 1961—also at the University of Michigan—and graduated in 1965 with a bachelor’s in business administration. He took a friend’s advice to do campus interviews with recruiters from corporations such as Ford Motor Co. and Procter & Gamble. When Harley heard about these interviews, he called Larry and said, “I assumed you’d want to come into the business with us.” Larry said he hadn’t thought seriously about it. “Well, if you’re doing job interviews,” Harley said, “can I come up and interview you?” Over dinner, Harley told Larry about the company’s current operations and future plans. He told Larry how much he enjoyed the business and working with their dad, and he thought Larry would enjoy it as well. After considering the idea and meeting with Harley and Sherwin in Toledo, Larry decided to join the firm, setting him on his lifelong course in scrap.

Learning the Trade

Despite his college degree, Larry says he donned work boots and a uniform and spent his first six months sorting metal in the company’s warehouse. The following two years he worked as warehouse manager, learning about metals and the costs to process, handle, and transport them. “It was the best education I ever had,” he says.

After that hands-on learning, Sherwin enlisted Larry to build the business by calling on industrial prospects. “I really enjoyed it, and I learned I was pretty good at sales,” Larry says. He reviewed the Toledo Blade newspaper every day to discover which new manufacturers—and potential customers—were coming to town. “Those were exciting times,” he says. “We were growing, buying equipment, adding trucks, spotting containers at industrial plants.” Sherwin Metal Reclaiming Co. started reaching into the Detroit market, handling nonferrous scrap from car manufacturing plants. The company’s operations became more sophisticated. The Kripkes developed a more efficient, environmentally sound process for burning insulated wire, for example, feeding the material on a nickel-alloy conveyor belt into a double-chamber furnace with an afterburner for emissions. “That worked well for the most part,” Larry says, “but we continued to look for the next technology.”

That led the company into wire chopping. The company had roughly 30 employees as well as a thriving industrial business. In the late 1960s and early 1970s, the company began producing secondary aluminum alloy products, with its own lab, metallurgist, and aluminum sales specialist. The firm’s growth in this period also included acquiring Linver-Kripke in 1969, with Harley becoming president of that ferrous operation, Larry serving as president of Sherwin Metal, and Sherwin becoming CEO of Kripke Industries, a holding company for the family’s various businesses. The ability to handle both ferrous and nonferrous scrap “worked out better for us,” Larry says, “because then we could be a full-service provider.” In 1975, Bobby Kripke—Larry’s younger brother—joined Sherwin Metal Reclaiming Co. The Kripkes took another big corporate step in 1976, when they merged their recycling operations with Tuschman Steel, an established Toledo ferrous scrap company. The combined operations of the new Kripke-Tuschman venture allowed the company to become “a factor,” Larry says. “We were young, full of vinegar, and ready to roll. We were running like racehorses.”

By the time Kripke-Tuschman grew to 250 employees, Sherwin was ready to retire. The remaining principals went seeking a new partner to take his place and bring new capital to the company. Someone suggested Leonard Rifkin, patriarch of Superior Iron & Metal Co. (Fort Wayne, Ind.), which later became OmniSource Corp. The parties forged a deal in 1978 in which Rifkin became a one-third partner with the Kripkes and Tuschmans. The partnership was a success, but the scrap market fell dramatically in 1980. The Kripkes and Tuschmans decided it made the most economic sense for Rifkin to buy them out, which he did in 1983. In that transition, Harley left the company, while Larry and Bobby remained with OmniSource.

The Birth of KEI

In 1992—after nine years with Omni­Source—Larry decided he wanted to do something on his own. He was 49, and he recalls wondering, “If I don’t do something now, will I ever do it?” He talked with Joan, and she supported his decision 100 percent.

His plan? Start a brokerage company that would allow him to leverage his industry contacts to build a small, successful business. He founded Kripke Enterprises Inc. on Jan. 4, 1993—Joan’s birthday—and he focused the company on aluminum because of its higher available volume than other nonferrous metals.

KEI was barely a year old when Larry suffered a major health crisis—the onset of serious abdominal ailments that included peritonitis, pancreatitis, and a perforated diverticulum. “I was really in bad shape,” he says. “They weren’t sure I was going to make it, and the company was basically gone.” Harley and Bobby suggested having Matt manage the company in his absence, at least to answer the phone and keep customers informed. At the time, Matt was working with Harley at Premier Steel, another Kripke family company. He had no background in metal brokerage, but he took to it like a natural. Some customers started selling KEI more loads than usual to help the company during Larry’s convalescence. “Matt was rolling them in,” Larry laughs. “It was like going fishing and hauling in more fish than you ever expected.” Larry and Matt worked out an arrangement for Matt to join KEI permanently. Larry says he was thrilled at the thought of working with his son, just as he had worked with his father. “It was the best thing that ever happened to the company,” he says. “My lowest point became my highest point.”

Within a couple of years, KEI was turning a profit—“and I don’t think we’ve had a year that we’ve lost money since then,” Larry says. The Kripkes have built their company’s success on a simple business philosophy: “We do what we say!” On the buying side, Larry explains, “when I tell a customer he will get his money in 10 days, that doesn’t mean 11.” To do that, KEI always must keep a working line of capital ahead of its needs. “I’ve described us as bankers who happen to be in the scrap business,” Larry quips. On the selling side, he says, KEI ships its consumers the right material by the date requested. “We do what we say! We won’t make a promise unless we know we can fulfill it.”

Another key to KEI’s success, Larry says, is its willingness to meet suppliers and consumers more than halfway whenever an issue arises. If a load is rejected, KEI will offer to bring the material to its Toledo warehouse to rework it for the supplier—sometimes for free, sometimes for a fee. In such situations, Larry says, KEI’s outlook is, “we’re in it with them. ‘We’ have a problem, not just ‘you.’ It’s our job to make life easier on our dealers and consumers.”

KEI’s depth of experience is another strength, Larry says. In addition to his 50 years in the nonferrous metals business, Matt has more than 20 years, and the other five traders have a combined 75 years of experience, giving the company a deep bench of talent and wisdom.

Larry has built KEI on two additional philosophical concepts: One, take care of your employees, and they’ll take care of you. The other—which Larry learned from his father—is “Never burn a bridge because you never know when you’ll have to cross back over it.” Though KEI tries to be “compassionate and agreeable” in its business dealings, conflicts are inevitable. “We take it very seriously when we upset or lose a customer,” Larry says.

By the Numbers

Although Larry founded KEI as a small metal brokerage firm specializing in aluminum scrap, the company has mushroomed far beyond his expectations. “We didn’t know what to expect,” he says, “and the company has grown a lot larger than we could have expected or imagined.” He credits Matt for much of the growth, praising him—and the firm’s other employees—for making the company what it is today. “The whole KEI team is responsible for the company’s success,” he says. “Every one of our employees is phenomenal. We’ve been very fortunate to have hired right.”

KEI plans to keep growing, Larry says, noting that Matt’s goal is to double the company’s sales by 2020. Describing himself as semi-retired, Larry says he is happy to witness that growth from a distance. Even though he still has a Toledo office and plays an integral role in the financial side of the business, Larry has decided to slow down and change his approach to life. He and Joan bought a second home in Palm Beach Gardens, Fla., where they spend their winters. They started traveling more and spending more time with their eight grandchildren.

In addition to marveling at KEI’s growth over the past 22 years, Larry is amazed at the changes the industry has undergone throughout his career. “The technology has changed the business the most,” he says, pointing to digital scales, computerized inventory management programs, and metal analyzers among the developments. Those and other advancements have “taken the guesswork and the potential inaccuracy out of the market” while making it more efficient and professional, he says. Along the same lines, he sees an ongoing shift from the older generation of industry leaders to new, younger leaders who are “more educated, more sophisticated, and more balanced in the 21st century.” Larry sees Matt as a perfect example of this trend, and he takes great pride in Matt’s involvement in ReMA as a national board member, chair of various national board committees, and past president of the Northern Ohio Chapter. Matt is also active in the Young Presidents’ Organization as well as corporate and charity boards.

Even as he enjoys the sunsets from his Florida home, Larry says he isn’t ready to completely ride off into one. He wants to use some of his time to help KEI think outside the box about how to use its available capital to “do something unusual.” Although he knows the company is in good hands, he can’t shake his desire to lend a hand. “If I can contribute something because I’m free to think while they’re in the midst of the action, then that’s great for everybody. That’s where I want to be.”

Kent Kiser is publisher of Scrap and assistant vice president of industry communications for ISRI.