Recycling in the Heartland—Midland Davis Corp.

In the past 10 years, Midland Davis Corp. has transformed itself from a metals-only processor into a diversified recycler encompassing metals, paper, and wood. 

By Eileen Zagone

Eileen Zagone is an associate editor of Scrap.

“We have rust in our blood,” jokes Mitch Davis about he and his brother Marty, who together operate Midland Davis Corp., a Moline, Ill., scrap processing company that’s been run by their family since 1892.

He could just as easily have said that paper and wood chips course through their veins, as this business—now well into its fourth generation of family leadership—has broadened its scope beyond scrap metal to include secondary paper and scrap wood as well. Given the changing business environment of the Moline area, this diversification is part of the firm’s efforts to establish a broader, more secure operating base for the future, rather than having all of its proverbial eggs in the one basket of scrap metal recycling.

While countless firms that once depended on the region’s once-mighty steel industry have disappeared from the landscape, Midland had the vision and flexibility to adapt to the changes while continuing to operate according to the principles of service and efficiency that have been passed down through its family ranks for more than 105 years.

Updating Traditions

Nestled on the banks of the Mississippi River, Moline and the cities of Rock Island, Ill., and Bettendorf and Davenport, Iowa, are collectively known as the Quad Cities. This region has been Midland’s home since its founding.

The firm traces its roots to Louis Livingston (Levinstein), a Lithuanian native who moved to the Quad Cities—where his relatives had already settled—and went into business with his brother Ike Levinstein. Their venture, named I. Levinstein & Co., was a horse-and-wagon operation that collected a variety of scrap along the Davenport levee.
When the brothers dissolved their partnership in 1906, Louis moved across the river to East Moline, opening a plant on First    Street and an office in downtown Rock Island. He named his new firm Midland Iron & Steel in honor of Midland Car Co., the former owner of his plant site.

Soon, Louis’s oldest son, Irving, joined him in the business and helped expand its operations through the World War II era. In 1946, the company sold its East Moline operations and moved to its present home on Fourth Avenue. In the following years, Louis’s younger son, Al—who had been a CPA and operated his own wholesale and retail liquor businesses—also came onboard with the company.

When Louis and Irving died in the early 1950s, Al became president and Hank Davis, Louis’s grandson, took over as vice president. Hank later became president in 1966 after Al’s death and continued to lead the company until his own death in 1991. Hank’s sons—Marty and Mitch—then took the helm as president and vice president/secretary, respectively.

For its first 94 years, Midland focused mostly on recycling ferrous and nonferrous scrap. “Since we’re regional scrap processors,” Mitch explains, “we process the scrap that’s generally produced around here, and most of that is related to the agricultural industry and made of steel.” Over the years, for example, Midland cultivated a close relationship with the company that put Moline on the map—John Deere.
And that relationship still thrives today. For proof, you only have to examine the firm’s scrap. Its piles of brown-and-gray steel scrap are peppered liberally with material colored with the signature grass-green paint of Deere products.

To be sure, the firm’s heritage is firmly cast in metal. But in 1986, it was compelled to look beyond metal scrap to ensure its viability and growth into the future.

Bringing Paper Into the Fold

Ironically, it was the closing of Midland’s largest steel scrap supplier that prompted it to enter the nonmetallic recycling business.
   When agricultural equipment maker International Harvester Farmall closed its Rock Island plant in the 1980s, the area in general—and Midland in particular—lost a sizable generator of steel scrap. Hank, Marty, and Mitch saw the writing on the wall. “We saw that we had to diversify so that we weren’t dependent on any one part of the business to stay successful,” Marty recalls.

Though the firm considered a number of different business options that weren’t related to scrap processing, it ultimately decided to explore paper recycling. One reason was that it was similar enough to metal recycling that it made good business sense. It also has a cyclical nature similar to metal scrap markets and, as Marty notes, “we knew how to manage in a fluctuating market.” Another reason was that Midland had space readily available for a new processing venture at its plant.

And so, after buying a shuttered paper recycling operation across the river—mostly to acquire the operation’s baler—Midland established its paper recycling division in an empty building adjacent to its metal processing area.

Midland Paper & Products quickly expanded into recycling all grades of paper, including Marty’s favorite—hard white, the high-ticket jewel of recycled fiber. “I’d love to handle more of this grade,” Marty says, affectionately patting a bale of the material.

As the division grew, it outgrew its original digs, prompting Midland to add another building to the division’s operating space. While many processors enlist the construction talents of their employees to expand their plants, Midland took that do-it-yourself philosophy a step further—it built the paper recycling addition almost completely out of usable scrap from the metals side of its business. “We’re proud we were able to do this ourselves,” says Mitch, adding that it saved the company a bundle on construction expenses.

All in all, Midland’s transition into paper recycling was relatively easy. Yet that’s not to say the company didn’t have a learning curve and its share of challenges along the way. Some things are simply done differently in the paper niche compared with the metals side of the business. One fairly elementary difference is that paper must be kept dry—an easy feat when material is selling quickly and storage space is available. But what about when markets are down and material isn’t moving through as quickly, yet is still coming in at its normal pace? Then, paper recyclers must have adequate covered space to keep this inventory high and dry until it can be sold, Marty notes.

Another difference is the constant threat and fear of fire in the paper business. A fire can quickly reduce thousands of tons of inventory to ash and destroy operating space and equipment. And though insurance covers the equipment and inventory, paper recyclers still face problems in the wake of a fire, such as where to store and how to process incoming paper to meet customer demands. To help reduce the risk of fire, Midland’s employees reach for a broom whenever there’s even a momentary lull in the whirl of activity in the paper processing plant. And thanks to their efforts, the floor is free of even the tiniest bits of paper.

Yet another difference is that the focus of the firm’s paper recycling customers is on diverting material from the landfill, whereas its metal scrap suppliers know that their material has always been recycled rather than discarded. The Davis brothers are proud of the role their paper division has played in redirecting and recovering material that was previously thrown away. While there are no mandatory recycling laws on the Illinois side of the Mississippi, Mitch says, the county does have landfill diversion goals and the cost of landfilling has increased steadily. Midland Paper & Products, he asserts, has played an important part in helping the county meet its diversion goals.

Currently, the operation processes around 2,000 tons a month of as many as 15 grades of secondary paper. At least half of that total is old corrugated containers, or OCC, that ultimately find their next life in linerboard and packaging products. As with Midland’s steel scrap supplies, most of the paper division’s recycled fiber supplies are of local origin, with Marty boasting that the operation handles “the lion’s share of the paper in the Quad Cities.”

The division receives a variety of grades from local newspaper and printing companies and draws OCC from area grocery and retail businesses. Through the years, Marty has encouraged the latter groups to bale their empty corrugated boxes rather than sending them to a landfill, while also striving to make the recycling process as convenient as possible for them. The company, for instance, offers to pick up bales as often as needed—even on weekends—without charging more.

In its short 11-year history, the paper division has grown to the point where it now accounts for 40 percent of the company’s overall revenue. “This is hardly a stepchild of our total business, but a very important part of Midland,” Mitch states.

The brothers attribute a significant measure of the division’s success to their participation in the Paper Stock Industries Chapter of ISRI. “We didn’t know that much about paper when we first entered the business,” Marty recalls, noting that attending the chapter’s meetings “helped get us up to speed quickly.” To this day, he says, he always comes away from the chapter’s meetings “with good, practical ideas,” stressing, “I can’t overstate how important our active participation has been.”

And when Marty says active participation, he isn’t kidding. Despite the firm’s short tenure in the paper recycling niche, he has quickly climbed the ranks of the national chapter and currently serves as its secretary.

Not the Same Old Grind

Given its success in the the scrap paper business, it’s not surprising that Midland decided to diversify into yet another recycling niche—namely wood chipping. While this may sound like an odd sideline business unrelated to Midland’s metal and paper recycling operations, in truth it makes perfect sense.

As the Davises explain, much of Midland’s incoming scrap paper is transported on wooden pallets, which are designed to take only so much use and abuse before they wear out. A number of Midland’s local paper and metal suppliers also generate scrap pallets and other wood waste such as crates, and they were eager to do something else with them as landfill costs in the area rose.

Midland saw an opportunity and purchased its first wood grinder in 1991, adding a second one in 1994. The tub grinders, explains Mitch, operate similarly to an automobile shredder, with the scrap wood being pummeled by a hammermill. Acquiring the units called for a sizable investment, but one that paid for itself quickly, he says. An added bonus to the “Midland Mulch” side of the business is that the firm didn’t have to look much beyond its established customer base for infeed material.

The firm’s shredded wood is suitable for use as fuel, animal bedding, and landscape mulch. The “raw” shredded product isn’t as dark and rich-looking as most landscape mulch, so Midland hired a company to dye some of the mulch a dark, reddish brown.

Though the firm originally planned to sell the mulch only commercially, the heaping mounds of mulch attracted attention from passersby who were interested in buying it for their homes. They were doubly thrilled when they discovered that the material was recycled. The upshot of all this attention was that Midland started selling its mulch to the public as well. And though most of the 75,000 cubic yards of chipped wood the firm produces each year is sold for fuel, the community’s interest in the landscaping mulch has prompted the firm to continue dyeing some of its wood chips to exclusively serve this market.

Treating People Right

The community goodwill Midland demonstrates in continuing its mulch sales and in accepting household scrap paper from Quad Cities denizens is echoed inside its plant in the way Marty and Mitch treat their employees and customers.

The family theme is a popular one at Midland, with several father and son and brother teams at work side by side in the plant. Mitch feels that hiring the son of a good employee is even safer than hiring a friend of a good worker because it’s likely that if one family member has a good work ethic, others will too.

Most of the company’s nonunionized work force boasts an admirable 10-to-12-year average length of service, with some employees serving much longer than that. “Long-term employees make our job as managers easier” because they know how to work safely, what’s expected of them, and how to work together, Mitch says.

To reward its employees for a job well-done, Midland offers a 401(k) plan and profit sharing. Marty and Mitch are also considering implementing a new monetary incentive program that would boost productivity and efficiency by rewarding employees when the company meets a particular financial or performance goal.

Increasing operating efficiency is one of the keys to Midland’s long-term success, the brothers say, noting that another key will be continuing to offer superior service—a philosophy they learned from their father, and he from the two generations before him. “We believe we offer the best service at a fair market price,” says Marty, adding, “no one can outperform us in this area.”

And indeed, after not only surviving but succeeding for more than 105 years in the scrap recycling industry, it’s hard to deny that Midland has earned its motto: “The name of recycling in the Quad Cities.”

And will the company continue its recycling tradition into a fifth generation? Will more Davises grow up with rust—and paper and wood chips—in their blood?

It’s too soon to tell. The oldest of Marty’s and Mitch’s kids is in college and the youngest is still in elementary school. But that question doesn’t have to be answered now. Marty and Mitch enjoy what they’re doing and aren’t anywhere near retirement—they seem to be having way too much fun growing their business.•