October 2003

Midwest Shredder Back On Line

Auto Recyclers Provide Important Source of Scrap Metal

It was March of 2002 when Cargill Steel closed the doors of Northstar Recycling in Toledo, Ohio. Located just a block from the busy Port of Toledo, the multi-faceted metals recycling operation served customers throughout the region. Early last year, Cargill - the world’s largest privately held enterprise - announced an initiative to focus more on its core business. As a consequence, Toledo’s second largest metals recycling facility was no longer part of the plan. In the bitter cold of winter, it appeared that Northstar Recycling and the more than 15 full time employees who worked there had reached the end of the line.

Doug Dauer believes timing is everything. Not long ago, the 43-year old Toledo native and veteran of the steel recycling business saw an opportunity in the mothballed Northstar operation. Together with partner Mike McVey, also a former Northstar executive, Dauer began looking at ways to transform the once proud business into a serious contender for today’s market. By pooling their talents, as well as their resources, they purchased the assets of Northstar Recycling and created an all-new organization. Toledo Shredding, LLC was born.

“Both Mike and I are excited to be in Toledo,” said Dauer, who handles the commercial side of the business for Toledo Shredding. “The area is rich in scrap and presents opportunities we feel are right for the new operation. Our objective is to become the lowest cost provider of the highest quality product,” he added.

While Dauer and McVey were well prepared for the new venture, they had help. “Toledo Shredding, LLC is owned in part by ProTrade Steel Company, Ltd.,” explained Dauer. ProTrade Steel is a multinational broker and trader of scrap iron, steel and other metals. “ProTrade is our parent company. Their involvement with Toledo Shredding is a natural extension of their vertical integration strategy. Considering ProTrade’s commitment to the scrap metals industry, it makes sense for all the right reasons,” he added. ProTrade Steel has offices in Chicago; Ann Arbor, Michigan; Hudson, Ohio; Birmingham, Alabama; Baltimore, Maryland and Richmond, Virginia.

With the backing of ProTrade Steel, the partners got additional help from places they didn’t expect. According to Dauer, “Right from the start, The City of Toledo was a huge supporter. Mayor Jack Ford played a key role in making sure we had everything we needed to get ourselves established and off to a good start. The city leaders appreciated the fact that we were saving a lot of very good jobs. They felt a full service scrap recycling facility would be a good thing to keep up and running. I can’t say enough about how important their support has been for us,” said Dauer.

Early chores included getting the yard in order and preparing the new operation to compete in today’s market. Then on July 29, 2003, the shredder came back on line. “We hit the ground running,” said Dauer. “Our employees are experienced pros who really know what they’re doing. Having a ready-made workforce was a real benefit for us,” he said.

It was obvious how important the “human factor” is, and Dauer’s philosophy is clear. “Employees here are good people who embrace change, who share our vision for the future and are willing to do what successful new companies need to do. The excitement is a neat thing, and we see it everywhere. People are working hard again, they’re enjoying what they’re doing and getting a great job done. We believe it’s an important part of our competitive advantage,” he added.

Toledo Shredding is already supplying a broad base of new customers throughout the region. Their primary ferrous products are number one and number two frag. “We’re processing a lot of finished product, and every shipment is fully certified for content,” said Mike McVey, who oversees the new firm’s day-to-day operations. At present, the firm is focused on auto bodies, white goods, sheet iron and light gauge industrial scrap.

Auto recyclers take note. “There’s a large concentration of auto recyclers in the region we serve,” said Dauer. “Our customers are depending on us for more and more material. Since auto bodies are an important source of scrap, we’re constantly looking for new sources,” he said. “We’d like nothing more than to grow our business by helping recyclers in the region grow theirs at the same time.”

In addition to the ferrous output, Toledo Shredding has also established an on-site warehouse for non-ferrous scrap. There, employees of the firm sort and analyze inbound material and prepare it for delivery to special accounts. “Our new warehouse is fully equipped with shears and balers for the wide variety of aluminum, copper and other non-ferrous metals we handle,” said McVey.

With prices for scrap metals moving steadily upward, the timing to get started could not have been better. Foreign demand, coupled with returning strength in the domestic market has depleted scrap metal supplies on a regional basis and bolstered pricing as a result. “We firmly believe there’s room in the market for a supplier like us,” said Doug Dauer. “Customers appreciate great quality product - on time - at a fair price.” It’s a formula that’s right for the times.