MARCH/APRIL 2007
Leonard Rifkin has guided OmniSource Corp. on its journey from a small family business to the largest scrap metal recycling company in the United States.
BY SY WAKESBERG
Leonard Rifkin and his family’s company, OmniSource Corp., are two of the great success stories in the U.S. scrap recycling industry. That’s why it’s so ironic that Rifkin didn’t even like the scrap business when he first started working in his father’s scrapyard as a teen. Fortunately, his second impression proved much more favorable, starting him on his 51-year career (and counting) in the industry, which he today serves as OmniSource’s chairman and CEO.
Building a Company
The story of Leonard Rifkin’s—and OmniSource’s—success is really the story of the Rifkin family in America. That story began in 1920, when Irving Rifkin, Leonard’s father, left Russia at about age 19, fleeing that country’s revolution in search of freedom and new opportunities. After a roundabout journey through Europe and Canada, he settled in New York, where he had cousins, and it was there that Leonard was born in 1931.
After jobs in the delicatessen and vending machine businesses, Irving decided to move his family to Lima, Ohio, in 1942 so he could learn the scrap business from an aunt. There he began collecting and selling rags, paper, and scrap metal, traversing the region in a pickup truck. After learning the scrap trade, Irving’s entrepreneurial spirit prompted him to relocate to Fort Wayne, Ind., in 1943. He borrowed $7,500 from an uncle and bought an existing scrapyard, which he renamed Superior Iron & Metal Co. At the time, 26 scrap dealers were reportedly operating in Fort Wayne, a town of only 100,000 citizens, so Irving’s small scrap operation faced a challenging future.
Leonard started working at Superior when he was a freshman in high school, doing “a little of everything,” including working the scale and sorting metals. “I didn’t like it very much, so I quit,” he recalls. “I told my dad, ‘This is not the business for me.’” Instead, he went to work at a shoe store and was soon making more money than he had earned working for his father.
Rifkin held that job until he headed off to Indiana University, where he attended its Kelley School of Business. After graduating in 1952 with a bachelor’s degree in business, he continued his studies at IU with two years of law school. While there, he married his first wife, Norma Jean Smith, in 1953 and started a family. At that point, “I decided I wasn’t going to be an attorney anyhow,” Leonard recounts, so he returned to the family scrap firm as an operations manager. To his surprise, he discovered that he enjoyed the business this second time around. “I saw there was a big opportunity there,” he says.
Military service called, however, and the U.S. Army drafted Rifkin to serve from 1955 through 1956. He was assigned to the audit department in Chicago, where his work with certified public accountants and chief financial officers was a graduate business school of sorts, he says.
After his discharge, Rifkin resumed his scrap career, with his father serving as his principal mentor. “Generally, what was important to him was establishing a good home for his family, maintaining a positive home life, and providing as many fine things as possible for his family,” Leonard recalls. To achieve those goals, Irving Rifkin worked seven days a week, sometimes two jobs, for years—“whatever he needed to do,” Leonard says. “He had a tremendous work ethic.”
In addition to showing Leonard the value of hard work, Irving Rifkin taught him the importance of integrity, of standing behind one’s word. “With my father, a promise was always a promise and a deal was always a deal,” Leonard says. Irving also showed his son the wisdom of focusing on long-term opportunities rather than short-term profits and stressed the need to take care of one’s customers, employees, and community. “I spent a lot of time with my dad and learned a great deal from him,” Leonard says. “We had a great relationship.”
Along the way, Leonard received additional guidance from industry colleagues, most notably Noah Liff of Steiner-Liff Iron & Metal Co. (Nashville, Tenn.) and Joe Pinkert of several Chicago-based scrap companies, including Consolidated Mill Supply Co. and Scrap Corp. of America.
In 1963, Leonard became president of Superior while his father assumed more of a chairman role in the company. Under Leonard’s direction the firm embarked on its first joint ventures, establishing Indiana Briquetting Corp. in Fort Wayne in partnership with Joe Pinkert’s companies. In the 1970s, Superior continued growing through a couple of acquisitions, including Kripke-Tuschman Industries Inc. in Toledo, Ohio—the company’s first step outside Indiana.
The late 1970s and early 1980s brought big changes to the Rifkin family and Superior, including the death of Irving, the family’s patriarch. As one generation passed, however, another arrived, with Leonard’s three sons joining the company throughout this period: Daniel—the eldest—in 1977, Richard in 1980, and Martin—the youngest—in 1985. The 1980s also saw the company change its name. As the firm grew, “we thought Superior Iron & Metal was a little confining as a name,” Leonard recalls. After some brainstorming, Danny suggested OmniSource, which was adopted quickly as the company’s new name.
Becoming a Leader
Over the years, OmniSource grew from a scrap sapling to a sequoia, using the same slow, steady approach to growth as those majestic trees. Throughout, the company never lost sight of its core values or its core strengths in ferrous and nonferrous scrap management, brokerage, and processing. Today, OmniSource is reportedly the largest U.S. scrap metal recycling company by volume, handling 6.5 million tons of ferrous scrap and 700 million pounds of nonferrous scrap each year. The firm generates $2.3 billion in annual sales revenue and has 2,000 employees in 35 operations in seven U.S. states and Canada. Its extensive operations include several automobile shredders, wire-chopping lines, and a secondary aluminum smelting company, Superior Aluminum Alloys LLC, in New Haven, Ind.
An amazing success story, to be sure, and Leonard Rifkin was the firm’s principal guide through it all—yet he only accepts part of the credit. “Generally,I just was the captain of the boat,” he says, stating that his greatest contribution was building a corporate culture that breeds success. “A company’s culture and its people are really what make it work,” he explains. “I was able to bring different individuals together to work as a team. I had the ability to understand the essence of a person and put [him or her] in the right spot. In that way, we have built a team with varied strengths that works together from a culture point of view. That’s the secret of our growth as a company.”
The Rifkin family members are pivotal players on the OmniSource team. The company remains very much a family affair today, with Leonard’s three sons—the third generation of Rifkin family leadership—now managing the day-to-day affairs. His sons act as a unified team, each with his own niche and management responsibilities, he notes. Danny is president, while Rick and Marty are executive vice presidents of various nonferrous operations. “I worked very closely with my father,” Leonard says proudly, “and today my sons also work closely together.” Several OmniSource customers confirm that fact, asserting that the Rifkin family’s “togetherness” is a key factor in the firm’s ongoing success.
Leonard is quick to note that OmniSource is much more than the Rifkin family, though—it’s the proud product of all 2,000 of the firm’s family of employees. “No one person can do it alone,” he says. “It has to be a team affair, and that is what the Rifkin family strives for.”
Leonard also has strived to make caring and responsible corporate citizenship part of OmniSource’s core values. One OmniSource executive described the company as having an “uncommon regard for people”—from suppliers to consumers to employees to those in need. In other words, it takes good care of its own as well as others.
OmniSource certainly exhibited its altruistic nature in the aftermath of Hurricane Katrina, when the company set aside a penny for every retail pound of nonferrous scrap and a dollar for every retail ton of ferrous scrap it collected in September 2005. In the end, the firm donated almost $68,000 to the American Red Cross to aid its hurricane relief efforts.
Five Decades of Change
Through the decades, OmniSource has grown along with the evolution of the scrap industry as a whole. “The changes that have occurred have been enormous,” Rifkin says, thinking back over his five-decade career. “The development of new, sophisticated technology has made a vast difference in the processing of scrap.” In addition, he says, the marketing of scrap has become global instead of regional, a factor that has made the scrap market more volatile. When Rifkin entered the business, a $5-a-ton rise in scrap iron prices was a big deal. Today, a $30-a-ton change is routine, he says.
Noting other changes, “transportation of materials has advanced significantly,” Rifkin says, explaining that “there was very little truck movement when I entered this business. Rail was king.” Also, the scrap industry continues to face stiffer environmental regulations, a trend that has brought positive changes for the environment but, at times, has placed significant burdens on scrap processors. Rifkin calls on regulators to balance environmental protection with fair and attainable regulations of scrap operators, whose businesses provide an environmental service to the world.
On the scrap-consuming side of the business, the growth of electric-arc furnace production has made a huge difference in steelmaking, Rifkin says. This type of scrap-fed minimill production enabled the establishment of world-class steel operations around the world, leading China, India, Turkey, and other countries to purchase large quantities of scrap.
Rifkin knows whereof he speaks when it comes to the steel industry. Over the years, OmniSource has forged close relationships with many steel producers. In fact, the company was one of the founders of Steel Dynamics Inc. (Butler, Ind.), which is today “one of the most profitable steel mills in operation,” Rifkin says. He has seen the U.S. steel industry go through good times and bad, and he has strong views on the matter. In his view, three factors contributed to the decline of many U.S. steelmakers: poor management; overcapacity; and lack of modernization. Looking ahead, he sees fewer mills operating, which will bring more disciplined pricing to the steel market. That, in turn, will increase returns that will strengthen the financial condition of the steel industry.
As for scrap, Rifkin says that supply and demand will continue to shape the market price of scrap and other commodities. He foresees no shortage of scrap in the near term and expects ongoing strong demand from China, India, Turkey, and other world consumers, including the United States.
Two Cents More
Now in his mid-70s, Leonard Rifkin sits atop the scrap cosmos, a man whose success in business and dedication to others have earned him the respect of family, friends, customers, employees, and competitors alike. His achievements and character have attracted a host of honors, including Indiana’s prestigious Sagamore of the Wabash award, which the governor bestowed on Rifkin in December 2003.
Even with all of that, Rifkin is motivated to achieve more in his role as OmniSource’s chairman. “I’m still in there working,” he says. “I’m still pushing for growth. I’m still criticizing those areas that aren’t doing what they should be doing.” He knows the company is in good hands under his three sons, and he is no longer involved in the firm’s daily activities, but “I still like to get my two cents in,” he says.
When he’s not at OmniSource, Rifkin enjoys playing golf, walking (three miles a day, he points out), reading, and attending social functions with his second wife, Ariela. A true man of the world—his travels have carried him to Africa, Europe, South America, Asia, and Israel (several times, he notes)—Rifkin now prefers to travel among his three homes in Indiana, Florida, and Wyoming.
Still on the go, still active, and still involved—doesn’t he ever get tempted to walk away, retire completely, and leave the scrap action behind? “Not really,” Rifkin says. “What would I do?” Then he answers his own question: “I’d have to open up a competing junkyard and start over, huh?”
Leonard’s Life
Born: April 10, 1931, in New York.
Education: Graduated from Indiana University’s Kelley School of Business in 1952 with a bachelor’s degree in business. Continued at IU with two years of law school.
Military Service: Served in the U.S. Army’s audit department from 1955 to 1956, based in Chicago. Family: Married Norma Jean Smith in 1953. Three sons—Daniel, Martin, and Richard—and seven grandchildren. After Norma Jean’s death in 1983, Rifkin married Ariela Kalisky in 1984.
Career: Aside from a high school job in a shoe store, Rifkin has worked his entire career in the family scrap business, first with his father at what was then Superior Iron & Metal Co. and now with his three sons at the company, now OmniSource Corp.
Community & Philanthropic Service: Active in Fort Wayne community life, including the chamber of commerce, the B’nai Jacob congregation, and the Jewish Federation. Created a $50,000 endowment at his alma mater to provide academic scholarships for IU students who are state residents.
Hobbies: Golf, walking, reading, and travel.
Si Wakesberg is New York bureau chief for Scrap.