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Schupan & Sons Inc. |
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March 10, 2014 Issue |
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The Most Powerful Name In Corporate News and Information |
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Closing the Loop: Metal distribution & manufacturing, Industrial Recycling and everything in between! |
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 About
Schupan & Sons Inc
www.schupan.com |
Kalamazoo, MI 49001
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – March 10, 2014
CEOCFO: Mr. Schupan, what was the vision when your father started Schupan & Sons? Mr. Schupan: My father was 48 years old at the time, and his vision was really to be an entrepreneur and have his own business. He knew the metals business and he had been the general manager of a company for 17 years with an opportunity to buy that company. That no longer was an option and, suddenly, he needed to find something else, for which I give him a great deal of credit. He had four reasonably young children. A small company that was in the metals business in Kalamazoo had an owner who passed away, so it was in an estate. With very little cash and a friend to cosign, he became a business owner. This was in 1968, and the company he bought had five or six employees in a very small facility. His vision was to make a good living for his family and to grow that business.
CEOCFO: What is the vision today for the company? Mr. Schupan: The vision today after 46 years for me is sustainability for future generations. The business has grown and diversified, and is substantial now. It certainly takes a different skill set to run a company with 400 people in ten locations. Unfortunately, my father passed away in 1974, so he only had the business for six years. I always joke that I reached my level of incompetency at the age of 26. Sunday was the funeral and Monday morning I was at work, because there were no alternatives at the time. I definitely had my baptism under fire.
CEOCFO: What are the principle areas the company is involved in today and what are some of the more ancillary areas? Mr. Schupan: We started out when my father had the business. We were strictly in what you call the non-ferrous recycling for industrial companies. We started out handling factories’ aluminum, copper and stainless steel. As the years went by, we found other opportunities in other directions, and we became distributors for aluminum products from the mills. We started small and have grown it to a substantial business now. We are in three cities and covering a very large geographical area. We are in Kalamazoo, Dayton and Toledo. In that division, we have bought a few companies over the years. About 10 years ago, we brought in a small manufacturer, so we have climbed to the point where 30 percent of everything we ship or sell we now value-add by doing something to it -- whether we bend it, weld it, drill it or machine it. We are adding value there in that division. It takes a great amount of capital investment, but we certainly like that it is a growing business. The industrial scrap division, with headquarters in Kalamazoo, has grown again. We have a large facility in Northern Indiana in Elkhart, home of the RV industry. With everything we do in the Midwest, we have over 800 industrial plants where we service their metal needs on the recycling side. The other division, which started over 20 years ago, was in the beverage container recycling side, because Michigan was a deposit state for containers. When we started that division, we had major competitors -- Alcoa, Reynolds and Anheuser-Busch being our main ones. We had zero percent of the market, and as years went by we came up with some pretty good equipment and some new ideas. Eventually, a third-party pickup program was needed in Michigan. We became partners with a company out of Norway called TOMRA, who has the barcode reading capability. Between our skills in the pickup and processing, it was a nice marriage, which we still enjoy. We are the beverage container pickup company for Michigan, where service over 600 of the major stores. We pick up on a daily and weekly basis. With a tremendous amount of investments, we have two facilities for that – one in Grand Rapids, Michigan, and one in the Wixom area of Michigan, which is near Detroit.
CEOCFO: What, if anything, has changed in recycling over the last few years? Mr. Schupan: Over the years, there has been a tremendous consolidation on the industrial recycling side. There are a number of consumers – companies we sold to over the years – that are no longer in business or have consolidated. A major part of that industry is no longer here due to the exporting of jobs and the difficulty in manufacturing – the die casting industry is a good example. As you know, in the US there is certainly a lot less manufacturing today than there was 20 or 30 years ago. If you look at just my own city, I would guess that 80 percent of the metalworking companies that were here when I started in 1974 are no longer in existence. You really have to diversify where you go. I am also part owner of a melting operation. I think one of the real changes is that the major players, like the Alcoas of the world, know that it is important to use recycled metal. The economics are there, not just because it‘s good to be green, but because it makes tremendous economic sense. We are primarily an aluminum recycler even though we do all the other metals too. There are mills that would never buy scrap and are now looking at someday using 60, 70 or 80 percent of their charges from scrap. I would say that there is finite amount of material available for the industrial scrap side and the demand is infinite. It is a world market for everything too. Everything is very transparent. What happens on the London mill exchange affects our ability to sell because it is so influential on pricing. It is a little bit different in the service center, because that does not react quite as fast. You have to be aware. We are wired in to the fluctuating exchanges 24 hours a day. It is much more sophisticated than people would think.
CEOCFO: What is key to running an organization that has so many locations and people? Mr. Schupan: When I first got out of the university, I ended up teaching for three years. From a standpoint of coaching sports, I was very successful even though I only did it for a short time. I was not sure what I was going to do. I came back to work for my father for just one year and then I was either going to go to law school or try to coach college basketball. Being in the small industrial scrap operation was not what I wanted to do, but it obviously has turned out okay. I think the key to real success is the human resources department, which we are now preparing to change from “human resources” to “talent acquisition and retention”. It is having the right people. If you have the right people with the right attitudes, you can always teach them the skills. We foster a family. It is hard, because I do not know all 400 people in the company, but we still foster a relationship. Thomas Freedman once said at a talk in Colorado that “nobody ever washes a rental car.” I do not want the jobs here to be rental jobs. I want them to own their jobs. It is up to us to foster that environment. If they own their jobs, it is a tremendous difference. There is a book called “The Coming Jobs War,” and part of it mentions that 25 percent of people are very highly motivated with regard to their job; 50 percent do it every day and they are involved, but they are not heart and soul; and 25 percent would rather be anywhere else. That is what they found in the average company. That is not what I would like the picture of our company to look like, and I do not believe it is. Just recently, we won awards for 100 Best Companies to Work for in West Michigan and 100 Best Companies to Work for in the Detroit Area. Then we won a national award for being one of the 100 best companies. They get the information from the employees at random, so it is not me saying how great we are. Are we perfect? No, but we are always trying to get better. I have three presidents, and two of them have been with me for over 30 years, and one for 20 years. We would not be together if there was not a trust, loyalty and sharing of success. Those are old-fashioned values, and in the 39 years I have been here, we had one layoff for three people for three months. Things were tough, but we have managed to get by without hurting our people. In order to have loyalty, you have to give some loyalty. If I had been a public company, I may have been fired for not squeezing out the last ounce of profit. My goal is never to be the richest man in the graveyard. My job as a CEO is to help employees grow and be able to utilize their talents.
CEOCFO: Would you tell us about community involvement? Mr. Schupan: I have been involved in fundraising for Big Brothers and Big Sisters for 30 years. There is a dinner, which I think raises the most of any Big Brothers and Sisters’ events for one night in the country, in which we are heavily involved. It is named after a son I lost 11 years ago in an automobile accident. I was in the midst of helping them get a new facility, and about six weeks before it opened I was asked if they could name it after my son, which I had never asked for and there were no conditions attached to that. It is called the Seth Nelson Schupan mentoring center, and we help about 1,200 kids a year. As far as involvement, a great example is in the Kalamazoo area we have about 170 employees. Last year, 98 percent of our employees contributed. The year before, it was 100 percent. Rarely do you ever see that kind of participation. We just got a call that we are being recognized as the company that is the pace setter. There are some wealthier companies, but we have always had an attitude here that you want to give back to your community. My mother used to say it is easier to give somebody the shirt off your back if you happen to have another one, but you have a responsibility. We have taken that seriously to give back to our community.
Mr. Schupan: Absolutely. We just had one, which is interesting, of a small electronic recycling company. It was really almost buying a person because he had a small business and he came out of Northwood University. It so happens we had a scholarship up there for their entrepreneur program. It is designated for four young people at a five-year commitment, and he started his business while he was in that program, which was named after the son we lost who also went to Northwood. Our son played hockey up there, and they have a hockey tournament named after him, which I had nothing to do with except them coming to me and saying he meant a great deal to the school and program and asking if they could name the tournament after him. It has been that way for 11 years. He was a great kid.
CEOCFO: Put it all together for our readers. Why is Schupan & Sons a company of note? Why should people pay attention?
Mr.
Schupan:
If you look at our growth, we ship one million pounds a day of recyclables.
We have relationships throughout the United States. I have a brokerage
office in Chicago that buys metal and I have somebody working out of the
Colorado area. We have extremely talented people. I was just asked to do a
talk for the American Metal Market for May, which I actually turned down. We
are respected in our industry. If you look at our website, there was an
article in December in the Metal Service Center where we were featured. I
have a 50-year-old, framed quote on my wall that says, “There is nothing
nearly so clever as honesty and sincerity.” It will always be applicable. We
do not try to outsmart the people we work with; we work with them and build
relationships where there is mutual benefit. Sometimes in business,
especially on the industrial scrap side, you do not necessarily see that, so
I think we are a little bit unusual. I think that very simply, we really do
treat our customers and employees as we would want to be treated. I think it
goes a long way because everyone pretty much knows our philosophy. If we
make a mistake, we do not hide behind it. We fix it and try to do the right
thing. I think these are Midwestern values, but they work for us. That is
why we have grown from a tiny company to a good-sized company. |
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