March/April 1997
Whoever warns against going into business with friends hasn’t met the founders of United Alloys Inc., three men who have parlayed friendship and business acumen into a thriving superalloy scrap recycling company.
By Kristina Rundquist
Kristina Rundquist is an associate editor of Scrap.
It’s a challenge running a business in Southern California. Between the earthquakes, the now-infamous riots, and the daily, almost Herculean efforts it takes to keep a scrap recycling company viable, it’s a wonder that any company can survive, let alone prosper.
But that’s just what United Alloys Inc. has done—and then some.
Since its inception in the late 1960s, this Los Angeles-based company has grown from a small vendor of aerospace metal products to a 100-employee, multisite firm, with a 2-acre superalloy scrap processing facility and aircraft metal service center in Los Angeles, a 3-acre processing plant in Columbus, Ohio, and a sales office in Houston managed by Peter Mason.
As the firm has expanded its physical operations, so, too, has its reputation grown. “We’re a very formidable little company,” says Allan Sacks, secretary/treasurer. “We know what we’re doing, and we’re well-respected in the industry.”
United We Stand
It was nearly 30 years ago—in 1968—that brothers Allan and Art Sacks, along with partner Ron Donn, decided to form United Alloys Inc.
All three had previous experience in the superalloy scrap business. The Sacks siblings, for instance, had worked for Max Zuckerman & Sons Inc., an Owings Mills, Md.-based processing firm, where Allan was vice president. Ron Donn, meanwhile, had grown up in the scrap business. His father was a partner in a superalloy processing operation in Ohio, and Donn would work there whenever he wanted extra spending money. He moved to the West Coast in 1968 to work at a Commercial Metals Co. operation.
The three partners met through their business contacts, became friends, and eventually decided to start their own company. “Call it entrepreneurship, call it ambition,” says Ron, president, “but whatever it was, we discussed it collectively and decided it was time to try it on our own.”
There was never any question that the three would work as equal partners. “We knew that each of us had talent and connections,” Allan says, “but more than that, there’s an incredible amount of synergy when the three of us get together. And that’s reflected in the fact that we called the company United.”
Nor was there any question that their business would specialize in superalloys. Not only did the partners’ experience lie in that niche, but such specialization was virtually required for quality control reasons. As Ron explains, “When your primary business is high-temperature alloys, your facility is audited by the consumers of your product. The last thing they want to see in your plant is copper, brass, tin, or lead, which are all detrimental elements in this business.”
Initially, United dealt mostly in titanium aerospace products. But in 1973, the firm organized its business into its current structure of two divisions—scrap processing and aircraft products. Also in these early years, United had a business association with Vac Air Alloys Co. (Frewsburg, N.Y.), a partnership that lasted approximately three years. When that relationship ended, the company began to look at expanding its operations.
In 1977, it did exactly that, forming a joint venture with I.H. Schlezinger and Sons (Columbus, Ohio). When the Schlezinger family patriarch retired, United bought him out and made the company a wholly owned subsidiary under the name Unico Alloys Inc. Howard Schlezinger, the patriarch’s son, took over the reins and continues to serve as president of the operation today.
While Columbus may seem an odd and distant place for a Los Angeles-based company to set up shop, the move made sense because Ron was originally from that area and had business connections there, and because the Midwest was—and is—home to many of United’s customers. “A tremendous amount of the metals we’re dealing with are generated in the Midwest, and the bulk of our primary consumers are out there,” Ron notes. In fact, he points out, Columbus is strategically located as a hub among superalloy consumers, with the majority operating within a 400-to-500-mile radius. “It’s also difficult to buy scrap and ship it to the West Coast, so business-wise it was a good decision to establish a location there,” Ron says.
Today, United handles both superalloys—metals used in the aerospace and petrochemical industries and by manufacturers of medical and recreational equipment—as well as related primary metals such as tungsten, tantalum, cobalt, and beryllium. Much of the firm’s material is titanium or nickel-bearing metals used by desalinization plants and petrochemical companies worldwide.
When it comes to buying and selling material, United sees the world as its oyster, pulling scrap from Eastern and Western Europe, Southeast Asia, South America, even the Middle East. “Scrap is worldwide,” Ron says. “We buy and sell all over the world, and a large part of our business today is importing and exporting.” By his estimates, export sales account for 20 to 30 percent of United’s business in a given year, while approximately 20 percent of its scrap purchases are imported.
Adversity’s Lessons
While most companies experience a few rocky years at the outset, United Alloys was lucky in that it was able to grow quickly.
Still, the superalloy business is not without its inherent problems, namely that historically it has been tied to the defense industry. “The superalloy business is by nature a difficult one because it experiences long-term swings,” acknowledges Ron. “It’s not necessarily a recession, but there are bad periods, and when you’re as heavily related to the defense industry as we are, these cycles are extended over a longer period of time than those in the ferrous and nonferrous industries.”
And bad years there have been. In the four or five years prior to the economic recovery that began in late 1993, there were times when Ron thought United would have to cease operations. “We had an extremely bad cycle in the superalloy business that finally turned around in 1993,” he says. “When the bad times come, you do what you have to do—you cut overhead. You look at your insurance and your personnel and you try to cut back where you can. The problem with our end of the business, though, is that we can only do so much to adjust our overhead, but we have to maintain our key personnel because of the great expense that goes into training our metal sorters.”
Nevertheless, good things do spring from adversity. For starters, the company learned the value of having a “good bank,” as Ron puts it, “one that understands the scrap industry and that won’t walk away when you’re having a bad year or two.” The firm also learned how to be more cost-conscious and how to manage its operations through the worst of times. “We also learned that keeping a good relationship with your customers is vital because when they’re looking to make a sale or purchase, you want to be the one they come to,” Ron says.
Good Enough for NASA
One reason customers keep coming back is that United guarantees a No. 1 product, says Ron, noting, “We have a reputation for supplying quality scrap and meeting contractual obligations with regard to both purchasing and selling.”
Those obligations include guaranteeing a melt for consumers. If a melt turns out to be off-spec due to scrap con-taminants, one of two things can happen, Ron explains: “One is a negotiated price adjustment, or, if the melt involves elements that can’t be realloyed, then we have to buy back the heat and that can be quite expensive. In that case, you end up paying for whatever additions the consumer made to the heat, be it primary metals or their scrap, plus costs.”
This sort of do-or-die proposition drives home the critical importance of quality control in the superalloy scrap processing business. In this niche, therefore, it’s the sorting, grading, and cleaning of material that distinguishes a company from its competitors. That expertise involves not only a highly trained work force but extensive quality control procedures. And United has them both.
Prior to being sold to melting facilities, United’s superalloy scrap undergoes a vigorous series of grading, identifying, and processing steps.
Incoming material arrives by truck in drums or gaylord boxes, with turnings stored outdoors in the receiving area and solids unloaded indoors. After being unloaded, turnings are taken to the firm’s in-house lab for acid testing, while larger solids head for one of the eight sorting tables, each equipped with a spectroscope that identifies the precise alloy of each piece of metal. Sorters also use spark-testing to determine an alloy’s composition, primarily by noting the arc length of a metal’s sparks, their color, and the presence or absence of stars at the arc’s end. So great is the need for purity that each drum or box must be checked individually because even the slightest amount of a contaminant can ruin a load.
Once analysis has been completed, each load is given a lot number and alloy identification. This type of fastidious documentation is necessary because superalloy scrap processors such as United must maintain records on every load for up to eight years in the event of a ruined heat or parts failure down the road.
From there, turnings head to the firm’s crusher to be processed into chips, while sheet cuttings are made into a chunk-like product called cobble by a series of shears, chop saws, and briquetters. Once 10 to 20 tons of an alloy has accumulated, the material is run through a degreasing unit that has the all-important task of removing all carbon/sulfur-based solvents, which are a serious contaminant in the melting process.
After each 10-to-20-ton batch, the crusher and degreaser are dismantled and steam-cleaned to remove impurities and prevent cross-contamination of loads, a process that can take upwards of a day.
Once processed, the chips and cobbles are stored at United’s main site or in its 25,000-square-foot warehouse across the street.
Most of the material that passes through United’s scrap division is sold to U.S. specialty and vacuum melters, which melt material in furnaces equipped with pumps that remove all gases, thus ensuring the melt’s purity. The remainder of its scrap heads for destinations in the Far East and Western Europe. What isn’t consumed by vacuum melters goes to consumers that use air melting furnaces such as steel mills and foundries.
United’s superalloy scrap processing operation is distinctly different from its aircraft product division. Located on a separate site a few miles from the company’s main offices, it operates much the same way as a metal service center. As Art Sacks, vice president, explains, “The aircraft division is like a minimill in that it subcontracts the majority of its processing.”
Frank Mackie, who joined the firm in 1983 as technical director and today serves as the aircraft division’s general manager, expands, noting, “We do it this way because the capital investment for processing equipment of this sort is in the multimillions.” According to Frank, Southern California is unique in that it has superalloy formers in the area. “We can place an order for a mill, never see the product, and after it goes through the various steps, one day the truck pulls in with our finished bars,” he notes.
Art founded the aircraft division in 1973 and set about the business of distributing high temperature alloys, aircraft stainless, and titanium sheet, plate, and bar. A decade later, the division expanded from basic distribution to the conversion of ingots to mill products and open-die forgings.
Building upon service and technical ability, says Art, the division has flourished. “When Frank and I started working together, we had one saw and a meager inventory located in a small facility,” he says. “Today, we have a 30,000-square-foot facility and 10 saws operating around the clock, five and six days a week.”
Quick turnaround and quality products have bestowed a very unusual claim to fame upon the aircraft division as NASA’s only approved source for the enormous frangible nuts that keep the space shuttle anchored as it prepares for takeoff, says Art. Lest these nuts not be in place or fail to work properly, the space shuttle would pass the control tower too slowly when lifting off and incinerate everything in its path. Instead, these nuts are filled with an explosive charge that cleaves the nuts after 3/4 of a second, long enough for the shuttle to build up steam and literally blast off. “As far as we know, we are the only approved source,” Art says. “We take great pride in developing with our customers a quality product that meets the demands of a highly technical market.”
Garnering the confidence of NASA is no small feat, and the secret lies in United’s dedication to 100 percent quality, 100 percent of the time, Ron says, reiterating, “The first step to success is in quality control. Without that angle, you can’t be a vacuum supplier or a processor of specialty metals.”
One for All and All for One
For all the importance of quality issues, a recycling company—even a superalloy processor like United—can’t succeed on quality control alone. And sure enough, the firm has managed to succeed over the years for other reasons as well, note the firm’s principals.
Allan, for one, points to United’s service and integrity as having played—and continuing to play—a major role. “We’re a company that keeps our word,” he says. “If we make a deal, it’s a deal, be it good or bad.”
Art agrees with the service point, noting that the firm is able to deliver its products quickly. But he also attributes United’s rise to the experience factor, the fact that they know the superalloy business inside and out. “We know we can’t be everything to everybody, so we stick to our niche, what we know,” he states. “And if we don’t know the answers, we know where to find them. We only get as technical as what we sell.”
One point the partners agree on is that their team mentality has made a huge difference, perhaps the difference, in their business. As Art describes it, “Everyone is part of the team. No one wears the big hat here. We discuss things, and everyone’s opinion means something.”
Allowably, it’s management that directs the success of a company, but no company, regardless of the strength of its management team, can excel without good employees, a fact that is recognized and supported wholeheartedly by United’s leaders.
It’s that team spirit that keeps employees at United, say the three partners, noting that the company is blessed with negligible turnover. Yet keeping employees satisfied is not something that just happens—it’s something you have to work at. “There’s a good work atmosphere and ethic here,” says Ron. “We try to keep our employees happy and give them the benefits they need and we can afford.” That includes solid wages, health coverage, and profit sharing plans. “If the company makes money, we do, and if we do, our people do,” says Allan.
United’s involvement also extends outside its operations. Not only does the firm support various neighborhood causes, but its principals are active on several boards, including local chambers of commerce. For his part, Allan also sits on the board of the Paralysis Project of America, an organization he founded in 1984 following an accident that left his son paralyzed.
Supported by all of these positive corporate attributes, United faces the future with ambitious aspirations, in keeping with its habit of always looking for new opportunities, Ron notes. For one, the firm has its sights set on expanding its business into the Pacific Rim and Europe, and it plans to set up additional operations and sales offices here at home.
And you can be sure that whatever opportunities it pursues, the company will proceed in the same way it began its business—united. •
Whoever warns against going into business with friends hasn’t met the founders of United Alloys Inc., three men who have parlayed friendship and business acumen into a thriving superalloy scrap recycling company.