Tim and Karen Strelitz, California Metal-X, Los Angeles, California. Interviewed by Zachary Paul Levine, April 2019. Transcription by Speechpad.
Tim: Well, I graduated at the University of Denver. Actually, we’ll go a little before that. Karen and I met 50 years ago at a Jewish Community Center dance in Englewood, New Jersey. And one of my best friends, a young lady that I grew up with from the time I was five, was Karen’s best friend, Ellen Bergfeld. So, she introduced us and as they say, the rest as history.
The way we got into the business was that my mother and father were in the world of women’s fashions. My mom was an assistant to Oscar de la Renta. My dad was the vice president for a company called Kimberly Knitwear, which was knitwear for ladies. Karen’s father ran one of the finest French restaurants in all of North America, a restaurant called the Café Chauveron, which was iconic on the East Side of New York. Today, it is, I think, the headquarters for Citibank.
Karen: Yes. It’s changed.
Tim: So what happened was, I went to the University of Denver, Karen graduated from the University of Denver with a graduate degree. I then traveled to Europe until my money ran out. I came back to New York and explained to my mom and dad that I was gonna go to Los Angeles to find work. So I drove to Los Angeles. My father was good friends with a gentleman named Joe Shapiro, who is the owner of National Metal and Steel on Terminal Island. At that time, National was probably the largest ship dismantling company in the United States. When I visited that facility and saw those ships coming down, I knew right then and there that a connection had been made. It was one of those moments of epiphany.
Karen: So, a little Jewish geography rolling back to when we were coming out to California in our college days. It turned out small connection that in being introduced to the Shapiro’s, of course, they asked where my background stemmed from. And it was Baltimore, Maryland and New York, and the next question was, what was my maiden name? And so that was answered with a, “Do you have a Toby in your family?” And I said, “I have an uncle Hoby in my family.” And the next step was, “Your grandfather was my father’s legal counsel.”
Tim: And his.
Karen: And his. So, again…
Tim: Small world.
Karen: …it’s such a small world.
Tim: And, you know, the Jewish population’s a small population, but when those things happen, there’s a certain amount of serendipity associated with it.
Karen: It was wonderful.
Tim: So I went to work as a labor. I was earning $81 a week.
Interviewer: How old were you?
Tim: A labor.
Interviewer: How old were you?
Karen: How old?
Tim: How old was I? I’m sorry, I was 21.
Tim: My background is I have degrees in history and philosophy from the University of Denver, which absolutely set me up for this particular industry. I worked at National Metal and Steel for several years. I ended up realizing that I was very, very good with process systems. I did some very innovative things while I was there, and that included being the assistant superintendent for Clean Steel. Clean Steel was one of the first automobile shredders in the country. And it was owned by both National Metal and Steel and Alpert & Alpert, also a company you might want to interview because they have deep roots in the scraps industry and genuinely lovely people.
From there, I went to a company called Pacific Smelting, which was one of the larger re-melters and manufacturers of re-melted zinc in North America. The company was owned by two Jewish gentlemen who got their careers from Federated Metals which at the time was the university for many, many companies that were born from people who had worked at Federated.
And term Federated was part of the ASARCO, which was famous because the Guggenheim family, an 18th-century Jewish family, founded American Smelting and Refining Company, and built it into the large mining complex in the world. They got involved in secondary metals and the manufacturing of copper-based alloys. And these two gentlemen were from the smelter that existed in San Francisco at the time. They left the company, they started Pacific Smelting Company and built it into something very large. That was where I fell in love with combustion.
Karen: So, Tim asked me to marry him. And, so…
Tim: I did.
Karen: …I said, “Yes.”
Tim: I asked you that when we were 16.
Karen: That’s true too. That’s true too. My father said, “Come back when you know where you’re going and what’s going on.” So, I came out to California with my skis, my trunk, which was books and paraphernalia, not very much, and my Siberian Husky. And at that point became interested in the metal industry, because Tim was deeply involved with it. And being a woman in the industry at that time, which was 45 years ago, it was quite a skill set to introduce a woman into the workplace. So I asked to go out and learn to grade metals, and that was not an option being in New York, being, you know, in a place that was not a place that they thought was a woman’s place to be. And I didn’t want to necessarily go back into the office area. So, I had an opportunity to…
Tim: We had a very close friend.
Karen: Friend, who was looking to hire a precious metal buyer, so I became a precious metal buyer, which is a whole other area.
Tim: That was Howard Martin also a Jewish fellow.
Karen: Yes, Martin Metals.
Tim: Martin Metals.
Karen: And then at that time that was Handy & Harmon, Engelhard, much bigger companies, but he was an owner-operator. And I would go out to areas around Los Angeles, Southern California, Northern California for, at that time, the purchase of silver nitrates from the film industry, computers…
Tim: And precious metal scrap.
Karen: Well, precious metal scrap.
Tim: What did Howard always tell you to do?
Karen: To bring in samples. He wanted to have the sampling so that he could develop the package as [inaudible 00:07:17].
Tim: In those days, they put huge amounts of gold when they manufactured print circuits and other things. And so Howard was always about the samples. It was so cute.
Karen: Well, the other part was the computers. The computers were rooms. They weren’t as we see them today. They were room built caverns and caverns of large precious metal that we could take and extract through precipitation and through refining, and so that was my orientation. But generally speaking, that was not exact…I didn’t want to be just an industrial buyer. Of course, I was selling the material that was the product of thousand, you know, troy ounce, over a 100 troy ounce of amalgam, the gold and to the dental amalgam people.
But my interest was really when Tim was in the National Metal Cubby, and was out on the ship and breaking down this enormous hull in the dark with the bright lights, and it was really mystical. It was really amazing to see this industrial demolition going on on one of the amazing, you know, what was a warship navy ships that were in there. And so at that point, I really was smitten. And I knew that I couldn’t stay where I was and that we were better served working together. Because we would each come home after the day and kind of say we had harder days than each other.
Tim: My father and mother never went to college. My father grew up in Harlem, New York. If my dad were alive today, he’d be about 118. So they were older parents than us. My mom was born in the Midwest and probably didn’t get through high school, because at age 14, she ran away from home during the Depression. They both became incredibly successful, and they were both very, very humble about their past. What was so important to them, was that myself and my brother go to college. Now, for my brother, that was important. For me, it was just another step. Okay, college, fine.
So I’m on the job, and the first day I’m on the job at National Metal and Steel, I’m given a disc saw, 2.5 horsepower saw, and I have protective clothing on. And I’m brought up to an area in the main yard where they had a 65,000 pound super stone propeller off a destroyer. And they explained to me that in order to put this material into a container and ship it to Japan, where it would be remelted into propellers, I had to cut two props. Those are the blades of the propeller. And in order to do that, I had to cut as close to the hub as I could. The prop itself was probably 20 inches thick at that point. So I made a complete cut across the prop, and then I went to the opposite prop on the opposite side, I made another cut. Then these massive gantry cranes that are on almost 15-foot wide rails, come up, lift this 65,000-pound manganese bronze propeller, flip it, and I have to make the cut again on the same propellers on the opposite sides.
Once that was done, they came over with, you know, maybe a 10,000, 12,000-pound magnet, dropped the magnet on the prop snapping the two propeller props. That job took me probably close to eight or nine working days. And by the third day when I would go home at night, I could feel my hands still vibrating from working the saw. My opinion was that I had been set up and they were gonna do everything they could to get this knucklehead out of the business. Well, I survived. I didn’t enjoy the job, but I had great respect for the human beings that did that job. And that was my first job there.
Interviewer: How long did you do that kind of labor?
Tim: I probably labored for maybe a maximum of 30 days when they put me into a training program to become a supervisor. And from there, I was put into all the different aspects of the facility. I ended up being assistant to the superintendent of the non-ferrous department. Everything on a warship that isn’t steel is bronze, and there’s lots of, lots of it from insulated copper wire to the copper-nickel tubings, you name it. A ship has to have everything in order to sail, and a ship going off to war has even more.
So I became the assistant inside the non-ferrous department. I was very fortunate. Every Thursday, Mr. Shapiro would hold a big meeting. And at the end of the meeting of superintendents, he would say, “Okay, who has some new ideas?” And, of course, that went on every Thursday, and nobody ever had new ideas.
In working in the non-ferrous department, it became very evident to me that it was inefficient. And it was inefficient because the piles that would form to feed the various processing systems were all helter-skelter. So I went off to the art store, I bought graph paper, I graphed the entire facility out by the square yard as it was. And then I graphed it out as it would be had I been allowed to do the design myself. I wrote a big report up, I gave everybody credit for involvement in that report, and I turned it in. And it turned out to be quite a success. They reorganized the entire non-ferrous operation according to the designs that I put together. And that was really the beginning of a lot of recognition for me.
I will tell you one other thing I did which is really funny stuff, and it is thinking out of the box since that’s a little bit about what this is about. So one of the other things I did very quickly at National Metal and Steel is National Metal and Steel occupied a huge amount of Terminal Islands North Shore. And on the far east side of Terminal Island, they had a massive marine diesel shop. At one time, it was one of the finest marine diesel repair shops in the world.
And when I first came on board, which was 1974, it was still on operation. They had a big problem. And the problem they had was that the seagulls and the pigeons, but mostly the seagulls, would come into the building, roost, and they had problems with droppings everywhere. And I’m watching this happen, because I was in the building one day and a seagull took a crap on my head. And it was a very uncomfortable moment for me. I was very upset. And so I watched the situation for a couple of days, and I realized something. I realized that when the birds entered the building, they always flew in and as close to the top of the opening for the doors as they could. They never flew in 10 feet below, always right at the edge.
So I went down to the store and I bought some polyethylene transparent strips. We put them up across the opening to the marine diesel plant, and I dropped a bit down about six feet. And for the first couple of days, you’d see the seagulls hit the matting, drop down. You thought they were dead, but they were actually just dazed. After a couple of seconds, they’d shake it up and take off, and by the fifth day, we never had a problem again. So thinking out of the box, looking at a situation and asking yourself, “What can I do to improve upon it?” I think is really always the beginning to innovation. You have to have a curious mind.
So I’m a very aggressive person, and I really like to make things happen and I love to manufacture. And when I was 16, I told Karen’s father, I was gonna marry Karen, and we had one of those moments. And Karen’s maiden name is Blank. And Karen’s father Kurt Blank said to me, “Tim, once you marry my daughter, how are you gonna support her?” And I looked at him and I said, “Mr. Blank, once Karen and I get married, you’ll never have to worry about that again.” I always wanted to build things. I just always had that thought in my mind.
And as I went through several different large companies on the west coast, I also realized that I didn’t play well in big organizations. I was 22 years old, people looked at me as a 22-year-old person, and that meant that I didn’t have the experience or the knowledge to make decisions to improve things. And I found out very quickly that human beings typically are quite political. And if you don’t have strong management, the politics takes over the business. And so at National Metal and Steel, I reached a point and I came home one day and I said, “Karen, I can’t take it anymore. I just can’t take it.” And I left.
I went to work for Pacific Smelting Company. And three years after a bunch of design changes that I made as the head buyer of the company, I ran into the same problem again, “Tim, you’re the buyer, you’re not an engineer. You have no business delving into areas that we have project engineers that we paid to delve into.” And incidentally, it doesn’t matter that your idea is terrific and can save us a lot of money. So we started to look.
Karen: My background with my dad and my mother, they were completely community minded. And my father was very much a part of the political base in terms of our little town.
Tim: That was when all Jews were Democrats.
Karen: Right. No, he was actually a Republican at that time.
Tim: You know what? He was.
Karen: He was a Republican.
Tim: But a liberal.
Karen: Yes. And he did not believe we should be, and this might be offensive to some, that we should be in Vietnam. He was one of the very lone wolves out there. And he brought to the township Equal Housing, which was again out of the fix of what was going on in the 50s and 60s. But both my parents were very active in the community, as has been my case in our Jewish community and areas of Long Beach. But I was teaching at that time. I have a master’s degree and then I have a Montessori International Diploma and graduated from Vermont.
And so with all of that, I realized that you’re saying what’s the segue of how we got into the business together is when I came to California, it was a small area of opportunity in terms of business and, again, women and starting a business. And so I went into the teaching area. And I was very fortunate. I got a substitute position for a six-month, a long-term substitute position. And then when I was offered a full-time position teaching, I realized I had accepted the contract and I realized that my partner and husband is more needing of attention and involvement than 38 children in a classroom, so I took…
Tim: But I don’t know how to take that. This is the first I’ve heard of this.
Karen: No, that’s not true. So I gave up the teaching career and, again, had the introduction for the precious metal. And I had wanted always to have my own business. My father graduated Penn Wharton, and we’re a family from the Philadelphia, Baltimore, Washington area. And, again, with their community service, I was very much self-motivated to do what I felt that I would want to do in areas that were interesting to me. So with that, we were given that opportunity to buy a small company in Metal Briquetting, and that Metal Briquetting which we borrowed against our little home, became our partnership in what was going to be a future of building into the ultimate…
Tim: So a friend of ours Jerry Hyman who owned a company called Copper Alloys, which was a very well known company and it begun by an icon of the industry, his name was Matt Cutler, introduced me one day to Harry Bergman. I was still at Pacific Smelting Company. Harry Bergman owned a little tiny company called Metal Briquetting. And Metal Briquetting warehoused bronze ingot for R. Lavin & Sons out of Chicago.
At that time, R. Lavin & Sons was the largest, most well known, copper-based alloys smelter in North America. And Harry had a couple of broken up forklifts, an old truck, a little tractor, and he had a little hockey pucker that he hockey pucked cast iron borings with. We borrowed $40,000 against our house, and we paid Harry $10,000 to take the business over. We never signed the note. The note was for 160 some odd thousand dollars. And in our first year of business, we did a total of $160,000 in sales. I worked with Harry Bergman for three months without taking any money, and this was under the auspices that we want to purchase the company.
Harry came up to me one day and said, “Tim, don’t you wanna know the price I’m putting on the company?” And I said, “Harry, here’s the facts. The fact is that Karen and I need $24,000 in yearly salary to cover our home and all of the requirements we have to stay alive. That’s it. You can put any price you want on the business, but if it can’t generate $24,000 a year in profit to begin, I’m not interested. And if it can, we’re happy to make the deal.”
Well, we made the deal, we gave Harry Bergman 10 grand. We didn’t sign any guarantees, because who knew. And, you know, at age 27 risking everything was not a big risk. We had the home and we had what we had built. We still didn’t have children. We still had our intelligence. We still had all of our contacts in the industry. This was a great opportunity because it provided us with a little mass and momentum. And for me, mass and momentum are everything. If you can add a little inertia to mass and momentum, you could see the future before it gets here and you can adjust the circumstance and make good things happen.
So here’s the way it works. The way it works is you take a tiny little company that’s got some mass and momentum, and you’re an excited young person who wants to make things happen, what better opportunity. So we knew that we could improve on things and we knew we had lots and lots of energy. And Harry gave us that opportunity and the cost for the business was negligible.
The first thing we did…And my wife learned how to operate every piece of equipment we had in that plant. She could run the split action truck sheet. She would operate the tractor at night and go into this load of…So here’s what happens. So, Harry’s business was warehousing and shipping ingot for R. Lavin & Sons. He made a total gross revenue of a penny a pound to offload it from a team track to bring it all the way back to the warehouse to put it down on the ground to inventory it, to put a ton or a truckload onto the trucks, and ship them to the consumer, all for a penny a pound.
At the same time, Harry had a little piece of equipment called a hockey pucking machine. And he took cast iron borings and he squeezed them together in this hockey pucker. And the reason they call it a hockey pucker is it looks like a hockey puck. And it would pop out and he had a huge, huge mountain of cast iron borings in the shop. The shop was completely dark and black. And we would ship those to…
Karen: We called it a cave.
Tim: We would ship those to foundries melting cast iron. So, the first thing we did is I built a rotary dryer. And the reason I built the rotary dryer is because every foundry taking ingot from the ingot manufacturer was machining that component and they were ending up with brass turnings.
At that time, the two largest selling brass alloys in the world were semi-red brass and red brass. And that’s what most of the pump houses in Southern California were making. And there was four to five million pounds they melted every month. It was a big market. So I built a dryer, and I used a smog hog which is an electrostatic precipitator to remove the smoke from the atmosphere to keep clean air. Well, the precipitators didn’t work very well and they kept catching on fire. And I kept adding more and more…
Karen: The sediment.
Tim: …to the system to overcome the problem until it created so many moving parts of this piece of equipment, I was beside myself. So, I went to an engineering firm there in Long Beach, California, it was called Marine Electronics, I think. And they designed and built…oh, I have to back up, I’m sorry. Meanwhile, back at the ranch, I built the dryer. So we had gone to our accounts and the one account was…what was his name? Peerless Pump.
Karen: It was Aurora.
Tim: Oh, it was Aurora Pump, I’m sorry. The guy’s name was Bob Cozart, and Bob was a 67-year old Vice President for the company. He loved Karen and me. And I told Bob Cozart I could dry his red brass borings, hockey puck them, and give them back to him for a nickel a pound instead of him shipping them all the way back to the Midwest to be converted to ingot again.
So, Bob said, “I’m ready for it.” And he started shipping metal in, and then he started shipping metal in, and we’re running the system and the system isn’t running well and it keeps catching on fire. These were in the days where everybody had a three-martini lunch. And when I would have lunch with Bob, I would go to the payphone and call Karen and say, “Honey, I’m going home. I’m not coming back to the plant.”
Well, what happened was, Bob kept shipping metal in and we had almost 400,000 or 500,000 pounds of borings on the ground. We were barely getting a truckload out per week. And I said, you know, “Karen, any day Bob’s gonna call. If he calls afternoon, tell him I’m not here because he’s gonna be drunk and it’s gonna be a mess.” And sure enough, Bob called and Karen came out and, “Hey, Tim. Bob called.” I go, “Thanks, honey. We’ll call him tomorrow.” And then Bob called again. And then the third time, Bob said, “Karen, I know that Tim is there, and you know that I know that Tim is there. Tell Tim if all of this metal isn’t back to me by the end of this month processed, you’ll never do business again with us.”
So that night, everybody left. We turned on the rotary. Karen ran the tractor, and she would dump 2,000, maybe 3,000-pound piles in front of me. I would hand feed the damn furnace. We got through it. At 5.5 cents a pound, we made about $25,000 of gross revenue. Bob got his hockey pucks, was overjoyed. And we took that money to the marine company in Long Beach. They put together and designed and built an afterburner. We put the afterburner in, I tore down the electrostatic precipitators, and we were in business.
So the other thing that happens is, don’t keep going down a bad road. When you realize this road is not gonna get you to where you wanna go, start thinking again. There’s always a solution to the problem. Sometimes it takes a whack on the side of your head. And that was Bob’s call that day that did it. And we would come home just coded in cast iron dust, but we did it.
So today CMX has two plants. We just purchased a plant in Columbia, Pennsylvania, the land of Ben Franklin and John Marshall and all kinds of people. And the company operated as Colonial Metals. They have the third largest production capacity in North America for copper-based alloys. Karen and I moved from the warehouse that we leased to 366, East 58 Street, where we bought that piece of land. We had a partner at the time. Within two years, we bought the partner out.
And the next thing I did is I took my knowledge of reduction from my years at National Metal and Steel and at Pacific Smelting Company, and I decided that we could manufacture a mechanical engine that would be semi-red brass and red brass. Keeping in mind those were the two largest selling alloys in our industry at the time. I was fortunate enough to be able to do that. We were very successful at it, and at one point, we were shipping close to six million pounds a month just of mechanical ingots all over the country. We had a facility just outside of Memphis, Tennessee that supplied all of the large consumers of semi-red brass in North America.
So, again, the innovation took us to the next step. When we were successful with that, we then took the success that we had, and we built state of the art electric furnaces because we understood that that’s where the profit in our industry really was. At that time, the industry was beginning to collapse. And it was beginning to collapse because during the time of Nixon, Nixon went overseas, made his love affair with Zhou Enlai, came back. The Congress of these United States were basically bought out by large global publicly traded companies at the time. And these companies wanted to move all of their labor costs to Asia, and benefit from the extremely cheap labor in Asia and specifically, in China. It began with Taiwan, but Taiwan and Japan were small compared to what China was gonna do.
So when we began our business in 1979, there were over 50 companies in the United States manufacturing copper-based alloys for foundry use. Today, there’s only four. And the usage of brass is many times greater today than it was. What happened was that they created tax incentives that made it impossible for domestic consumers to succeed. And so those industries collapsed, whether it was copper tubing, whether it was brass and bronze piping, the great companies of Olin Brass are much smaller than they were. The great companies like Wolverine too are virtually gone.
So while the scrap industry as a whole geometrically increased to levels never imagined with the growth of China, the consumers in the United States suffered, because the Chinese were committing unfair trade practices. They were paying many, many times more per pound of copper than copper was selling for on the international COMEX and LME.
Karen: To build their own.
Tim: And so the real trick to innovation, the real trick to success is, can you succeed in a marketplace that’s collapsing around you? And the only way you can, Zacchary, is by constantly adjusting the circumstance, paying attention to see what’s coming at you before it gets to you, and making those changes so that when it happens, you’re not only prepared, you’re already doing well. And so, the company became very successful.
We bought state-of-the-art electric induction furnaces. These are 5,000-pound furnaces that have the capability of melting a 5,000-pound heat of metal in about 45 minutes and then you make the pour often to ingot. And the engineered alloys because of their unique nature and requirement for quality tend to generate a better profit. And we understood that at the time. When we developed the mechanical ingot, that mechanical ingot displaced regular melted and cast ingot on the west coast to a very large degree.
When that happened, all of the producers of ingot had a very difficult time shipping to the west coast because engineered alloys didn’t ship in truckload quantities. So by putting the electric furnaces in, we were able to go after the engineered alloys and consolidate our hold on the west coast. That’s what happened.
Karen: It’s a difference between volume…
Tim: There was a good strategy.
Karen: Volume business that can be duplicated easily as opposed to the more sophisticated, I would say the more elemental complex alloys that you don’t try to do it. It’s an art.
Tim: Yeah. And once that happened, then we put in the rotary furnace.
Tim: Because we understood that it was an appropriate thing to do. We’re in California, our plant is maybe three and a half miles from downtown Los Angeles in the most proactive, sustainable state in the union. And the only way we have been able to survive is by recognizing, once again, where the mass and momentum are taking us. And once you understand where you’re gonna be two, three years from now, you can make those changes today so that when that time comes, you’re ready to go.
And the consequence of that for us was that we’ve been very fortunate. We’re extremely green and sustainable. In fact, one day, I received a phone call from the East Bay Municipal Utility District. They’re the second-largest power and water distributor in North America. They’re part of what’s called the American Water Work Association. The Los Angeles Department of Water and Power is the largest. These two utilities came together and decided that the science showed that lead was leaching from components that were transmitting potable water and they wanted the lead to be taken out of the components moving forward.
So, one day, I received a phone call from the general manager of East Bay MUD. His name is Richard Sykes. And Richard said to me, “Tim, can you take the lead out of copper components?” And I said, “Well, of course, you can, Richard. Don’t put it in.” And he laughed and he said, “I’m serious.” And I said, “Why would you ask me that question?” And he said, “Well, all of the people that manufacture components for us…” And at that time they were all 836 red brass, 85 copper, 5 tin, 5 lead, 5 zinc.” That was for municipal water works with the exception of water meters, which they allowed to be made out of semi-red brass, because the pressure of the water meter is not critical. So it required a lesser alloy, which is cheaper.
So he said to me, “Look, everybody has told us that if you take the lead out of the copper-based alloy, we’re not gonna be able to make castings. Is that true?” And I said, “No, it’s not true. Here’s the truth. The truth of the matter is that alloy has been used for over 125 years. When they were driving down the street and horses and buggies and never thought about cars, this was the greatest alloy to be used. And today, it’s still a great alloy. Think about it, everything’s changed, but that alloy remains the same.”
So what we have here is an issue, which is called fear. These people own multi-million dollar plants, maybe the plants are much more than multi-millions, maybe it’s $100 million plant. For 80 or 100 years they’ve been running the same alloy. All of their equipment is set for that alloy. Now the government comes in and says “Hey, we’re not gonna run that alloy anymore. We’re not gonna use lead which was always thought to be critical in machining and the elimination of porosity and castings.” What would you have them say, “Oh, go ahead and do it”? So, they’re acting out of fear. I get it.
But here’s the truth. There’s an alloy called 903. It stands for Navy G Bronze. It’s been used for hundreds of years by Western Navies and that has been to manufacture cannons and other types of armaments. This alloy is a true red-brass. It’s got copper, it’s got tin, it’s got a touch of zinc. It’s got a maximum lead content of 0.25. So you can go back to everybody and say, “Hey, we have alloys that work. And we’re gonna go through with this regardless. You need to get on board.”
And that’s why today AB1953, which was the first law ever written to eliminate the element lead from drinking water components was passed on its first ballot in the State House in the state of California. In 2012, it became federal law as well. And the maximum lead allowable is 0.25, not because there was science around it, but because Navy G 903 alloy tolerated the maximum 0.25 lead.
So, once again, we recognized the opportunities, we recognized the change was coming whether we wanted it or not. And, you know, my dad always used to say, “Tim, if you’re gonna swim upstream, you better have a place you know that you can get to because water never gets tired.” Well, it’s the same with regulators. It’s the same with mass and momentum. It’s the same thing with change. It never stops. You have to be able to adjust to circumstance. We made those adjustments and we made them really, really well.
And we actually went on to produce…we have a license for an alloy called 87850. It’s a silicon enhanced alloy as opposed to a lead enhanced alloy. And as it turns out, this alloy is significantly less expensive than the original 836. So along with adapting to change, along with recognizing where the mass and momentum take you, you begin to recognize that as you get good at something, you drive the cost down. And the benefits from understanding that are quite large.
And so as the children grew up, we raised them around that consideration. And so when the point came that we really wanted one of them to come into the business, they looked at us and said, “Hey, guys, you told us to pursue our happiness. And now we found it.”
Karen: All three of them worked…
Tim: “And it’s not in the scrap business, it’s not running a brass smelter.”
Karen: All three of them worked in the business. And of course, as they were coming up through that whole, you know, piece that they would break away in a vacation period or work between, you know, after school and that likeness, it was obvious that it was not necessarily going to be the place for them. And so, again, they were everything that they had looked to be and wanted to be, and they focused on that. And it wasn’t until they were a lot older where they became, you know, the successes that they are, that that interest to bring them into the business became a possibility for them. For me, I started the business to have a next…
Tim: Take care of me.
Karen: That’s true, that’s true. To have the next generation. I wanted three daughters…you know, whatever the combination was gonna be, I wanted three daughters to be involved in my business, our business. But that wasn’t necessarily, you know, in the cards and in the future. And you know, when you’re in a business, we’ve been in it 40 years, 50 years, 40 years. And, you know, it’s not an easy journey. We have made everything and continue to be persistent and relentless in what we do with the multiple of magic and families that we have who help us grow and go the business.
And what was most of interest to me and again, having three daughters, is that empowerment and that independence. And what I saw in our industry as was the case when I came back after being married, with the wedding ceremony and the like, coming back to California, and then Tim having an event for the business and the women were not invited to the event. We were not invited, the wives, to National Metal and Steel. My point is that, so in seeing that little segue, I became more involved in the business and in the industry. And part of the American Foundry Society, all these different spaces where I felt that my participation in them would hopefully open up other opportunities.
So with ISRI, I started with Robin Wiener, the executive director, a group called the National Women’s Council, and that lasted about eight years. And the reason I say lasted is the imminent goal to that organization was to draw in and mentor women or mentor, you know, just abundant of advancing leadership and evolve and dissipate so that this group, women and the like would build into the generations the new leadership moving into different spaces. And I think it was successful. Certainly, it can become, you know, adjunct again, but that was my evolution.
Tim: If you go back 30 years before the internet, there were many organizations of scrap dealers in every large urban area, whether it was a Jewish war Vets, whether it was ISRI, NARI, you name it. And when you went to these dinners that were held virtually once a month, they were always attended by everyone. Today, that’s gone away. And it’s gone away because there are so many more things that come at us every minute of the day. And the consequence of that, I think, is there’s much less community amongst scrap dealers that 30 years ago was enormous, today, it’s much smaller. And events like this really are the only events that bring all of us together. The local events are much, much less attended. It’s become a very big issue. It really has.
What does bring people together and always will is common cause. And the common cause that hits our industry today is so enormous that you have to pay attention to it. When you talk about community, for us, our community are the people that we work with every day, it’s the neighborhood we find the company. And we think that we really are what I’m gonna call are like the capitalists. Every day we come to our plant and we see the same people that we’ve worked with for almost 40 years now. We have very little turnover, and that’s because we enjoy the people. And that’s because they make up the team that we require in order to adjust to the circumstances that are constantly changing in an industry that’s collapsed, so that we can still stay ahead of the game and make money.
This is the only industry I know today that really and truly is a paradigm of Laissez-faire economics. It’s all about supply and demand. Every deal is a little different from every other deal. You can horse-trade. You can trade for metal. You can trade for stainless. You can trade for ferrous. There’s not another industry that does that anymore. Everything else is pretty nip and tuck. It’s categorized and it’s in a cubbyhole. Scrap is uniquely creative.
Interviewer: And it seems like it’s been that way since its…
Tim: Time began. And it’s the only industry that you could get into with no money. And anybody who looks at me and says, “Well, you know, Tim, you and Karen are pretty lucky.” We are lucky. “And it could never be done again.” That’s just not true. You can start with nothing in this industry and do just fine.
Karen: It takes drive and passion. But in terms of, you know, community, there is the umbrella or the national side that draws and swipes across everybody in a somewhat of a general sense. And then, of course, the focus which, you know, Tim would say on a specific area, maybe, ferrous more than non-ferrous, but we’re small part of that. You know, it’s just how your quotas come in. But then there are the organizations that are the smaller organizations within the trade associations and they’re the Non-Ferrous Founders’ Society.
For us, we’re consumers, there’s the American Foundry Society. There are, you know, the South Western chapter and all these different areas that we do need to continue to participate with that because we…we as in the total scrap industry…because it has value. We don’t need to reinvent the wheel. We all need each other to work with all the successes or problems. And I’m not saying give away trade secrets. I’m saying, you know, if somebody has a problem, which has a surfacing in California of certain, you know, compliance or non-compliance.
Tim: So Zach, you brought up regulatory issues. Today, regulatory issues exist that did not exist 30 years ago. Thirty years ago, you didn’t have seven different consultants that you needed to have an arm’s length relationship with just to make sure you don’t get sued or end up going to jail or having some terrible thing happen to you. So, ISRI, for the most part, is this huge monster of an organization that takes care of national affairs.
Now, they have chapters in every state and they have many chapters in some states. But the truth of the matter is that 35 years ago, those groups that were trade organizations that worked with state politics and state regulatory issues were tiny. Today, they’re massive, and the community of scrap dealers pay more attention to that than coming together as scrap dealers to enjoy each other’s company. It’s changed. It’s just absolutely changed and that’s the way life is, you make adjustments.