November/December 2011
Lou Baron’s entrepreneurial spirit found its home in the scrap trade, where he has devoted 59 of his 93 years to building a successful three-generation, family-owned recycling company.
By Jim Fowler
Lou Baron realized early on that he wasn’t cut out to work for others. He was destined to be an entrepreneur—a scrap entrepreneur, as it turned out. From nothing, he founded a one-man, one-truck scrap peddling enterprise. Later, after launching an ultimately unsuccessful refining operation and selling his original scrap company, he started from scratch again, with one truck and two employees. Today, that second-chapter scrap company—Acme Refining Co. (Chicago)—has 200 trucks, 400-plus employees, and eight locations. Though the 93-year-old Baron officially is retired, he can’t stay away from the industry he has made his calling for 59 years. He still works one day a week and continues to tinker with cleaning and sorting metal, particularly from electronic scrap. Scrap clearly runs deep in his veins.
An Entrepreneur Is Born
“I came from a very poor background,” says Baron, a native Chicagoan. His father abandoned the family when he was just a year old. His mother, an immigrant from Odessa, Ukraine, raised and supported her five children by basting sleeves onto coats for Hart Schaffner & Marx, a prominent men’s clothing maker in Chicago. With no father and a working mother, Baron says he grew up “strictly on my own. What I had were my own wits and confidence in myself.”
After Baron graduated from Manley High School in 1937, one of his sisters got him his first job: He was a go-fer with U.S. Sanitary Specialties Corp. (Chicago). The work world was a rude awakening for the 19-year-old Baron, who considered himself a “playboy” at that stage of his life. “That was my first realization that the destiny of most people is to work at a job for the rest of their lives,” he says. One day, he took a break from his job to go sunning on the company’s roof. He woke up to find the owner staring down at him. “The last two words I heard him say were, ‘You’re fired,’” he says.
From that experience, Baron says he learned he wasn’t cut out to be an employee. “I couldn’t take orders, and I couldn’t take direction,” he says. Instead, his work stint at U.S. Sanitary “influenced me to be my own person, economically,” he notes. “That experience steered me toward entrepreneurship, where I could be my own man and not [be] confined to the dictates or orders of others.” Ultimately, he asserts, that’s what motivated him to start his own scrap peddling business.
Before Baron could take that important career step, however, the U.S. Army drafted him in 1940. He was 22. “My draft number was 158. I’ll never forget that number,” he says. “It was the first lottery I ever won.” Private Baron reported for duty to Fort Warren, a Quartermaster Corps supply division located just outside Cheyenne, Wyo. Because he had grilled hot dogs and hamburgers at his uncle’s food mart for a short time, the Army made him a cook. In addition, the base commander, who frequently hosted military brass from Washington, D.C., discovered that Baron had a talent for producing theatrical shows. His ability to create entertainment for the commander’s visitors made him an asset, and he claims it delayed his deployment overseas.
During his service at Fort Warren, Baron’s fiancé, Mary Waldman, boarded a Union Pacific train in Chicago and headed for Cheyenne, where they married on March 14, 1943. Shortly thereafter, the Army transferred Baron to Virginia and then to Europe. From Southampton, England, he first went to France to help establish Army supply operations. The Battle of the Bulge was raging at the time, he recalls, and Gen. Dwight Eisenhower decided that 10 percent of all Army units had to go into the infantry to cover troop losses. Baron was among the 10 percent from his company, and the Army assigned him to the 69th Infantry Division. During one battle, Baron says, he and four other men attacked an enemy machine gun nest and captured 25 German soldiers, earning the Bronze Star Medal for their bravery. His company moved steadily eastward through Germany and was the first to meet the westward-moving Russian army at the Elbe River. At war’s end, Baron says his Bronze Star earned him an earlier discharge than undecorated soldiers, and he officially wrapped up his military service in 1945.
Taking to the Scrap Business
Back in Chicago after the war, Baron initially sold notions to grocery stores from a van, then he took a higher-paying job at Centennial Laundry Co., providing residential laundry service. Within a year and a half, he had doubled his route. His biggest laundry customer caught his attention, he recalls, because the man always pulled out a big wad of cash to pay his bill. Baron learned that the man earned his money by selling scrap. The man would torchcut three cars at night in an empty lot across the street from his house, and in the morning he would winch the car bodies onto his flatbed truck, haul them to the scrapyard, and sell them. “I asked myself, ‘Why can’t I do that?’” Baron says. “I didn’t realize how easily I would take to the business.”
In 1952, Baron decided to leave the laundry, take his vacation pay, and put the first $100 down on a $500 truck for collecting scrap. (He started with the truck itself: It was a retired troop carrier, so he took it to a scrapyard and asked the owner to cut out the benches on each side with a torch.) Baron named his fledgling solo enterprise City Scrap Iron Co. He describes driving the truck down Chicago’s alleys, collecting scrap from businesses and residents. Someone told him to take his scrap to General Iron Industries, which was reputed to be “the most honest scrap-yard in Chicago, particularly if you didn’t know anything about the business,” he says. “I had no idea what I had on the truck. I parked outside the yard, and the foreman came out and explained what I had and what it was worth. That’s when I sold my first load of scrap.”
Baron slowly began to expand his operations, forging relationships and accounts with regular suppliers. He recalls that one machine shop generated drums of steel borings, the lowest grade of scrap, which the company set outside for any recycler to take. Baron says that he knocked on the door and told the owner he wanted to buy the material. The man looked surprised and said, “No, you can have it.” Instead, Baron offered to pay him $1 per drum, but only if he would keep the drums inside. He gave the owner his card and asked him to call for a pickup when the drums were full. “He seemed a little skeptical that I would come when he called, but I assured him I would. That’s how I got my first industrial account.”
In the late 1950s, Baron became intrigued about the gold in the electronic equipment that was just entering the scrap stream. Printed circuitboards contained a wealth of gold, he says. “I had a place where I could take them apart. In addition to gold [on the circuitboards], the contact points were platinum, palladium, and silver. I was doing this long before others in the industry, and I was hooked.” That interest prompted him to found Acme Refining Co. with the goal of refining precious metals.
Baron used the revenue from City Scrap to fund the new Acme operation. “I was a good scrap man,” he says, “but I lost so much money refining precious metals that I jeopardized my reputation with my scrap accounts.” To maintain his good name, Baron sold City Scrap for $25,000 cash and used the money to pay all of his scrap suppliers. He and his wife had planned to move to San Diego and use the remaining money to enter the real estate business, but there was so little money left that they couldn’t move. Baron decided he had to get back in the scrap business, even though he had signed a five-year noncompete agreement. He approached City Scrap’s buyer and told him he wanted to re-enter the trade. “I gave him my word I wouldn’t go after the accounts I sold with the business,” he says. Thus, in 1971 he started the next chapter in his scrap industry career, beginning anew with one truck and two employees.
Baron opted to keep Acme Refining as the company’s name, even though the operation no longer refined metal. “It was a misnomer,” he acknowledges, “but it helped me get interviews with potential industrial accounts. They already had a scrap company handling their material, but I was a ‘refiner,’ so they’d invite me in to hear about what we did. In that way, I dissolved sales obstacles.” Within a year, Acme needed a second truck. By 1975, the company had four trucks and six employees. Baron’s business plan was simple: “I’d buy and sell the scrap in the same day so I had no inventory. It was manageable. At the end of the day, I could relax at home.”
Baron’s son Larry joined Acme Refining in 1975. The two agreed to a 50/50 partnership, which Baron says he considers “the smartest move I ever made in my life.” That doesn’t mean they always see eye to eye. Their first argument, Baron recalls, was about whether the company should expand. As he explains it, “the new Turk wanted to wind up, and the old Turk wanted to wind down.” Though Baron had no interest in expanding, his wife asked, “Lou, why did you bring Larry in the business, to stand still? You have to understand it’s only natural to expand and improve.” Baron relented. “Larry had great ideas,” he says, “and he developed into a better salesman than his father.”
Father and son also experienced “turf problems,” Baron says. For example, Larry, now the firm’s president and chief executive officer, likes a neat operation and wanted the company’s trucks to be in top shape on the road. Baron says he was focused more on economic concerns—namely, saving money. To him, it made more sense to buy two older trucks for $12,000 each rather than one new tractor for $24,000. “I could send them out to make twice as many stops as one truck could make,” he explains. His son pointed out, however, that the older trucks would break down more often and would “attract the state police like an elephant attracts flies.” Larry was right: In one instance, a trooper noticed the overloaded springs on one of the company’s older trucks and made the driver pull onto a highway scale. The truck exceeded the highway weight limit, which resulted in a $2,000 fine. “After paying that fine, my son’s [approach] began to make sense to me,” Baron says, adding
that “an intelligent man never argues with success.”
To be sure, Baron hasn’t had much to argue about since Larry came aboard. From four trucks and six employees in 1975, Acme now has 200 trucks, more than 400 employees, and eight locations that serve more than 5,000 accounts and handle more than 200 million pounds of scrap a month. And he proudly points out that Acme now is a three-generation recycling company. In addition to Larry, Baron family members in the business include Lou’s daughter Iris, an industrial sales consultant; his grandson Brett, chief operating officer; and his granddaughter Lindsey, office manager.
Keeping a Low Profile
Throughout Baron’s 59 years in the recycling industry, honesty and integrity have formed the foundation of his business philosophy. “If you give your word, you should live by it,” he says. “When you make a pitch to a prospective account, you keep the promises you make, and you perform. That was my concept—being fair with companies, doing what you promise, and giving them something better than they can get from your competitor.” That approach has made Acme’s customers extremely loyal, which fits another of Baron’s business principles: “It’s not how much business you get, it’s how much you keep.”
Acme’s employees are another component of its success, Baron says, noting that he has definite ideas about the qualities he wants in his staff. To him, a positive attitude is an employee’s most important trait. “It’s more important than experience because a person with a good attitude wants to learn the business,” he says. In fact, Acme’s supervisors cannot issue a uniform to a new employee until that person has worked at the company for five weeks. “Our foremen are trained to check for attitude, and we can make that determination in five weeks,” he says. Employees who passed the attitude test would become part of the Acme team and earn Baron’s devotion. “I would take my time to teach them product identification,” he says. “I’d also tell them, ‘You’re working for me, but I’m no better than you are.’” He worked to exemplify that statement, he adds. For example, “I’d never correct an employee in front of another employee; I maintain their dignity. That has always been my outlook, and my son adopted that philosophy.”
The company has taken its concern for its employees to incredible lengths. In the mid-1980s, for example, a competitor offered to buy Acme for “quite a few millions,” Baron says. Despite the tempting offer, Baron and his son felt so strongly about protecting the company’s staff that they refused the offer. “We didn’t want to risk putting our people out of a job,” he says. “You have to take those feelings into consideration. You can have all the brains and ambition in the world, but you can’t grow without people.”
Acme’s people-focused philosophy has created a dedicated work force. “I can safely say that we have people who like working here,” Baron says, and he maintains his aversion to selling the company. “We’ll never become a steel mill,” he says, in reference to the many scrap companies that steel companies have acquired. “Near term, the business will be continued by generations of Barons.”
When Baron looks back on Acme’s growth over the years, he notes that making money was never his principal motivation. “The driving force was the satisfaction of creativity,” he says. “Because you create and extend your business through your idea, that is wonderful satisfaction for a human being.” In truth, he says, he never imagined Acme would become as large as it is today. “No, no way. It’s the ideas that came from my son’s head that created what Acme is today.”
Baron enjoyed watching the company grow so much, however, that he found it difficult to retire. “Retirement posed a bit of a problem,” he admits. “It was about 10 years after Larry requested that I retire. I was 83 when I finally agreed.” So what is his role today? “Pain in the ass,” he replies. “I come down to intimidate.” And whom does he intimidate? “My son,” he says with a straight face, before bursting into laughter.
Despite his retirement, Baron still reports to the office every Friday. Until a year ago, he would still wear an Acme work uniform with “Lou” on it. One day, he recounts, he was walking through the company headquarters facility when he met an Acme salesperson who was giving a potential customer a tour. The salesperson stopped Baron and said to the guest, “I want to introduce you to one of our owners.” The visitor looked at Baron in his work clothes and couldn’t conceal his surprise, wondering why a company owner would walk around in such an outfit. “I enjoyed the moment because I’m always comfortable carrying a low profile,” Baron says with a smile.
Jim Fowler is retired publisher and editorial director of Scrap.
Lou’s Legacy
Born: April 13, 1918, in Chicago.
Education: Graduated from Manley High School (Chicago) in 1937. Later, he spent 10 years in the great books program at the University of Chicago, wrapping up in his early 40s. “I became self-educated,” he says.
Military Service: Drafted into the U.S. Army as a private in 1940. Fought in the European Theater, earning the Bronze Star Medal for bravery. Discharged in 1945 as a sergeant. “I was never bitter about being drafted,” Baron says. “Only in America could I achieve what I have achieved in my life economically. That’s why I was only happy to serve my country.”
Family: Married Mary Waldman on March 14, 1943. Two children, Iris and Larry, as well as three grandchildren and one great-grandchild.
Career: Founded City Scrap Iron Co. (Chicago) in 1952, which he later sold and then repurchased in 2011. Established Acme Refining Co. (Chicago) in 1971.
Personal Influences: Nathan Rosenmutter of General Iron Industries (Chicago).
Honors: Received the Recycler of the Year Award in 2008 from the Illinois Recycling Association (Oak Park, Ill.).
Hobbies: Reading.
Lou Baron’s entrepreneurial spirit found its home in the scrap trade, where he has devoted 59 of his 93 years to building a successful three-generation, family-owned recycling company.