with the headline 'Scrap's maverick' is featured
in the March/April issue of American Metal Market Magazine,
which will reach subscribers in early April.
Just as every good movie needs an element of tension, the scrap
industry has found its own leading man to supply drama and
controversy: a fine arts major who hails from a small town in
New York that has fewer residents than the number of employees
on some of his competitors payrolls.
So how does a guy
who owned a successful gallery in the Manhattan art scene
manage to succeed in a cutthroat environment, take on the big
boys and shake up the scrap market from the Mississippi River
all the way to the East Coast? For Adam Weitsman, owner of
Owego, N.Y.-based Upstate Shredding LLC-Ben Weitsman & Son
Inc., it has been a rocky road.
Weitsmans proponents call
him a renegade, maverick industrialist, while those who
dont care for him have less-kind things to say. But
competitors claims that the 44-year-old buys too high,
sells too low and disrupts the market--and call his growing
empire-in-the-making nothing more than smoke and
mirrors, a house of cards doomed to implode--dont
bother him one bit.
Weitsman has earned the respect
of those on the other side. I. Michael Coslov, retired chairman
and chief executive officer of Tube City IMS LLC and TMS
International Corp., called him terrific and
one of the best innovators of today.
Both cheers from his fans and
jeers from his critics serve as the fuel that makes him want to
fight harder. I didnt get into this industry to get
invited to golf outings, Weitsman said. If my
competition was friendly to me, then I am not doing my
Weitsman followed his
fathers footsteps into the scrap market in a roundabout
way. After graduating from college, he was running a small art
gallery in New York City when his sister, Becky, became
terminally ill with cancer. Weitsman packed up and returned
home to help his father run the family scrapyard, which focused
on the peddler trade.
I didnt know
anything, and the learning curve was really tough, he
said. He learned a lot of lessons--including how bigger yards
can bully the little guys.
My father was getting
pushed around by a shredder in Pennsylvania because we were
small, he said. There was a little auto parts store
down the street and my dad would sell those cars to the
shredder. The shredder, who he was selling the material to,
came in and took the account right from under him. The bigger
guys were pounding us from all sides. I wouldnt take away
business from someone who is shipping to me. I would take it
away from someone who wasnt shipping to
He became attracted to the
wholesale side of the business, starting his own yard with the
help of a job-creation grant and entering the shredding
He admits that the work ethic
that has brought him success is a learned trait. When I
was young, I made a lot of mistakes and I went to jail.
In 2004, Weitsman pleaded guilty to felony bank fraud. Before
sentencing, both banks involved in his check kiting wrote
letters to the judge saying they had not lost money and asked
that Weitsman not serve prison time because it would hurt his
business and the local economy, but Weitsman nevertheless was
sentenced to a year and a day in federal prison--he served
eight months--and fined $1 million.
That time stripped away my
ego and made me more mature and focused, he said. I
was younger and into speculating. I learned the hard way, and
now make sure I run one of the most conservative scrap
companies out there.
His wife, Kimberly, gave him
solid advice when she told him he needed to repay the debts he
accrued during that dark period in his life. I probably
should have gone bankrupt, but she said, If you
dont pay, they will remember it your whole life. So
I paid and hand-delivered checks, he said.
Weitsman said one of the most painful decisions he made at
the time was selling a buildup of 100,000 gross tons of
inventory for $75 per ton. The shredder wouldnt run
because its manufacturer had filed for bankruptcy during
Today, its a different
story. Upstate Shreddings assets include a
megashredder in Owego and a port facility under construction in
Albany, N.Y. Weitsman has grown the company from one location,
which brought in $1.5 million per year in revenue with the help
of 10 employees, to more than 10 locations--in Albany,
Binghamton, Ithaca, Jamestown, Liberty, Owego, Rochester and
Syracuse, all in New York, and in New Castle and Scranton in
Pennsylvania--employing 400 that will post sales of $750
million per year when the port facility is done.
Its ironic and kind of funny that I had more debt
back then than I have now. I was overleveraged and
undercapitalized, he said.
Aside from a penchant for
exercise, Weitsman has no hobbies. He puts in a 90-hour week
and survives on as little as three hours of sleep a night.
This is an opportunity of
a lifetime to go against the big boys, and I want to beat those
guys. It is not just about the money. No one is asking me to
join a foursome, and I dont like or want to socialize
with my competition, he said. Im not looking
to be Mr. Popular.
Weitsman said his
philosophy is all about attacking the competition. My
motto is to go after the other guy seven days a week, and I
want them thinking about us when they are off. We are as
aggressive on Saturday as we are on Tuesday, because we are a
volume-based company, he said. I dont mind
irking people. I like to keep them unbalanced.
The Owego shredder operates
24/7, and all feeder yards are open seven days a week as a
convenience to customers. When you add up the hours, we
are open basically three and a half times longer than they
are, he said of his competition. When you look at
companies like the Sims, Schnitzers and EMRs, I cannot
out-finance them, I cannot outstaff them--and they do have some
amazing people--so I have to outwork them.
Those who say his business is
doomed for failure are just plain wrong, he said. Back in
the day, it was a house of cards and I failed. I can weather
any storm now. The whole model here is setting us up for the
rainy day. Before, I based everything on perfect-day scenarios,
and we all know that never works out.
He said that publicly held
companies are at a disadvantage to his own. Employees
there are merely a Social Security number, and when things go
bad they just start cutting jobs, he said. Id
sell my house and car before I had to lay off anyone who helped
make this company grow. How can employees have morale when the
company is losing money, closing facilities and laying off
people while the top guys take huge bonuses?
Weitsman said he makes sure that
customers and employees have direct access to him at all times.
We can react fast by keeping an open forum with employees
that allows us to give customers the attention they want and
need, he said.
Weitsman dismissed claims from
those who say it is impossible to turn a profit when paying too
much for feedstock and selling finished scrap into the market
at prices lower than the competition. I am working on a
single-digit margin, dont speculate and make sure I turn
over my inventory every month, he said. Some say I
pay too much for scrap, but I am happy. We have had 28
consecutive quarters with a profit. Being a single-digit-margin
guy I will never have a home-run quarter, but will consistently
hit singles and protect myself from that knockout blow.
And companies that managed
to lose a half-billion dollars last year have no right talking
smack on me, he added, referring to one competitors
Its not unusual for
Weitsman to enter the market before everyone else, then sell at
down numbers compared to the previous month. I have heard
the rumors (that) it is because of cash-flow problems, but if I
sell into Ohio under the market it is not because of cash
flow--it is part of my strategy to bring down the price in that
market, he said. I know what mill demand is, and if
there is no demand, of course I am going to get out there and
put a carrot in front of the mills. I am a realist. He
dismissed claims that he disrupts the market by entering early.
One seller is not going to make the market.
He also rejected claims that he
sought to set up shop in Buffalo purely to rile one of his
competitors. I searched my lists by area code and
realized we were not getting any scrap from there. I am not
going to enter a market where we have a good supplier base. I
go in where we are not getting scrap, he said.
Wherever we go, we push someone off.
Upstate has been known to play
in the domestic and export arenas to maintain a steady outlet
for all its tons every month. But ever since the company
announced in December it was taking space in the Port of Albany
to bypass traditional exporters and become a direct shipper,
his export avenue has dried up--for the moment. I have
been blackballed by the exporters but still have been able to
sell all my scrap. And demand hasnt got so low where you
cant sell. If domestic demand weakened, that would be
unpleasant until I get my port facility up and running,
Weitsman is fully aware that the
major exporters have deep pockets, so he doesnt even
consider setting up a shredder next door to one of those major
players. I am not going to fight someone like Sims Metal
Management (Ltd.) and build a shredder in Newark. Instead, I
attack their suppliers, he said.
He sets up shop near the feeder
yards that supply exporters or other shredders, then takes them
on by paying more for scrap and being open every day of the
week. I am constantly hammering against yards that are
supporting our competition. I am trying to choke their supply
and make them pay more for what they are getting, he
said. In doing so, Weitsman said he is able to whittle away at
his competitors balance sheets as well as steal tons from
As for assertions that his scrap
has quality issues, Weitsman acknowledged that once was true.
Way back in the day, it was crappy and an export grade. I
was putting more tons through a smaller shredder, which made it
dirtier and high in copper, he said. But a couple of
years ago he installed the megashredder and a new downstream
system, as well as investing in a wire recovery unit and wire
His newest target area is Ohio,
having recently purchased in a bankruptcy auction the assets of
Ferromet Corp. across the border in New Castle, Pa. I
will put in our template yard, get our feet wet and see if it
makes sense to put a shredder there, he said. He also
plans to market hard to mills in Ohio. There are
operators there right outside the mills who could bring them to
their feet. I am now telling these same mills, You
dont have to buy local anymore.
Weitsman said he loves the
industry because it is truly a free market that no one can
predict or control. But growth does have its setbacks. I
have been known to micromanage too much, and as the company
grows it is harder to manage. I have had to bring in
people--especially on the accounting end--because I am a
production guy, he said.
Adding executive positions at
Upstate has not slowed Weitsman down. I am not in the
relax mode. I want my wife and daughter to see that Dad goes to
work and works hard every day, he said.
Looking down the road, Weitsman
expects bigger companies to start shedding nonperforming
assets. Many shredders are having very hard times, and we
plan to be even more aggressive in 2013, fighting our
competition, he said.
Weitsman credits part of his
success to recognizing his weaknesses and delegating certain
tasks to more capable hands. The key is that I am an
average operator and surround myself with the best people in
the industry, he said.
As for poaching talent from
other companies, Weitsman said some employees were only too
happy to leave public companies and work for him. But his
operation isnt for everyone. Some have come and
worked out great, and some didnt work out at all. This is
a fast-paced environment filled with a self-motivated group. I
can teach about scrap but I cant teach passion, and some
just didnt have that spark I want and require.
You are basically building
an army, and I want fighters and not passive people. Not only
do I want good, talented employees, I want them to have the
fire underneath them and the desire to make money, he
said. This is not a place for the faint of heart to work,
because there is no hiding and being off the radar.
His core group is known to be
texting and communicating at 1:30 a.m., when the rest of the
world is at rest. Last night, one of my guys stole a
competitors customer, and we were all mass-texting and
thriving on the coup at 1 a.m., he said.
Weitsman said his competitors
dont like him because he makes them work harder. If
they cant compete against a company with its headquarters
in a town of 4,000 that is run by a fine arts major, they
should be worried, he said.