Albert Cozzi

Albert Cozzi, Cozzi Recycling, Phoenix, Arizona. Interviewed August 2019. Transcription by Speechpad.

My name is Albert Cozzi. The name of the company now is Cozzi Recycling. I’ve been in the business since 1963. Well, my family had, you know, what you would probably refer to today as a recycling center. Back then, we called it a junk shop, a little place where we bought newspapers or rags and, you know, ferrous metals and a little bit of ferrous scrap. It was my grandfather and my father. And I used to go down there on the weekends when I was a little kid or holidays from school, you know, or in the summertime and work in the junk shop from the time I was five, six years old. Well, in the junk shop, you know, I remember one of my jobs was just sweeping up or taking nabs off of stoves or sorting metal.

By the time I was 18 years old, they had grown to the point where they had some trucks where they were peddling, they being my grandfather and his two brothers, and my father was the oldest brother. He’s my father’s oldest child, so my uncles were basically big brothers to me. There wasn’t that much of an age difference between me and my uncles. And so, by the time I was 18 years old, they had trucks and they were peddling the west side of Chicago picking up rags and newspapers. And I left high school to do the same thing, and you know, picking up newspapers from big multi-unit apartment buildings. And it took me about two or three months to realize that I made a big mistake by dropping out of school and I didn’t want to carry newspapers out of basements for the rest of my life.

So, we started to make a push to acquire scrap metal, generating supply product from manufacturing companies. And shortly after I started to do that, my brother Frank joined me. And, you know, we tried to get away from the paper business into the metals business and we grew the business from there. And we grew the business to where we became the largest scrap metal company in Chicago. Early on, one of the serendipitous things that we did is we had acquired a competitor, and that competitor was also somebody that we used to sell our ferrous scrap to. We didn’t have a scrapyard. And after we acquired that competitor, we had to open up our own facilities in order to lay down scrap and send it to a steel mill.

And we found a piece of property that we rented that was on the water and that gave us such a competitive advantage at the time. This was back in 1974 that we grew from there. And we grew the business to where we had 13 facilities in Chicago, a couple of facilities in Wisconsin, one in Pittsburgh, Pennsylvania, and one in Arizona near Phoenix. And we sold that business in ’97 to what is now Sims Metal Management. It was Metal Management, and, you know, they were the guys that put Metal Management together, a couple of guys that came out of the waste industry. And they were acquiring companies. They acquired our company and they ended up loading out a lot of debt to do acquisitions. It was a consolidation and roll up at the time, and then they ended up having some financial difficulties.

Anyway, they were a public company. The boards hired him and brought us in, us being me and my brothers, to basically run the company. And that was in 1999. We reorganized the business in bankruptcy, through bankruptcy, and in 2004, we left the company and we had… When we originally sold our family business to the public company, we primarily sold it for stock. And then as the company started to have its difficulties, we had restricted stock and we couldn’t sell these stocks. So, after we reorganized the business and [inaudible 00:05:40] our original stock was extinguished, but we got some options and warrants and the stock was up to $38 a share. So, and we were still restricted. We couldn’t sell our insider stock. So, we left the company, and we had a non-compete from 2004 to 2006.

And after our non-compete had expired, we started back up in business and opened up Cozzi Recycling, which is… You know, it’s a much smaller business than our original family business, but you know, we’re building it up gradually. You know, at this point in our life we’ve got a different philosophy. You know, we’re not… When we built the original company, we just concentrated on making the company big, concentrated on market share and, you know, [inaudible 00:06:41] concentrating on, you know, having a business that keeps us occupied and we run a profitable little business. And if you look at the discrepancies across the country, you know, most of the companies are either Jewish or Italian. And when we were in Chicago, I mean, we’re Italian and most of our competitors or complimenters, you know, people we traded with, did business with were Jewish.

And, but then, you know, it was always a tough business there. You know, you had these guys that were very successful and then you’d go to a bad market, there would always be a shakeout in the business. But, you know, most of my friends in the business…most of my friends were in the business, and most of them were Jewish. Originally, it was my grandfather that started out. He was a food peddler in the summertime with a horse and wagon. And then in the winter, he was a junk peddler. And in 1945, he and my father got together. And my father, you know, prior to that, 1944 or so, was a junk peddler as well. And they teamed up, and they opened up a little facility, a little junk shop, that became Frank Cozzi and Sons. And when I joined the company, and my brothers started to join the company, we became Cozzi Iron and Metal. And like I say, ultimately we merged with Metal Management.

Well, I remember we… This is probably early 60s. I don’t think I was working full-time and I used to go to work with my father every morning. And we used to get there by 5:00, and we would work, generally until about 6:00 every night. And I remember my father’s youngest brother, who was only 10 or 12 years older than I am, he rebelled at those hours. You know, he thought it was absolutely crazy for anybody to work from 5:00 in the morning to 6:00 at night. So, they had a big family feud about it and the settlement of this argument was that they decided that they would no longer start working at 5:00 in the morning. They’d start working at 6:00 in the morning unless there was something special going on.

But I remember also that, you know, back then, the way that you handled like insulated copper wire is that you burnt it, and you put it in the barrel or you put it in a pile and you’d set it on fire. And every morning, somebody would have to show up at 3:00 in the morning and start the copper wire on fire, so when the other guys got there at 5:00, the fire would be out. So, you know, the first chore of the day was, you know, to pick up and clean the copper wire, which was probably the dirtiest, filthiest job in the world. You’d pick it up and then put it away, and then you start your day buying scrap metal from your customers, whoever would bring it into you through the day.

I would say, you know, the biggest change was the shredder. You know, when I was younger, I worked at a competing scrap yard and they had a hydraulic shearer. And that was a big piece of technology at the time. You know, prior to that to break things apart, you know, you used a sledgehammer and axes and settling torches to prepare scraps or the shearer was a big piece of technology. The shredder was a big piece of technology. One of the deals that we did, one of the acquisitions that put us on the map, the one that I referred to before in 1974, where we ended up buying the scrap steel business, the industrial accounts and the trucks and the cranes from a company called Listner [SP] Iron and Metal, the reason that they did that, they were one of the first that in the business of chopping copper wire rather than burning it. And they had become huge doing that and they wanted to double the size of their wiretapping line.

In order to do that, they were gonna build a building on top of where their scrap steelyard was. So, they decided to sell the scrap metal business to us, and, you know, prior to that, we had a lot where, you know, industrial customers that we were picking up from, but we would sell everything to Listner. And after we bought their operation, you know, we had twice as much scrap to sell and nobody to sell it to. So, we had to open up our own facility. You know, one of the things that drove technology is the cost of labor kept going up, and so you had to find cheaper ways to do things. You know, I was talking about… You wanted a story from my childhood working in the junkyard, I just thought of something. I used to come in on Saturdays and to show you how cheap labor was, my grandfather used to pay me $3 a day. And when the summer came and I was going to work full-time, you know, it was a full six-day-a-week job, he was paying me $3 a day, but you know, the first time he paid me, he gave me $15. I said, “Grandpa’s, you know, it should be $18. Three times 6 is 18.” He says, “It’s $15. Take it or leave it.” That was my first lesson in negotiating.

I think that one of the things that drove technology is labor rates came higher. You had to figure out ways to become more efficient. And, you know, once the environmental situation started to change, you had to do things in different ways. You could no longer burn copper. You know, nobody would let you put black smoke and dust up into the atmosphere. And, you know, and as people did become more efficient with equipment, you know, competition would force other people who look at ways where they could become more efficient too. And, you know, it creates a cycle where everybody is trying to become, you know, more efficient, more productive, all in one. I mean, you know, what we used to do, the way I can remember when I first started out, there was a company across the street from us that used to load cast iron in railroad cars.

And the way they would do it back then, they didn’t have a crane. They would pick it up out of the pile and put it in wheelbarrows. And they’d take the end out of the railroad car, out of the Gondola car, and then they’d roll the wheelbarrows up planks into the car and dumped the wheelbarrows out. And that’s how they loaded the car, and it used to take like 10 men a day to load back then a 50-ton car. Well, today with a man and a material handler, you can take that same scrap and load a 85-ton rail car in maybe 15 or 20 minutes. Well, you know, my opinion of it has evolved too. I mean, you know, originally everybody was scared to death about regulation. And I think our opinion evolved that we figured, first of all, it was, “Okay, you’ve got these regulations and now you got to comply with them.”

So, how can you comply and maintain a competitive advantage? For example, dust and runoff became a very big problem. So, one of the things that we did to deal with runoff and dust is, you know, we hard-surfaced the roadways of our scrap yard and made sure that everything drained to where we could treat the water before it went into the municipal sewer system. But by doing that, yes, we had an expense where it costs us money to hard-surface the roadways. But now the trucks weren’t getting stuck in the yards. We were getting less flat tires. Trucks could move through the yards much quicker. They didn’t get all muddy. The people could walk through the yards quicker.

So, you know, we figured out ways to be compliant with environmental regulations that gave us a competitive advantage. And not only the, you know, our first step was, “Okay, now you’ve got to comply.” Then we got to the point that as we were growing, we wanted to be able to anticipate what environmental regulations were going to be. I saw on the waste industry, the garbage business, there’s a lot of similarities between our business and the garbage business, that, you know, one of the things that help raise the barriers to entry for that industry was some of the regulations that were coming along at the time. So, we wanted to get to the point that we could anticipate what was happening with environmental regulations down the road.

I can recall like 30 years ago, my brother and I went to Germany and Denmark to look at scrap yards because we felt, environmentally, that they were more advanced than what we were in the United States. And then we wanted to get to the point after that only were we anticipating what was gonna happen, we wanted to get to the point where we could influence how scrap operators like ourselves had to comply with what the environmental regulations were. I have three daughters. I had one that was working in the business who really did a good job, but, you know, she wasn’t crazy about the business, so she left. But both of my brothers, each have two boys that are in the business, and, you know, they’re basically the ones that are running the company now.