At 2008’s Institute of Scrap Recycling Industries Convention in Las Vegas, thousands gathered to see innovative scrap technologies, learn the latest techniques and celebrate the industry’s immense success of the past few years. Even so, one could not help but wonder how long it would be before the early years of the 2000s would be referred to as “the good old days” for the scrap industry.
What a difference a few months make — or just one month, for that matter. September 2008 held a steep freefall for the scrap market. Steel prices that started the month at more than $500 per ton were down by nearly 50 percent at the beginning of October.
“The first week of September the mills told us the price for scrap steel was going down by $100 [per ton], and they came back the following week and dropped it by another $100,” said Pete Bausone, vice president of Hawk Steel Industries Inc., Kennedale, Texas. “By the end of the month, the price of steel was down by $253 per ton, and the mills were limiting the number of scrap shipments they would receive.”
Being a large steel scrap processor in the Dallas — Fort Worth market, this drastic drop in the commodity price really hurts. The company buys scrap from as far away as Louisiana, Arkansas and Oklahoma. Buying scrap at yesterday’s prices, which then sharply drop, has Hawk Steel and the industry playing catch up.
“The yards that are in debt and have their inventory financed will start to fold or get bought out,” added Bausone.
The lightning fast price decline surprised many. However, Bausone and other industry professionals knew the market was in for a correction. The prices for the last three years were overinflated.
“About five years ago, yards were getting less for steel than what they are now after the sharp decline,” said Tom Bagnell, vice president of sales for Hoss Equipment, a Terex Fuchs material handler distributor in Texas.
“Although no one likes to see it, an adjustment was inevitable.”
While it will take scrap processors time to recover from September’s steep correction, industry veterans like Bausone know that being successful in the scrap business takes much more than quickly adjusting to market conditions. Hawk Steel has worked through the many ups and downs of the industry for more than 25 years.
Experienced companies know it is imperative to differentiate their operations from the competition and be diligent in controlling the “controllables.” Above all else, a scrap yard must be productive to keep up with customer demand. Through new equipment purchases over the last two years, Hawk Steel has made advancements in its operation to differentiate itself from the competition and boost productivity.
In 2007, Hawk Steel invested in a shredding system to boost the company’s saleable product. The crews fed the American Pulverizer hammermill a wide variety of plate and structural steel and nonferrous materials.
“The only items we do not send through the shredder are glass bottles, anything explosive or flammable, big electric motors or compressors, and thick steel plate,” explained Russ Kelso, operations manager for Hawk Steel. All other items were processed by the shredder, and “everything coming off the belt is sold,” he added.
By adding the shredder, Hawk Steel eliminated the need for bailing and increased production of saleable product. Additionally, “the shredder has given us an edge on the market,” said Bausone. “It helps us to diversify our products and allows us to do what our competition cannot.”
The family-run processor also realizes an effective way to increase productivity at the yard is by keeping an experienced and satisfied workforce. The company values its workers, paying employees well and giving the crews the best equipment on the market to keep them productive and happy.
“What keeps my employees happy makes me happy,” commented Bausone.
However, Hawk Steel experienced a situation with its material handlers a couple of years ago that cut into productivity and put undue stress on the workforce and management. According to Bausone, material handlers are essential to the operation’s success.
“We depend on them rockin’ and rollin’ a minimum of 11 hours per day to sort material, feed the shredder and load trucks.”
A reliable material handler running every day enables the yard to keep up with processing needs. Yet, Hawk Steel saw several handlers experience significant downtime.
“We had major problems with four of the handlers, and we went through seven engines in a combined 2,200 operating hours between them,” said Randy Horton, equipment supervisor for Hawk Steel.
Horton explained that there also were reliability issues with the slew ring bowl in some of the handlers.
“At one point, we were down to one handler for the whole yard.”
The situation alone cost Hawk Steel significant sums of money, not to mention stress. With handler downtime costing the company about $3,000 per hour per machine in lost productivity, Bausone needed a solution.
About the same time the processor was experiencing the material handler reliability issue, Terex Construction Americas signed Hoss Equipment Company, Irving, Texas, as a Terex Fuchs material handler distributor for Texas. One of Hoss’s first calls was to Hawk Steel.
“Given their history with other handlers and dealers, we could tell they were a little leery about trusting another company, but we knew we could help,” said Bubba Fearka, senior sales representative for Hoss Equipment. Bausone added, “They were going to have to do a lot to get the business, and, in retrospect, they really did what it took.”
Hawk Steel started cautiously by adding one Terex Fuchs MHL350 D material handler to the operation. With a center-mount double-row slew ring design for reliable operation, the MHL350 D features a 52-ft. (16 m) maximum reach and wide undercarriage with large outrigger cylinders and stabilizer support beams for optimal lift capabilities and productivity.
A popular handler size for scrap operations, the MHL350 D is powered by a fuel efficient 198 hp (148 kW) turbocharged diesel engine. Its dual-circuit hydraulic system — one dedicated to stick movements and the other reserved for slewing and other machine functions — offers Hawk Steel operators smooth, precise machine handling and fast working cycles to quickly feed the crusher or load trucks.
Of greater importance to the steel scrap processor, the Terex material handler has a unique cooler arrangement that includes separate hydraulic oil and engine cooling systems to maximize cooling efficiencies. Speed of the hydrostatically powered oil cooling fan is temperature controlled up to 122 degrees ambient air temperature.
“We run our equipment seven days a week and often encounter overheating issues during the summer months,” explained Horton. “However, we have run into very few of these problems with the Terex handlers.” Bausone agreed and added, “The machines are very reliable, running 99.8 percent of the time.”
On the infrequent occasion that Hawk Steel has required service for the material handlers, Hoss Equipment has been there to provide it, and quickly.
“Dealers who service our other equipment typically have between a three- to seven-day lead time before being able to respond, but Hoss will typically send a mechanic out within one to two hours,” said Horton.
The combination of Terex Fuchs material handler reliability and service support from Hoss Equipment has allowed Hawk Steel to get its productivity numbers back where it needs them. Today, the company operates four MHL350 D material handlers in their yard.
“We could not have moved the amount of material we have over the last year or two without the Terex machines,” said Bausone. “There have been days where we were able to move over 50 loads [over 1,000 tons] to the mills when they were demanding the steel.”
Even with the market and price for scrap settling, the combination of product differentiation through the addition of the shredding system and increased reliability and productivity with the Terex Fuchs material handlers will keep Hawk Steel’s business rockin’ and rollin’ for years to come.