March/April 1991
The Newell family has devoted more than 30 years to perfecting the shredding plant, building its business on an understanding of both the scrap processing and equipment manufacturing industries.
By Kent Kiser
Kent Kiser is associate editor of Scrap Processing and Recycling.
When Scott Newell Jr. was 18, he and his father--Alton Scott Newell--made a scrap processing contract with a steel mill. When they left the client, Scott said, "Dad, we could have made a better deal." His father replied, "Yes, Scott, we could have--today. But in a few weeks they'd know that it wasn't such a good deal, and then they wouldn't be so happy with us."
Scott Newell Jr., now 51, observes, "I learned that it's better to have a good name than it is to make money on one deal. And I'm happy to report that we had a relationship with that steel mill for the next 20 years.”
When Alton Scott Newell founded Newell Auto Parts in Kenedy, Texas, in 1938, the company motto was "We'll Treat You Right." Today, though the Newell family business has changed (it now encompasses Newell Industries Inc. [San Antonio]--a multimillion-dollar shredding plant manufacturer--and nine scrap processing plants--most operating under the name Newell Recycling Co.), that motto is still appropriate.
Setting up Shop
The Newell manufacturing and scrap processing empire grew from the resourceful mind of Alton Scott Newell. "My father is very mechanically oriented," Scott says. "He believes that your mind is a self-sharpening tool."
While operating Newell Auto Parts, the senior Newell built a portable baling press to densify scrap parts, making them more economical to transport to scrap customers. During World War II, he also scoured Texas dumps and baled usable metals to help the war effort. He soon found himself making more money baling scrap than selling auto parts.
In 1946, Alton Scott Newell moved to San Antonio and established Newell Salvage Co., which focused on hand-torching, processing, and baling scrap metal. But shredding was not far behind. In 1959, Scott Jr., who was working in Arizona, told his father that copper mines could use shredded tin cans in a process to extract copper from copper oxide ore. The few tin can shredders then in use all featured a bottom discharge unit, but Alton Scott Newell had a better idea. Inspired by a grain grinder he had seen as a boy on a Kansas farm, he created a shredder with a top-only discharge feature, which he used to shred cans. Later, he created a shredder that offered a top and bottom discharge, which has become the industry standard. "I often tell him we were lucky he had never seen a rock crusher," Scott jokes, "because we probably would have done what everybody else did."
As tin can supplies waned, Newell Salvage began shredding fenders, sheet steel, and other thin metals. When steel mills began buying shredded heavy steel scrap, Alton Scott Newell created a larger, more powerful shredder that could process an automobile body.
After patenting his auto shredder innovations, the elder Newell opened a sister company, Newell Manufacturing Co., in 1965 to focus on making shredding plants. Even then, the company was reaping dividends from treating people right. One client, for example, bought the first model of a Newell shredding plant and found out that Newell sold the second machine for $25,000 more. "They sent a check to us for $25,000 without anybody asking," Scott says. "So we asked, 'Why did you do that?' And they said, 'Well, we knew this was the first one and that you might not have known how much it was going to cost, but we were buying something with that money. We were buying your dedication.' And I said, 'You know what? You've got it.'"
Over the years, Newell Salvage grew to become the current nine Newell Recycling plants, while in 1984 Newell Manufacturing became Newell Industries. All along, the companies have maintained a strong family focus. Now, Scott serves as chairman of all operations, while his brother John and sister Sharon Shirley act, respectively, as president and secretary/treasurer of Newell Recycling. Scott's wife Kathryn, son Alton Scott Newell III, daughter Sabra Newell Sweeney, and son-in-law Robert D. Sweeney Jr. are part owners of and manage the day-to-day business of Newell Industries. "I think [being a family business] gives us a big advantage and I enjoy it a great deal," Scott says.
Bigger and Better
If shredding can be considered an art, the Newells are striving to perfect it. The company designs and manufactures complete wet and dry shredding plants, including infeed conveyors, shredders, separation systems, scrubbers, and cyclones.
The Newell Industries complex occupies 15 acres in San Antonio's industrial district. The company's corporate offices are adjacent to its foundry, manufacturing facilities, and a Newell Recycling plant. This proximity helps the company be self-sufficient and maintain quality control, Scott says. Though it buys some raw materials and some abrasion-resistant plate steel from other manufacturers, Newell shapes, machines, and assembles every product it sells. Its foundry makes replacement parts for its own and its competitors' shredders, as well as shear blades and castings for rock crushing and mining equipment. The company maintains approximately 10,000 square feet of inventory space, offering such items as shear blades, bolts, bearings, and pin shafts.
Each new generation of Newell shredding plants is designed to be bigger, more powerful, more durable, and--most of all--more cost effective. To this end, Newell industries introduced its super-heavy-duty (SHD) shredder two years ago, which the company says enables processors to shred heavier, more valuable scrap such as No. 2 and some No. 1 steel without damaging the machine. Less sorting of “unshreddable” items is needed, reducing labor costs, and less damage to the machine means less downtime for repairs, the company says.
Last fall, the manufacturer introduced its megashredder, a larger, more powerful SHD shredder. It is designed to process up to 300 tons of scrap per hour compared with normal shredder capacity of less than 100 tons per hour. The megashredder can significantly cut the time required to process large quantities of scrap, Scott says, reducing workshifts and increasing a company's profit margin.
These types of SHD shredders will eventually dominate the market, Scott predicts, as the scrap stream grows and as smaller, less powerful shredders are retired. He points out that there are 200 shredding plants in the United States--the same number as in 1980--but today these plants are processing 50 percent more scrap than 10 years ago. "The operating efficiency of a large machine is so tremendous that it is very difficult for a small plant to compete," he says. Small plants won't disappear, but processors should buy the biggest machine they can afford in order to expand their processing capacity, he advises.
The company's newest advance is the super double-feed roller (SDFR), which helps the shredder reach its processing capacity through the "intelligent" feeding of scrap. "Every shredder could improve its productivity on an hourly basis with a smarter feed roller," Scott asserts. Normal infeed systems are efficient as long as they carry full loads, such as auto hulks. But normal systems often feed smaller, mixed loads too slowly for the shredder to reach its potential. The SDFR has a programmable logic controller--a brain--that speeds up the intake for smaller scrap and slows down for larger loads. The SDFR also has a 150-horsepower motor compared with the 40-horsepower motor on most infeed systems. "We tell people it's like this," Scott says, pointing to both his bicep and his head, "it's smart and strong."
Newell Industries has also been improving the efficiency of separation systems, promoting a "thin is in" philosophy. Conveyors and magnets have been widened so that shredded scrap is spread more thinly on the conveyor, which reportedly increases the quality of separation.
The company explores these innovations on 14 computer-aided design/manufacture terminals, which have increased productivity more than tenfold, Scott claims. With the push of a button, engineers can send a command from their computers to a machine that can cut a 26,000-pound piece of steel. "I don't think anyone can be an effective manufacturer without this equipment," Scott says.
On the quality-control front, Newell Industries has a lab that analyzes both problem equipment and successful equipment, seeking the best alloy formula to make the most durable products. The lab also samples incoming raw materials, such as alloy bars, to make sure that they meet the company's quality specifications. It's quality in, quality out, Scott explains. Also, if any inconsistencies are noted in the manufacturing plant between a product's mechanical drawings and its actual construction, revisions are made until an ideal product and drawing are created.
Wearing Two Hats
Newell Industries's continual improvements have helped make it a manufacturing leader in the shredding plant industry. "I think we have the reputation of being the innovators in this business," Scott says. "We're proud that today almost every shredder in the world follows our original patented designs."
Scott attributes the company's design success to the fact that he wears two hats--that is, he knows both the processing and manufacturing ends of the business. "As a processor, I know that the most important criterion is to design equipment that produces for the lowest cost per ton through its lifetime," Scott says. "As a manufacturer, I know that if our equipment is successful in the field, it will breed success for us. The scrap industry is a small community. People talk a lot and your reputation means everything."
At first, scrap processors were hesitant to buy equipment manufactured by another scrap processor, but now customers see that as an advantage. "People say, 'I'd much rather deal with you than with somebody else because you know how this stuff works, you understand the business,’" Scott explains. "We're not selling iron. We're selling ideas. We're saying, 'We want to sell you a moneymaking machine.'”
In Search of Synergism
Newell Industries has one major advantage over its competitors when it comes to designing new equipment: Before any product hits the market, it can be tried out at one of the Newell Recycling facilities. The company has its own testing grounds that allow it to "eat its own cooking," as Scott says. "Nobody benefits more quickly from an improvement to the shredding system than the Newell family does," he points out. The processing plants not only tell Newell what works and what doesn't work in new equipment, but they provide feedback that leads to product innovation. "When that feedback comes in, sometimes it plays off another idea and you come up with a new idea," Scott says.
This "pretesting" process helps Newell anticipate problems and manufacture “sophisticated" equipment, which Scott defines as machinery that looks and operates as if it has been thoroughly refined before being marketed. "You can immediately see that somebody has learned by what they did before and it's included in the machine," he says. "I want us to continue that snowball effect of improvement."
He considers it ironic that his company sells shredding equipment to competing scrap processors, "We joke about that," he says. "We say, 'Better we should sell our competitor one of our machines so they'll have the same disadvantages we have.'" But he points out that Newell maintains good relations with all of its customers, competitors or not. "I think it could be different if we were secretive and if we used information to our advantage," he says, "but if I get any criticism it's from being too open."
Newell Industries keeps in close touch with its clients, not only to service their machines and sell replacement parts, but to glean new ideas. "When you buy a machine from Newell, you'll hear from us all the time,” Scott says. He looks at each sale as a type of partnership or joint venture between his company and the client. He likes to use the word "synergism" to describe his business relationships, defining it to mean “how people help each other so that one and one becomes more than two.”
Treating customers like partners and delivering high-quality equipment has certainly won Newell fans throughout the years. Many of the company's customers are repeat buyers, who simply install a larger shredder on the same spot as an old one. "We have many long-term relationships," Scott points out. "In general, we're not willing to fight about small problems. We settle those and get on to the big picture." One three-time customer told Scott that they had turned their prayer rugs toward San Antonio. "And every night they offered their thanks in this direction that they bought our equipment," he laughs.
The company also enjoys significant word-of-mouth referral business. "I think we have the reputation for doing what we say we'll do," Scott reflects. "And I think we have the reputation for making things right. We stand behind our equipment."
Newell Industries does not have to live by reputation alone, however. When steel mills started purchasing their own shredding lines, many were not familiar with Newell's products, Scott says. One mill sent an engineering team to evaluate equipment and determine which company produced what it called the "World's Best Practice" in shredding equipment. The winner? Newell Industries.
Success at Home and Abroad
Newell's business success can perhaps best be seen in numbers. Newell Industries doubled its sales from 1988 to 1989 and again from 1989 to 1990. In 1990, the company sold more than $40 million worth of equipment, while the Newell Recycling operations generated approximately $200 million. In addition, Newell Industries has sold out equipment orders through the first half of 1991. And last fall, more than 290 requests for information and price quotes streamed into the company's office in two months.
The company has diversified its product line to include rock crushers and shredders for nonferrous metals, municipal solid waste, wood chips, and related replacement parts. Faced with the current recession, Scott says, "We're not expecting any real downturn in our business." That is partly because in tough times scrap processors must get more competitive, which often means they need bigger and better equipment.
The company has also had strong export sales, especially to Europe, which accounts for 50 percent of its new plant sales. "We are really world-focused at the moment," says Scott, who travels as many as 240 days a year. He flies to Brussels once a month, for instance, to meet with officers of the Newell Allard foundry (Turnhout, Belgium), a Newell associate company that casts high-temperature, abrasion-resistant products and replacement parts for Newell equipment in Europe. The firm's international presence was evident during the interview for this story, as Scott took a call from a prospective Polish client while German clients were in the company's board room revising plans for an aluminum shredding plant. Newell Industries has also enhanced its international opportunities through its multilingual employees, who speak Spanish, Chinese, Taiwanese, Vietnamese, Portuguese, German, Italian, French, and more.
Despite its international status, the company does not maintain sales agents in foreign countries (except for Fuji Car Manufacturing Co. in Osaka, Japan, which sells Newell products in Asia). "It's such a specialized business that it's very difficult to have sales agents everywhere," Scott says. "We've tried it, but we've never been as successful as when we've handled it from here ourselves."
One would think that so much success would inflate a company's corporate ego. Not so. "Even though we're the leaders in the business," Scott says, "we're not ready to sit back and rest on that. We want to keep on pushing the frontier forward in technical development.”
Planning for the Future
Scott Newell sees 1991 as a transition year. Most notably, Scott, his brother, and his sister recently acquired the assets of the Newell Recycling companies from Alton Scott Newell, and Scott will spend 50 percent of his time working on his duties as chairman of those companies.
In addition, Newell Industries is expanding its foundry to double its output and speed delivery of replacement parts. "We don't want any of our family of scrap operators to be shut down because of a lack of available parts," Scott says. The expansion will include the addition of a 10-ton furnace to augment its current 3-ton furnace and the acquisition of more space for the making and storing of casting molds.
Scott looks back to 1938 at the company’s humble roots and points to the family aspect of the Newell business with pride. Like Scott and his father, Scott III began working in the scrap business as a teenager and, at 28, is executive vice president of Newell Industries. With Alton Scott Newell still serving as a consultant, three generations of Newells are at work, ensuring the company's continued success. The family enjoys the business, Scott says, and everyone works with energy and enthusiasm. He refers to synergism again.
"We feel like we're contributing something positive to America," he says. "I'm very pleased with our position as the industry leader, and I intend for us to stay there for generations to come.”•
The Newell family has devoted more than 30 years to perfecting the shredding plant, building its business on an understanding of both the scrap processing and equipment manufacturing industries.