September/October 1997
Meet Atlantic Stainless Co. Inc., a Massachusetts-based company that specializes in saving usable stainless steel and high-temp alloys from the scrap pile and preparing it to customer specifications.
By Kent Kiser
Kent Kiser is editor of Scrap.
You’re a scrap processor, and you’ve just received a load of stainless steel bars. Nice looking material. Long, clean, undamaged. But it’s scrap to you. So you do what you’ve always done—tell your torchman to cut it into shorter sections so you can sell it as scrap.
But wait! Jerry Cohen and Bill Gouveia have a message for you. That material isn’t scrap. It’s usable, or surplus, metal, and it’s worth more than scrap just as it is. That’s right, you can sell the material for a premium without having to process it. It’s what Jerry and Bill like to call the “ultimate upgrade.”
Their company, Atlantic Stainless Co. Inc. (North Attleboro, Mass.), is dedicated to spreading the gospel of the ultimate upgrade far and wide. The firm, which Jerry, its president, describes as “a cross between a scrap processor and a service center,” specializes in buying usable stainless and high-temp alloys and preparing the material to customer specifications. By buying usable metal, the firm can pay processors a premium over scrap value, yet get metal at below prime metal prices and, in turn, sell to customers at a discount to the prime market—a win-win-win situation. “There aren’t many businesses where you can pay suppliers more than they’re used to getting and then take that same material and sell it to customers for less than they’re used to paying,” says Bill, vice president.
And thanks to the ultimate upgrade concept, as well as its penchant for making the buying and selling of stainless painless (to steal one of its mottoes), Atlantic Stainless has become the largest dealer of surplus stainless in North America, and possibly the world, Jerry asserts. “I don’t know of anybody like us,” he says. “We’re unique in both our abilities and our knowledge. We really stand alone in what we do.”
Starting From Scratch
At root, you could say that Atlantic Stainless is the offspring of a medical researcher and an associate editor. The firm’s story unfolded like this: Jerry, who grew up in New York City, initially pursued a career in medical research but gave it up when he found there was no money in it. A series of unrelated circumstances persuaded him to try his hand at the metal surplus business, which led him to work for—and eventually buy—Charles J. Whelden Co. Inc., a Providence, R.I.-based scrap processing company that handled ferrous, nonferrous, high-temp alloys, and high-speed steel, as well as surplus metals.
Bill, meanwhile—a Massachusetts native—skipped college to found a small weekly newspaper in Norton, Mass., with two friends. “I always loved journalism,” he says. “I always thought I was going to grow up and cover the Red Sox for the Boston Globe.” He served as associate editor for approximately two years before reaching the same conclusion as Jerry—that there was “absolutely no money” in his chosen field.
Bill happened into the scrap industry sometime around 1978 when the newspaper’s landlord formed a new company—Buyers and Sellers Stainless and Surplus Metals—and asked Bill to work for him. As fate would have it, Bill would often pick up surplus stainless at Jerry’s processing operation, and the two quickly established a friendly business relationship.
In 1983, when Jerry caught wind that Bill had been laid off, he called and asked if Bill wanted to start a business focused on usable stainless. Bill said yes, of course. And in April 1983, they launched the venture on nothing more than a verbal commitment for the simple reason, says Jerry, that they “liked and trusted each other.”
One of the first tasks was to select a name for the fledgling company. Given its location on the East Coast, the word Atlantic made sense. But more to the point, Bill says, “We chose Atlantic Stainless because it begins with A. Our priority was to try to be first in the Yellow Pages.”
“We thought that was important,” Jerry smirks.
“And after we named it, we found out we were still about seventh in the phone book,” Bill laughs.
Bolstered by this name and $50,000 in seed money, Bill leased a 1,400-square-foot facility in Plainville, Mass. “We basically built the business from scratch, and when I say from scratch, you don’t get much scratchier than how we started,” Bill says, noting that the company conducted much of its early business via a single two-line telephone and a dilapidated truck. In those early days, Bill took care of the day-to-day physical operations, while Jerry—who continued to manage his scrap operation in Providence—assisted Bill in the evenings.
It didn’t take the firm long, however, to become less scratchy. In 1985, Atlantic Stainless bought its first plant, a 3-acre former scrap processing site in North Attleboro with 7,500 square feet of operating space. As the firm became busier, the scrap market in Providence slowed, prompting Jerry to liquidate his processing business and devote himself to Atlantic Stainless.
Since then, the company hasn’t looked back, growing beyond the Jerry-and-Bill show to encompass 20 employees, increasing its annual throughput to “millions and millions of pounds,” and moving its operations once again in November 1995. This time, the firm moved even more upscale, setting up shop on a 2-acre site with 20,000 square feet of office and operating space, and an equal amount of outside space, in the prestigious North Attleboro Industrial Park, a site tucked amidst tall maples, elms, and pines. “It’s good for our image to be in a nice industrial park,” Bill says, noting that an added benefit is that a handful of the firm’s customers are also conveniently located within the park.
Excuses and Misconceptions
Conventional wisdom says the path to success is rarely smooth or easy, and Atlantic Stainless has certainly had its share of challenges in promoting the ultimate upgrade concept and establishing itself as a leader in its specialized niche.
The firm’s biggest obstacle on the buying side has been educating scrap processors about the value of their stainless and high-temp usables. “That’s what we’ve been working on for 14 years,” Bill says, noting that the company has promoted its cause through word of mouth, ads in trade magazines, catalogs, and directories, and now a Web site (http://www.atlanticstainless.thomasregister.com).
In their quest to persuade recyclers to save their usables, Jerry and Bill have heard—and countered—just about every excuse in the book. Some processors complain, for instance, that they never get a full truckload. That’s OK, Atlantic Stainless not only buys small quantities—“We bought 300 pounds from a processor in Arizona,” Jerry points out—but also pays the freight or picks up the material.
Other processors say they don’t have room to store usable material, to which Bill says, “Just call us, and we’ll pick it up in a day or two.”
Still others assert that selling usables isn’t worth their while. How can they say that, Bill ponders, when Atlantic Stainless will pay more than scrap value for the
material?
And when processors say they don’t have time to identify and inventory the metal, Bill responds, “We’ll visit and check it out.”
On the selling side, the firm’s biggest hurdle has been the perception among some customers that surplus metal is inferior to prime metal. “People told us in the beginning that you can’t be a service center and handle surplus material because people will turn their noses up at you and think you handle junk,” Bill explains, adding, “We never totally believed that.”
Sure, some customers, such as aerospace firms, require prime metal with mill test reports, and Atlantic Stainless can and does supply that. Most of its customers, however, are small machine shops and fabricators with less stringent requirements. “They want good quality material at a competitive price, and that’s what we give them,” Bill says. “We don’t hide the fact that we buy surplus. We advertise it. We’re proud of it. It’s taking recycling one step further.” Though the firm’s competitors sometimes try to use the surplus-vs.-prime issue against it, and though naysayers said surplus and service center activities couldn’t be merged, “so far we’ve managed to pull it off,” Bill says.
The Odd Couple
Atlantic Stainless has been able to pull it off, in part, thanks to Jerry’s and Bill’s different but complementary talents and personalities. They humorously—and accurately—refer to themselves as the Odd Couple, with Jerry filling the role of neatnik Felix Unger and Bill playing the more, um, relaxed Oscar Madison. Their differences are immediately apparent from one look at their offices. Jerry’s office is extremely orderly. That’s because he’s a “compulsive neat-freak” who is “organized to the nth degree” and who has an “insatiable appetite to be perfect,” Bill offers with a smile, adding, “Jerry will say he has no weaknesses, and it’s my job to keep him convinced of that.”
Bill’s office, in contrast, looks more lived in, shall we say. The papers that amply cover his desk drive Jerry crazy. Jerry, a notorious listmaker, jokes that Bill also makes lists from time to time, but then he loses the lists on his desk. “We’re so different that we balance each other out—we’re a good team,” Bill says. Jerry concurs, stating, “The combination couldn’t have been better. We totally understand each other and make decisions together. I don’t think we’ve ever had a fight in our 14 years. It’s a wonderful marriage and frankly,” he adds with typical humor, “we spend more time together than we do with our wives.”
Of course, Jerry and Bill brought more than differing personalities to Atlantic Stainless. Their partnership proved to be a perfect meshing of their professional talents and experience as well. Jerry’s experience in the surplus business and the scrap industry gave him extensive contacts with scrap processors all over the country and, hence, vast knowledge of where to buy usable material. Bill, meanwhile, had more direct experience in where to sell material. In practice, these complementary skills meant that Jerry could buy material at prices that allowed Bill to sell competitively against prime metal. It also meant that, together, they had a personal understanding of the needs, priorities, and quirks of both the processing and consuming sides of the scrap and usables businesses. The result was that the company’s business “just started snowballing” to the point where Atlantic Stainless now buys and sells throughout North America and beyond.
The firm’s snowball couldn’t have rolled for long, however, if Jerry, Bill, and their staff didn’t have the necessary technical know-how to survive in the specialized stainless and high-temp niche. As Jerry notes, “It’s technical in the scrap business. It’s vastly more technical in the surplus stainless business. Unless you know what you’re doing, you can put yourself and your company in great jeopardy.” Some customers, for instance, need to know extremely specific characteristics about their metals—such as its tensile strength or percentage of elongation—and “if you don’t know what you’re doing, you could ruin a project very easily and it could cost you millions and millions of dollars in a lawsuit,” Jerry explains, adding proudly that Atlantic Stainless has never been sued. That’s because the company takes extreme care in identifying the metals it handles, either using its own X-ray equipment or an independent lab. “If there’s a question, we have it tested, and we know what to test for,” Jerry says, stating, “We can sell to the aircraft manufacturers of the world because we know what we’re doing.” These high stakes give weight to his observation that “anybody can enter the usable stainless business but very few can stay in it unless they have a background and extensive knowledge in it.”
Aside from its technical savvy, Atlantic Stainless has also managed to not only stay in the business but thrive thanks to its “extraordinarily sound” financial position, as Jerry puts it. The firm’s financial strength became apparent early—it was able to recoup its initial $50,000 startup investment in its first six months.
While the firm is light years from its humble beginnings, its principals are still very careful about what they do with the company’s money. “We always like to have enough so we can do what we have to do,” Jerry says. “We have to have the ability to buy any deal, whether it be $200 or $2 million.” And in keeping with that goal, he or Bill can check the firm’s sales and profits within seconds via computer at any time during the day. This strong financial position has enabled the firm to weather difficult economic times in the past and continues to enable it to pay its suppliers promptly as well as purchase new equipment or expand as opportunity dictates.
Following the Golden Rule
Beyond these technical and financial factors, Jerry and Bill stress that they’ve built their business on positive relationships.
Bill still recalls the kind way Jerry treated him when he picked up usable stainless from his scrap operation in Providence. “Though I often arrived in dirty clothes and looked like a truck driver off the street, Jerry always treated me like I’d just walked in wearing a three-piece suit,” Bill says. “That was important. It taught me a valuable lesson.”
The lesson was to treat others the way you’d like to be treated—the Golden Rule.
From the beginning, the partners vowed to operate their business in an honest and forthright fashion. “We’ve always tried to be as honorable as possible and get the word out that there are benefits to dealing with a company like ours,” Jerry says. He credits the firm’s reputation for integrity, in fact, with giving it the word-of-mouth momentum it needed to take off and continue flying.
Jerry and Bill have also applied the Golden Rule by making it a point to meet with anyone who comes knocking on their doors, whether the person has an appointment or not. “We remember having doors slammed in our faces on the road, and we vowed not to do that to other people,” says Jerry.
The partners also tell their sales staff to never be rude to anyone. “We put the reputation of our company above everything else,” Jerry says. “We try very hard to treat people fairly because it comes back to you tenfold.”
Jerry and Bill apply the Golden Rule in-house as well, making it their personal goal to ensure that their employees look forward to coming to work. Their efforts go beyond offering fully paid medical insurance, profit sharing funded totally by the company, and bonuses in good years. “We give them enough freedom and responsibility where they feel they’re an integral part of the company,” Bill says. “If you can make an employee feel that he or she has some real responsibility and can make a difference, then you tend to get a better employee.”
Jerry and Bill also “tell them what’s going on”—that is, they give them access to information they need to do their jobs as effectively as possible. “We’re interested in making a living, but we’re also interested in the future, and the future is our employees,” Jerry states, adding, “We’re only as good as our employees. If they’re not happy, then we’re in big trouble.”
The company’s employees must be pretty happy because there are many multiyear veterans. Many of these employees have stuck with the firm even when offered “very large packages” to leave and even through lean years, when the firm couldn’t give raises, Jerry notes. And out in the plant, the company’s employees showed their satisfaction in the past year by voting down an organization attempt by the Teamsters.
While they’re on the topic of relationships, Jerry and Bill can’t help but mention the scores of friendships and business ties they’ve forged through their extensive involvement in first ISIS, then ISRI. In addition to both serving terms as president of ISRI’s Northern New England Chapter, Jerry has been chairman of the convention committee and public relations committee, vice chairman of the stainless and specialty metals committee, and president of NASCO-OP, while Bill has also served as chairman of the chapter presidents committee. ISIS and ReMA have “played a major part in our development,” Jerry says, adding that their personal involvement has been a way to give something back to the associations.
Improving Internally
Behind Jerry’s office door, there are mechanical drawings that outline Atlantic Stainless’s next expansion, an 11,000-square-foot addition that would give it a total of 31,000 square feet of indoor space. The firm planned to have the addition completed by now, but it’s been so busy that it couldn’t allow for the inevitable disruption caused by the construction. So the plans wait behind Jerry’s door to be unfurled when the going gets easier—sometime soon, they both assert.
Those drawings are just the most immediate and tangible of the company’s aspirations. Soon, for instance, its customers will be able to place orders via computer. The firm also has an eye on pursuing ISO 9000 registration, with Bill stating, “I’m sure we’ll eventually move in that direction.” Jerry and Bill also don’t rule out the possibility of opening additional operations in other states, a move that could reduce their freight costs significantly—though neither partner savors the thought of losing direct involvement in the daily workings of a second operation.
“I’m trying to convince Jerry to open up a branch office in Hawaii, but so far he hasn’t gone for it,” Bill says.
To which Jerry replies, “And I told Bill that I thought that was a great idea as soon as they complete the bridge.”
While Atlantic Stainless is always open to outside opportunities, its principal goal is to continue improving internally. “I’m not sure we can improve our attitude or our relationships with our customers and suppliers,” Jerry explains, “but I think internally there’s always room for improvement. If there isn’t, then you’re doing something wrong.” What it all boils down to, he concludes, is the commitment to “stay with what we know and what we do best, and make that even better.” •
Meet Atlantic Stainless Co. Inc., a Massachusetts-based company that specializes in saving usable stainless steel and high-temp alloys from the scrap pile and preparing it to customer specifications.