PITTSBURGH Publicly held
metals recyclers must focus on their business first and
foremost and not on pleasing shareholders, I. Michael Coslov,
retired chairman and chief executive officer of Tube City IMS
LLC and TMS International Corp., said.
"My business motto is four
things: Take care of your people, take care of your equipment,
take care of your customer and take care of the stakeholder,"
Coslov told AMM, noting that the shareholder should be
the last concern, because ensuring that the first three
priorities are in good order will ultimately result in a
"People make a mistake and take
care of (the) stakeholder first. If you take care of (the)
stakeholder first, you are going to end up in the crapper,"
Recyclers could benefit by
embracing the raw ambition that made American scrap legends and
fortunes, he said.
"The basis of the scrap industry
has been entrepreneurial," he said. "The big companies came in
and bought up entrepreneurs and try to force upon them the
corporate culture. As much as their size is an advantage to
(multinationals), buying up companies and taking the fight out
of the industry is a disadvantage to them."
Coslov singled out Adam
Weitsman, president of Owego, N.Y.-based scrap processor
Upstate Shredding LLC-Ben Weitsman & Son Inc., who has been
known to rile the industry with his maverick approach to
business. "Weitsman is terrific and one of the best innovators
of today who reminds me of myself when I was younger," he said,
noting that Weitsman epitomizes the ambitious competitiveness
that public companies mistakenly remove from their own
boardrooms. "Anyone who messes with the status quo, especially
with multinational scrap companies involvedI can see
where they get upset."
While steel mills have been
known to springboard deals into other cities, Weitsman steps on
some toes by springboarding into other territories to secure
feedstock, Coslov said.
Steel mills have been wise to
amass enormous scrap assets, he added.
"Mills are at a clear advantage
owning shredders," Coslov said. "Their return doesnt have
to be as great, their scrap doesnt have to be as clean
and they can melt their own mistakes."
Mills also enjoy lower freight
costs and realize the returns on the nonferrous generated in
the shredders downstream.
Its the sheer volume of
processing equipment that compresses margins. "I have been
known to say that I wanted to make a shredder to eat
shredders," Coslov said. "There are less scrap dealers today
but more equipment, and they are ultimately competing for the
same reservoir of scrap."
Coslov, who had joined
Glassport, Pa.-based Tube City in 1965 and retired in 2011 (
amm.com, Aug. 17, 2011), identified two ways for
scrap companies to manage volatility. "Either make a commitment
to make your costs low and handle less material so you
dont have to go for marginal material and function on the
higher spread material. To get larger, you have to go for more
marginal material, and you will have to speculate and wait to
sell until there is more of a spread," he said. "When people
stop treating scrap as a commodity, they start losing