September/October 1995
This Midwest recycler is more than up-to-snuff on quality control, customer service, safety, and environmental compliance. But the company’s president says the firm’s greatest resource and the true foundation of its success is its employees.
By Kent Kiser
Kent Kiser is an associate editor of Scrap Processing and Recycling
Jay Klempner laughs when he thinks back to his first say of work at Klempner Bros. Inc., the Louisville KY.-based scrap recycling company founded by two of his granduncles 90 years ago.
“My first day here, I was handed a shovel,” he recalls. “I had a college degree and was digging a ditch for a water line!”
That was 20 years ago. Since then, Jay has come a long way, moving from the ditch to the office of president and chief executive officer.
Klempner Bros. has come a long way since its start too, undergoing many changes since Morris and George Klempner began the business in 1905. For one thing, the company has seen 13 Klempners pass through its management ranks, with Jay now the only family member still active in the business. For another, while the firm started out recycling everything from bones to rags to rubber, it has since narrowed its focus to ferrous and nonferrous metals exclusively. Also, from one small rented yard downtown Louisville , Klampner Bros. has grown to two plants—a 26-acre tract in the city and a 17-acre parcel along the Ohio River . And along the way, the company’s employee roster has swelled from a handful to more than 120.
Add it all up, and klempner Bros. today can boast of being one of the top 100 privately held companies in Louisville , though someone as unassuming as Jay is hardly the type to brag. Furthermore, by Jay’s estimation, Klempner Bros is among the largest 15 percent of scrap recycling companies in the country, a position he attributes to the company’s investment in its operations, its customer service efforts, and perhaps most importantly, the dedication of its employees.
A Litany of Strengths
Though Jay closely guards his company’s vital statistics, he is open about every other aspect of Klempner Bros. When asked to discuss some of its strengths, for instance, he is at no loss for words, first pointing to what he calls its “financial soundness.” He notes: “We lean toward being conservative, but we’re willing to take risks based on good sound analysis.” Among its financial practices, the company believes in carrying limited-to-no-debt and reinvesting its profits back into the business, rather than taking them out for personal gain.
Another Klempner Bros. strength, Jay says, is its use of the most modern processing and handling equipment, including balers, ferrous, and nonferrous shredders, cranes, trucks, and more, Jay likes to talk about—and buy—equipment, which is understandable considering that he spent his first 17 years with the company in the plant handling operations. “I’ve always been an advocate of buying new equipment,” he says, noting that last year he purchased six new trucks to add to the company fleet and will probably buy four or five more this year. He has also been scouting around for a new shredder to replace the 17-year-old system at the firm’s shredding operation. States Dennis “Denny” Bordeau, vice president: “We try to stay on the cutting edge of technology regarding the equipment we use.
Jay goes a step further, asserting that Klempner Bros. “probably has more capital invested in equipment than a lot of companies” and noting that the firm is a true believer in having extra equipment handy. The reason? So the company “Can continue to provide top service to its suppliers and consumers, even if a machine goes out of service or is down for maintenance,” he explains.
Jay also counts computers among the company’s modern and essential equipment, noting that the firm “has been using computers for probably 25 years—long before most recyclers knew what a computer was.” Except for its general accounting software package, Klempner Bros. developed its own programs that enable it to keep up with the marketing, administrative, accounting, and operations information. “I can tell you anything you want to know about costs, purchases, sales—who, where, what, when, how, why,” Jay says. “And knowing that gives us an advantage.”
Another defining aspect of Klempner Bros., Jay notes, is its environmental compliance activities. “We strive to be and have been fairly successful at keeping an environmental program alive-and-well here and keeping up with the ever-changing regulations,” he says. Among its environmental features, the company’s facilities are hard-surfaced, which Jay credits to Irving Klempner, his father, and the firm’s chairman, who “had the foresight to pave most of his property 20 to 25 years ago.” The firm also recently hired a civil engineer with extensive experience in the environmental arena to keep its compliance efforts shipshape. “We’re always striving to do it right, even when regulations make it difficult to know what right is,” Denny says.
Jay also considers the company’s safety record a strength, noting, “My insurance company brings other processors to our facility to show them how to operate safely.” To illustrate the firm’s safety commitment, he opens a filing cabinet and pulls out several in-house manuals, all pertaining to safety topics. In addition, he notes, the company holds safety training classes and safety committee meetings regularly, has screened its employees for drugs and alcohol since 1990, has implemented “very good accident investigation procedures,” and has trained 25 management and plant employees in first aid and CPR. That way, no matter where an employee is around Klempner Bros. operations, he or she isn’t far from someone who could provide help in the event of an emergency.
Thanks to these and other safety efforts, the firm’s experience modifier has been continuously below .75 for years, which means Klempner Bros. saves on its workers’ compensation costs. The company passes on some of these savings to its plant employees through safety awards and incentives. Every month, for instance, one employee is randomly selected to win $75—provided he has operated safely and is wearing the required safety gear on the job. “Safety has always been and will always be important to us,” Jay asserts. “We don’t keep extra people on the payroll, so when someone’s out with an injury, it affects us.”
At Your Service
Jay has a poser that says, “Around here, the customer is king, and without customers, we don’t have a business.” This poster is a good reminder, he says, that scrap recycling is a “service industry as well as a manufacturing industry.” Or, as Denny puts it, “All I know is that customer service is one of the things that’s holy around here.”
Of course, the firm recognizes that service means different things to its varied suppliers and customers. For its over-the-scale suppliers, the company strives to get them in and out quickly, safely, and courteously. If there’s a backup at the scale, Jay encourages his employees to talk to those waiting and “try to make the feel appreciated. No matter how small, we try to give all of our suppliers the exact same level of service.
For its industrial suppliers, the company aims to provide prompt and reliable pickup service, which often requires anticipating the suppliers’ needs. Most times, the firm’s trucks are radio-dispatched to make specific pickups, but it’s not unusual for them to make unscheduled stops to check on suppliers and bring back half a load. This only reduces the number of empty backhauls the company’s trucks make, but also ensures that its suppliers feel well-serviced. “Some people may think picking up half-loads is a waste of time and mileage on our trucks, but that’s the kind of service we have to deliver in a competitive market,” Jay explains.
Consumers, meanwhile, want quality first, Jay says, so Klempner Bros. is “very careful about the quality of its material because that’s one of the reputations we have with our consumers.” One example of the firm’s quality commitment is its use of radiation detectors to monitor all inbound and outbound material. The company has used radiation detectors for several years, ever since Jay noticed that mills were installing them and putting greater emphasis on protecting themselves against potential radioactive scrap.
The firm also thoroughly inspects all outgoing scrap shipments to check for off-spec items, and a report is made on every shipment, noting who loaded the material and who inspected it. “That way, if we have a problem, we know where to go,” Jay says. As Doug Elder, director of marketing and secretary/treasurer, remarks, “When we sell to consumers, we want them to be comfortable that are material will be the quality they’re looking for.”
Delivering quality isn’t the only way the Klempner Bros. serves its consumers, of course. It knows that serving consumers also means meeting shopping schedules, producing new grades to meet changing specs, and being a reliable supplier. “We don’t hop from consumer to consumer every month based solely on price,” Jay says. Instead, Doug explains, “We’re interested in long-term, mutually satisfying relationships with our consumers. If it’s not a good deal for us and them, its not going to work in the long term.”
The Greatest Resource of All
No matter how much you talk with Jay about the company’s nuts-and-bolts business aspects, he never strays far from his favorite topic—the company’s employees whom he views as the firm’s “greatest resource.” And his people-oriented focus is obvious at every turn.
Strolling around Klempner Bros.’s plants, Jay waves and says hello to every employee he passes. Sometimes he tells them a joke. And he prides himself on knowing everyone’s name—all 90 at the headquarters plant and all 30 at the firm’s joint venture bailing and shredding plants, dubbed River City Bailing Co. and River City Shredding Co.
Though imposing, Jay’s name-recognition feat has been made easier because the majority of Klempner Bros. employees have been with the firm for years, and in many cases decades. In fact, you can point to any employee and ask, “Has he been here for awhile? and Denny responds, “They’ve all been here for awhile.” This longevity gives the company what jay calls “good depth of experience with our people.”
How has Klempner Bros. engendered such longevity?
By being “very good to its people,” Denny answers. By that he means more than competitive wages, a retirement plan, an employee assistance program, annual bonuses, generous holiday and vacation leave, and health, life, and disability insurance. He also means above-and-beyond gestures such as college scholarships for employees’ children, no-interest loans, and tuition reimbursement for continuing education in business-related subjects.
Klempner Bros. has also sponsored onsite classes to help employees earn a GED. Those who completed this two-nigh-a-week, nine-month course received $500, pass or fail. “The idea behind it was, if we have better-educated employees, they can work smarter instead of harder,” Jay explains. “We felt that training our people would be a long-term asset.”
The GED courses, by the way, were held in a $200,000 lunch and locker building that the company built for and dedicated to its plant employees both past and present. This facility sits prominently next to the Klempner Bros. entrance, looking for all the world like the firm’s executive offices.
And it almost was. In 1989, the firm was weighing whether to build new offices or a haven for its plant employees. It went with the latter choice.
While Klempner Bros. employees will tell you how much they appreciate these benefits and amenities, they’ll add that one of the best things the company does is give them autonomy. Doug can attest to this fact, noting that Jay gives him “free rein to do what I want. He doesn’t interfere with my day-to-day activities, but instead has confidence that I’ll take the company in the right direction.”
Denny reinforces this point stating, “I enjoy the freedom the company gives me to do what I want, when I want to do it.” As Jay explains, “I try to let my people be free-thinkers and give them the latitude to do things. If I let them implement their ideas, they’re going to bust their butts to make sure they work.”
On top of all this, there has always been what Denny calls an “unsaid dimension” to the Kemplner family’s relationship with all of its employees. “The thing that stands out is that they will help you any way they can,” he says. “I know that if I face a crisis, they’ll do whatever is in their power to help me with it—be it time, money, tolerance, whatever.”
As if to give credence to the adage, “what goes around comes around.” Klempner Bros.’s dedication to its employees is repaid in many ways. For starters, the mood around the plants seems buoyant. “Our employees are generally happy, diligent people,” Deny says. “Their attitudes throughout the day are bright and full of humor. Everybody is nice to work with.”
There’s also a strong team spirit and work ethic. If you happen to be out in the plant when lunchtime rolls around, for instance, you won’t see employees stopping their machinery on a dime and dashing for the lunchroom. “They’re committed to finishing what they’re doing first,” Denny observes. And one day in the winter of 1994, when Louisville was immobilized by 24 inches of snow, “you’d be surprised how many employees made it to work,” even though most other businesses were closed, Jay recollects.
The heart and soul the company exhibits toward its employees is similarly evident in its philanthropy in the Louisville community. A handful of awards decorate the company’s conference room, serving as testaments to its generosity. For example, you can’t miss the seven Louisville Slugger wooden baseball bats mounted on the wall, acknowledging the firm’s support of Homers for Kids, a United Way project connected with the Louisville Redbirds AAA baseball team. Then there’s the bronze sculpture award honoring the firm’s underwriting if the Jewish Hospital’s annual Skycare/Klempner symposium for helicopter emergency medical specialists. Other awards offer thanks for support from the Klempner foundation, which gives out “many tens of thousands of dollars a year” to religious, civic, and educational causes.
And these visible awards are “just the tip of the iceberg,” Jay says. “For the most part, we’ve been what I call ‘closet givers.’ We do things because we want to, not for recognition.” And if you ask around why the company is so community-focused, Denny offers simply, “The Klempners view philanthropy as part of the responsibility that comes with leadership.”
Controlled Aggressive Growth
Under the glass cover on his desk, Jay has a sheet of paper that states, “Those who don’t make mistakes seldom do anything at all.” He invokes that saying to encourage his employees to come up with new ideas and “always look for ways to improve.” As Denny asserts, “We have no operation that’s good enough as it is. Everything we do, we try to do a little bit better every day.”
This philosophy of continuous improvement comes, in large part, from Irv Klempner, who encouraged the firm’s employees to always shoot for one step higher. By doing so, they would always “keep pushing for better and better, no matter how good they get,” Denny says.
Continuous improvement is very much at the top of Klempner Bros.’s priorities for the present and the future. While improving, of course, the company also expects to grow, as it has steadily since 1905. “We aim for double-digit growth in a controlled, aggressive manner, increasing out areas of service and taking advantage of the growing need for scrap,” Jay says, pointing to the expanding minimill market in the Midwest .
Despite his growth projections, Jay has no grandiose scheme to expand Klempner Bros. into a scrap recycling behemoth. “I don’t have to be the biggest scrap processor in the country,” he says. “My main concern is to provide security for all our employees and meet the needs of our customers. If we can do that, I’ll be happy and probably have a fairly successful business.”
This Midwest recycler is more than up-to-snuff on quality control, customer service, safety, and environmental compliance. But the company’s president says the firm’s greatest resource and the true foundation of its success is its employees.