Nonferrous Nonpareil

John Thalheimer is royalty in the Philadelphia nonferrous scrap market, and—even at 69—he continues to oversee his immense Thalheimer Brothers kingdom.

By Si Wakesberg

Philadelphia was once the capital of the nonferrous scrap trade, and industry veterans can readily recall how the route from New Jersey to Pennsylvania was filled with scrap processing and consuming companies.
   “At one time,” remembers John Thalheimer, president and owner of Thalheimer Brothers Inc. (Philadelphia), “there were so many generators and consumers of scrap in the Philadelphia area that you could buy and sell your material within a small radius. And if you opened the Yellow Pages, you’d find pages and pages of listed scrap dealers.”
   That has all changed. Today, most of the scrap-consuming operations in the Northeast corridor have closed or relocated. The old days are long gone. 
   Yet, if you visit Thalheimer Brothers in northeast Philadelphia and walk through its huge facility, you could easily imagine you were still in the old Philly. Throughout the dramatic changes in the region and the scrap industry in general, Thalheimer Brothers has not only survived but thrived, thanks in large part to the acumen and leadership of its principal executive, 69-year-old John Thalheimer.

Brotherly Roots
Thalheimer Brothers wasn’t always one of the biggest nonferrous scrap operations around. It was established on a small scale by three Thalheimer brothers—Gustav (John’s father), Martin, and Max—who emigrated from Germany with their families in 1936. John was two years old at the time.
   The brothers, who had backgrounds in clothes, plywood, and scrap, decided that they could start a scrap business with the least capital and that such a business had the best chance to succeed in the scrap-rich United States. They also decided to specialize in nonferrous, especially copper, brass, and bronze—metals they had worked with in Germany.
   As the brothers began to build their scrap business, they also struggled to help other family members emigrate to the United States. To this day, Thalheimer proudly recounts how his father and uncles managed—through many trials and tribulations—to rescue many family members during the terrible Holocaust years. In fact, Thalheimer wrote a book titled L’Chaim…Only in America to record his family’s dramatic story—how they escaped Nazi Germany, how they trekked across Europe, how they eventually came to America, and more.
   While his father and uncles grew the business, John earned a degree in metallurgical engineering from Lehigh University and went to work for Bethlehem Steel, enlisting in the company’s training program. “I was well-paid,” he says, “but the work—or lack of work—bored me.” So after a year, he quit and told his father that he wanted to join the family firm.
   “Speak to your uncle Martin,” his father said, “and don’t ask him what the pay will be or you won’t get the job.”
“I worked my head off that first week, maybe 70 or 80 hours,” Thalheimer remembers. “At the week’s end, my uncle counted out forty one-dollar bills, handed them to me, and said, ‘If you weren’t my brother’s son, I’d throw you the hell out of here.’”
   Though he tells this anecdote with humor, Thalheimer adds respectfully: “I’m indebted to my two uncles for giving me a good, though strict, Germanic education.”
   Despite this less-than-encouraging start, Thalheimer never looked back. Scrap became his career, and his business instincts proved to be a boon to the company. In the 1960s, for example, he encouraged the family to expand the business to include nickel alloys and aluminum scrap. His role in the business continued to grow to the point where, in 1969, he bought out the rest of the family’s interest in the company.
   Under Thalheimer’s direction, the business became a vast enterprise. Today, Thalheimer Brothers occupies a 20-acre site and 400,000 square feet of indoor operating space, and it handles millions of pounds of nonferrous scrap annually, with copper accounting for about 60 percent of its business and nickel the remaining 40 percent. Quite a change from the family’s 4,000-square-foot plant where John first 
went to work in 1956.

Minding the Market
Thalheimer Brothers has deep roots in the copper scrap niche. “Copper scrap was the foundation of our company’s business,” John Thalheimer remarks. “We bought industrial scrap and sold the processed material to foundries, brass mills, and specialty houses. Some of these consumers were using the scrap as a substitute for prime copper.”
   Thalheimer’s decades of experience with copper gives him an ideal vantage point to observe market trends, both good and bad. These days, he says, there’s plenty of demand for copper scrap, noting that premiums of 3 to 5 cents a pound were recently being paid over the LME copper price.
   Demand isn’t the problem, however. Today, the problem is supply. “Years ago,” Thalheimer says, “there was an incredible supply of copper scrap available. Today, there’s a shortage of copper scrap. Why? Because manufacturers who were producing all kinds of goods and generating scrap have all vanished. They moved to the South, the Southwest, and now overseas to countries where the labor cost is cheap.” The bottom line for copper scrap recyclers like Thalheimer Brothers is that “it’s not easy to buy anymore—and when we do, we find that the margins have been tightened.”
   As Thalheimer explains, huge quantities of U.S. copper scrap are being exported, mostly to China and India, and he foresees “more and more copper scrap moving overseas.” This trend helps explain why he is less-than-upbeat about the future of the U.S. copper scrap industry. While China, for instance, is a great market for U.S. scrap shippers today, he says, the heavy export trade is hurting U.S. manufacturers by reducing their available scrap supplies and enabling other countries to produce the same products at cheaper prices. In the long run, if U.S. manufacturing continues to vanish, the amount of scrap available to U.S. copper scrap processors will likewise shrink.
   This trend is threatening the viability of many U.S. manufacturers and scrap consumers, prompting Thalheimer to hearken back to a time when there were many refineries, ingotmakers, and producers in the United States. “Look what has happened to U.S. primary copper producers who once were so powerful,” he says, asking, “Where are the likes of Anaconda, Kennecott, and Asarco today?” Currently, “there’s only one major refinery buying scrap left on the continent, and that’s Noranda in Canada,” he says, adding—“and I don’t know for how long.” Europe, however, still has some active refineries, he notes.
   Adding another point, he maintains that copper scrap is “undervalued.” As an example, Thalheimer tells how he purchased a Plymouth car in 1958 for $1,700 when copper scrap was about 45 cents a pound. Now, copper scrap is about 75 cents—less than double the 1958 price—but try to buy a car for less than $20,000, which is 12 times the price of his 1958 Plymouth.
   Thalheimer has fewer concerns regarding the nickel business—and for good reason, given the rather lofty nickel prices this year. About 60 percent of the firm’s nickel and alloy scrap comes from industrial sources and 29 percent from scrap dealers, he says, noting that the company ships its nickel and alloy material to foundries and specialty shops. In contrast to its copper scrap trade, however, Thalheimer Brothers ships its nickel only to domestic consumers.
   Beyond the above market challenges, the cost factor has made it more difficult for scrap recyclers to survive, Thalheimer says, pointing out that labor and handling costs have risen materially. So how can a scrap processor make it in today’s tough economy? “Reduce expenses as much as you can,” he advises, “buy in a wider geographic area, and find specialty consumers who will take your material.” 

A Family Focus
   In retrospect, Thalheimer credits much of his career success to the guidance of many relatives and friends in the industry. First, he acknowledges his wife, Joan, for her invaluable advice. “She helped me make the most important decision I ever had to make—the buyout of the family business,” he says. He also acknowledges his father, his uncles Martin and Max, and his cousin Hans Thalheimer as family members who aided him significantly.
   In the industry, Thalheimer mentions a number of colleagues “whose advice and help was inspiring,” including individuals such as Ernest Barth, Hugo Neu, Morton Plant, Leon Netzer, Harold Sachs, and David Edelstein.
While Thalheimer is quick to recognize those who gave so much to him, he is more modest when it comes to discussing his own service to various groups and organizations. In the Philadelphia community, for example, he has served as president of Philmont Country Club, been active in the Fed-eration of Jewish Agencies in Philadelphia, and filled the vice president position at Rodolph Sholom Synagogue, which he says is the oldest Ashkenazi synagogue in the United States.
   For decades, Thalheimer Brothers and John himself have also been stalwart supporters of scrap industry trade association, including the National Association of Recycling Industries (an ReMA predecessor organization) as well as ISRI. In his view, a strong trade association is a necessity for the scrap industry. Though the industry is “shrinking,” with inevitable consequences for its trade associations, he says, “it’s still very important to have an organization like ReMA that speaks for us, that stands up for what we do.”
   While Thalheimer has made an impressive name for himself as a businessman, he is truly a family man at heart. This is obvious from the array of family photos that cover the walls of his office. It’s also obvious when you review his L’Chaim family history book, which is replete with pictures of the family in Germany before the Holocaust. It’s clear that the Thalheimers are a large and well-integrated family, one that John loves to discuss.
   When talking with him, for instance, you can quickly learn that he met his wife, Joan, through another scrap dealer whose wife was her college classmate. This year, in fact, marks the Thalheimers’ 40th anniversary, and they celebrated this landmark occasion with a trip to Italy. 
   John is also quick to mention their two daughters—Gwen and Emily—pointing out that Gwen and her family live in Charlottesville, Va., while Emily is married to Richard Reiner, who works in the family business. Both daughters have two children, and—like most grandparents—Thalheimer is unabashedly proud of his four grandchildren.
   At 69, John Thalheimer remains an active, involved executive, fast on his feet in the office and out, and undaunted by the approach of his seventieth birthday. Why should he worry? He keeps physically fit by walking 3 1/2 miles a day and by playing tennis and golf. He and Joan spend the winters in Jupiter, Fla., where he gets together with his golf buddies, some of them from the scrap industry. Travel also keeps Thalheimer young, with his adventurous spirit taking him to Jackson Hole, Wyo. (a favorite vacation spot), as well as to international destinations such as Israel, Japan, Europe, and China.
   After about 47 years in the scrap industry, Thalheimer has certainly earned such rewards as well as an undeniable wisdom about the business. Looking ahead, he offers some insight to current and future scrap recyclers: “The scrap industry is resilient and will survive the current challenges, but it will be a different industry,” he states. “To succeed in the industry of the future, one must be ready to meet its new requirements and to apply new and different strategies. You can’t continue to do business as it was done 30 years ago. You have to be innovative, creative, and find new ways of doing business.”
   Recyclers who understand this, Thalheimer says, will do well in the coming years. •

Si Wakesberg is New York bureau chief for Scrap.