November/December 1989
Can not-so-friendly competitors become good buddies, then make a go of it as business partners? Here’s the story behind Toby Shine’s and Jack and Norman Bernstein’s new joint venture, TJN Enterprises, in Sioux Falls, South Dakota.
By Gerry Romano
Gerry Romano is editor of Scrap Processing and Recycling.
If they cannot agree, they'll flip a coin--that's one decision these new business partners have made. "We haven't had anything go to that yet," says Jack Bernstein, one principal in the just-started TJN Enterprises, a scrap recycling operation in Sioux Falls, South Dakota. The others are his brother, Norman, with whom he runs Sioux City Compressed Steel, Sioux City, Iowa, and Toby Shine, president of Shine Bros. Corp., Spencer, Iowa. "If any one of us feels very strongly about something, he designates it as such and the rest of us don't have a problem," Jack continues. "We're only interested in two things: starting the operation so that it's done correctly in terms of efficiency, and satisfying the community that we're in. Nobody wants a quote, unquote, junkyard. We're not a junkyard; we're a scrap recycling business ... and the partnership has worked out very well."
It's still quite young, this partnership, born out of a desire shared by the principals to process scrap in South Dakota. Although Toby and Jack have been friends for more than 20 years, following many years of not-so-friendly competition between their two family scrap businesses, it was about seven years ago that they decided to attempt a joint venture in Sioux Falls. TJN began operations last July.
Says Jack: "When it became evident that Sioux Falls was a ripe opportunity for a scrap operation, done properly, with modem equipment and a modem approach toward marketing, we decided that since Sioux Falls was our backyard, it was natural for us to go into it together."
"We didn't want to go in fighting each other," says Toby, though he points out that a partnership is unusual for both, who have always practiced entrepreneurship with their families. "But we both really needed a presence in that community. We think it's one of the most vibrant--one of the best--communities in the whole Midwest." He describes the Sioux Falls business environment as excellent, pulling in a lot of players in the metals and banking industries with its favorable economic climate. South Dakota has no corporate income tax and has attractive workers' compensation laws. In the past 10 years the state has drawn businesses from Minnesota--especially from the Twin Cities--and, according to Jack, is growing through other means.
The original Shine/Bernstein plans were to buy an existing scrap plant in Sioux Falls, but the terms were never worked out. In December 1988 Toby, Jack, and Norman decided to shift gears and start looking for a site on which to build. Involved in the planning was Terry Gilligan, an employee of Sioux City Compressed Steel's State Steel Division, which has a plant in Sioux Falls. Although Terry "knew his way around Sioux Falls and knew how to get things done," says Jack, complications arose. It took three months to find an appropriate piece of land due to strict city control over industry. There is no zoning for heavy industry in Sioux Falls; everything is zoned for light industrial and special use. Obtaining a heavy-use permit requires making a presentation to the planning and zoning board, then to the city council.
Securing Sioux Falls's Blessing for the Site
The TJN team first went to the planning and zoning board to find out where the city would want a recycling facility, then went to look for such a site. Once they found one, they went back to the board armed with an artist's rendition of the planned facility and letters of reference from Spencer's city hall and Sioux City's chamber of commerce.
Long before requesting these testimonials, Shine Bros. Corp. and Sioux City Compressed Steel each had developed a good relationship with its city and chamber of commerce and had garnered the respect of its community. "We're developing the same kind of relationship in Sioux Falls right now," Toby says. "Before our building was even up, we joined the chamber of commerce and the Industrial Development Foundation."
Adds Jack: "What the testimonials did for us was to show the credible nature of our businesses ... that we would be bringing the best of our operations and our experience to an operation in Sioux Falls."
After a two-month process, the planning and zoning board, then the city, approved TJN's permit. Says Jack, "They accepted our proposal, they accepted the site chosen [which fit the requirements they had outlined], and they also let us know that they expected the facility to look like the artist's rendition we presented."
This rendition, which has been closely followed, depicts what the principals call a "beautiful" recycling plant. Trees and grass help the facility blend in with the neighbors in its semiresidential location.
Fences block a view of operations. There are no towering piles of scrap--the goal at TJN is to process scrap and move it out quickly. One of the promises made to the city was that no automobiles would sit overnight full-size; they would all be flattened on the same day they entered the facility. Says Jack, "We're as beautiful as a heavy-industrial site can be."
"In fact, I think we look better than anything up there [in TJN's neighborhood]," he continues. "We selected an area compatible with the type of work we're doing. There's an oil tank farm, a cement plant, and several heavy-machinery dealerships, and we're next to a feed mill."
Public resistance was nonexistent, Toby says. "As a matter of fact, we had great support from the people in Sioux Falls." They were interested in what TJN could provide to the local economy.
Common Business Philosophy
The TJN principals think the partnership was helpful in obtaining approval for their facility because it offered Sioux Falls a broader base of experience. They personally benefit in the partnership, Toby says, from a better exchange of ideas. "We've got some very strong personalities, but I don't think there's ever been a voice raised in this thing ... even in spending over two million dollars. That's kind of amazing when you stop to think about it."
"Well, we have a common goal," Jack comments. "We feel that what we're doing is right; so we're willing to spend the kind of money it takes to do it right and relax, knowing we'll accomplish what we want. We're not nervous about the money we spend."
Much of that confidence, Jack says, comes from rapid expansion in the past several years of Sioux City Compressed Steel and Shine Bros. "We've learned how to invest money in equipment and facilities."
But aren't they nervous about starting up a new operation in the face of projections for a market downturn? "Some people would say the best time to open a new facility is when things are booming because then you're assured of success, not remembering that there's usually a downturn," says Jack. "But another way of looking at it--and I kind of like this--is to think it's best to start an operation when business conditions are lousy. It gives you a lot to shoot for. It makes you leaner and meaner."
What he's learned along with Toby and Norman, Jack says, is not to build a business just to take advantage of good times.
"We definitely take the long view ... because in the scrap industry, as opposed to other industries, the highs seem to be higher, but the lows seem to be lower. The way to run your business is to try to be as efficient as you can, work on as little debt as possible, and reinvest the money you make right back into the business. ...Technology is changing so fast that you'd better stay on top of everything or you'll get eaten."
Equipment and Operations
For that reason TJN has installed mostly brand-new equipment. Cranes, all hydraulic, include a Komatsu with a LaBounty shear attached and a Komatsu with a magnet. There are also luggers, roll-offs, and loaders.
An Al-jon remote-control car crusher flattens automobiles, which then are shipped to Sioux City Compressed Steel for shredding. All wire purchased by TJN is shipped to Shine Bros. for chopping.
TJN has a room for handling aluminum, copper, brass, and radiators. Purchase of a metals baler is planned.
The latest purchase is an 880-ton Vezzani continuously fed shear, to be delivered in the spring. With the Vezzani, TJN will process farm equipment, plate and structural, and mixed No. 1 and No. 2 steel grades.
Plant Manager Greg Morgan is assisted by six other people at the 4-acre site.
As might be expected, Greg frequently hears from his employers, especially regarding pricing policy. Plus, the TJN principals often visit the site to check on operations and, quite likely, just to enjoy a look at their new project.
"This is the dream, starting your own facility," says Toby. And with that he indicates the individual reward and feeling of ownership each partner draws from this joint venture.
The Businesses Behind TJN's Backers
Convincing any city to approve the siting of a new scrap recycling facility is no easy task. But the partners behind the proposed TJN Enterprises, planned for Sioux Falls, South Dakota, felt they had advantages: more than 130 years of combined experience in the scrap business and testimonials from local business leaders touting the recyclers' contributions to their communities.
Sioux City Compressed Steel, Sioux City, Iowa, began in business in 1940, founded by Jack and Norman Bernstein's father, Sam, who is still actively involved in day-to-day operations. This 6-acre operation employs 20 people and processes ferrous and nonferrous metals. Equipment includes a 74104 Hammermills automobile shredder, a Harris guillotine shear, an Enterprise hydraulic shear, a LaBounty shear, an two alligator shears--a Canton and a DNK. There are three balers on-site--an Economy, a Dempster, and a Mosley--plus a Bernstein-designed-and-built furnace. Cranes are from Koehring, American, and Link-Belt.
Shine Bros. Corp., Spencer, Iowa, was started in 1902 by Toby Shine's grandfather Sam and uncle Harry. Toby's father, Ben, joined the business in 1929; he's now officially retired though often seen working (not in his office but out in the plant). The main Shine Bros. site, in Spencer, processes ferrous and nonferrous metals on its 38 acres, with 54 employees. The six-employee, 4-acre facility in Minnesota also is devoted to metals. In Spencer, there are two Triple-S wire choppers, two United furnaces, a LaBounty shear, a Mosley shear with Hustler conveyors, three Komatsu cranes, an Insley and a Hitachi crane, and Ohio and National magnets.•
Can not-so-friendly competitors become good buddies, then make a go of it as business partners? Here’s the story behind Toby Shine’s and Jack and Norman Bernstein’s new joint venture, TJN Enterprises, in Sioux Falls, South Dakota.