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Ken Greco Co. Stays Ahead of Scrap Market
BOARDMAN, Ohio -- The scrap steel market is showing signs of stress – steel companies simply aren’t producing as much and demand for scrap is at low tide at the moment – but a local company has found ways to navigate through the tough times and remain strong.
“The market is iffy,” concedes Kenny Greco, vice president of the Ken Greco Co., founded in 1999 by his father, Ken Sr. “No one is putting inventory on the ground,” he says. “They’re buying only what they need and getting by with what they’ve got.”
Ken Greco Co. buys, processes and sells scrap steel from and for industrial customers across the region. Over the years, it has diversified its capabilities and added operations that process oversize materials as well as a steel service center.
“The scrap metal industry has changed as a whole over the last 20 years,” Greco reflects. “When we started, we were just a scrap company that dealt with industrial customers.”
Today, the company oversees three operations in Youngstown: a large scrap yard on Wilson Avenue and a warehousing operation on Florida Avenue under the Ken Greco name, and GLG Industries Inc. on Crescent Street in the Riverbend district.
“We deal with a lot of materials from steel mills that other scrap companies don’t want to deal with,” Greco says. “Real ugly stuff, scrap that’s 20,000 or 30,000 pounds.”
GLG processes “overpours,” that is, excess steel or metal that once spilled from a ladle or furnace and so is considered waste, as well as other scrap steel. The company uses a burning method to reduce the size of an overpour, for example, and then ships that scrap back to a steel company where it’s melted again and recycled to make new steel.
“Twenty years ago, this would have been buried in the ground,” Greco says, gesturing to the work of an employee burning an overpour to size. “Now, we buy them off different steel mills, we’ll cut it to size and send it back to the steel mill as scrap.”
According to annual data published in the U.S. Geological Survey’s synopsis of the mineral industry, total value of domestic purchases and exports of scrap steel and iron stood at $39.4 billion in 2012, down 22% from the year before.
Profit margins in the secondary steel business are often held hostage by the price of scrap, which is volatile, Greco says. With relatively weak demand today for the product, his company continues to streamline its operations, reduce costs and create new revenue sources.
“We’ve streamlined a lot of things,” says Sarah Brugler, recently promoted to the position of chief financial officer. “I’ve been with the company four years now, and we’ve looked at a lot of ways to cut costs. We deal with millions of tons of steel each year.”
Much of the company’s success in 2013, Greco emphasizes, is the result of sensible planning and foresight. “The scrap market isn’t good right now, but we’re doing well,” he says.
When the scrap market is down, for example, the company purchases dirt from steel companies as well as its dredge, Greco notes. “They’ll ship me dirt, and we run it through a processor at the Wilson Avenue location,” he says. The equipment separates dirt from rock and any metal buried in the ground.
The site on Wilson Avenue has been a scrap yard more than 100 years under several owners. So digging six feet into the ground is sure to yield metal components that can be reused. “We can run the separator at any temperature,” he reports. “After that, its pretty much 100% profit.”
In 2008, Greco purchased HR
Evans Steel Co., a steel service center in East Palestine in Columbiana County.
“We serve a totally different set of customers there,” Greco says, “but I’m seeing more synergy between the two companies, although they’re different.”
A saw operation at HR Evans was recently relocated to the warehouse on Florida Avenue, Greco notes, to cut down on delivery times to customers in Youngstown.
The company’s scrap is distributed to steel mills across the country, and Greco sells to all of the major operations in northeastern and western Pennsylvania.
“Our steel goes everywhere,” Greco says. “The ferrous metals – the scrap iron and steel – goes to every steel mill in a 100-mile radius,” he relates. Customers such as Vallourec Star, AK Steel and ArcelorMittal are among the major consumers of scrap.
Nonferrous metals such as copper and nickel are sent to specialty processors, he adds.
“We’re centrally located,” Greco says, noting that there are few scrap operations that handle the materials that Ken Greco Co. accepts. “There’s one in Akron and Chicago, people that deal with the large stuff,” he says.
Moreover, the company’s location and access to highway arteries make it a central hub for scrap sales, Greco says. “It’s the best place to be. Especially with Vallourec right in your backyard.”
Vallourec Star, the French-owned company that recently hot commissioned its $1 billion new pipe mill in Youngstown, is one of Greco’s customers that has seen an impact from oil and gas exploration in the Utica and Marcellus shale plays.
But the oil and gas business hasn’t really affected the bottom line for his company, Greco notes. If anything, the industry has lured many of the skilled workers in the area to more lucrative positions in oil and gas, thus thinning the labor pool in the Mahoning Valley and making it harder for businesses such as Greco’s to find qualified employees.
“Truck drivers, burners, saw operators, welders – I’m having a horrible time finding truck drivers,” he laments. “Oil jobs are coming and they’re paying incredible wages, and you just can’t compete,” he says.
“It’s extremely hard to find skilled workers.”
The company employs 75 at its three operations, Greco says, as the transition to the next generation of ownership in the company begins to take place.
“This past year, my dad went into overdrive on wanting me to take over,” Greco says. Brugler’s promotion to CFO is also part of this transition, he says.
“I think my dad is more comfortable because she’s here,” Greco says of Brugler. “There are a lot of things I don’t understand that she does.”
Brugler adds that the company generates a type of team spirit that makes for a comfortable environment and low turnover. “We have a lot of good people here, and the family atmosphere helps a lot,” she says.
“This company was started with a typewriter and computer in my dad’s basement,” Greco reflects. “My dad has taught me a lot, and I’ve spent a lot of time with these people. When you’ve got the right people on your side, it’s hard to go wrong.”
EDITOR'S NOTE: First published in the MidSeptember edition of The Business Journal.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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