An Inside Look at Scrapyard Operations with Kramer Metals’ Doug Kramer

June 26, 2015

 
John Shegerian: Welcome to another edition of Green Is Good and we are so honored to have with us today Doug Kramer. He is the president of Kramer Metals. Welcome to Green Is Good, Doug. Doug Kramer: Pleasure. John Shegerian: Before we get talking about Kramer Metals – your company – can you talk a little bit about Doug Kramer, the journey leading up to Kramer Metals and how you got involved etc. Doug Kramer: Sure. My family’s company was started in 1937 by my grandfather. John Shegerian: Wow. Doug Kramer: And it was always something that I loved and I enjoyed. It was a necessity, I think, more for my dad and my uncle to support the family. Growing up, I just loved it. I think I loved being with my dad more than I loved the business necessarily. John Shegerian: Yeah. Doug Kramer: So any excuse to be with my dad. John Shegerian: That’s awesome. So your grandpa started it? Doug Kramer: Yup. John Shegerian: Your dad and your uncle ran it. Doug Kramer: Right. John Shegerian: Now your generation – who is in the business now in your generation? Doug Kramer: Now it is my brother and I and my dad. John Shegerian: And your dad is still there. Doug Kramer: He is there every day. John Shegerian: And you still love being with him. Doug Kramer: Every day. John Shegerian: That’s awesome. We’re going to talk a little but about Kramer Metals. And for our listeners and viewers out there, to learn more about Doug’s company you can go to www.kramermetals.com. Talk a little bit about the business of owning and running a scrapyard. Our generation grew up thinking of scrapyards more like Sanford and Son. It’s not Sanford and Son obviously. Give a modern day version of what a scrapyard and a recycling scrapyard looks like. Doug Kramer: Well, it is not substantially different in terms of people bringing in obsolete goods into your facility for recycling. Modern day scrapyards also obviously purchase prompt scrap, which is industrial scrap that is coming from manufacturers. It is material that is coming from machine shops and aerospace and defense and all different manners of production. The difference today is that in addition to being a highly regulated industry, we are extremely careful about what we allow in, the types of materials, the hazardous constituents of which we absolutely will not let into our facilities. Safety, health, all the things that go into running a modern scrap facility. And, obviously, having a very strict inbound materials guideline so that you’re not bringing in materials that are going to be a problem. John Shegerian: It’s a lot different than when your grandfather started it. Let’s just say that. Doug Kramer: A lot different. John Shegerian: What state does Kramer Metals operate in? Doug Kramer: We operate in California. John Shegerian: You’re in California. So your scrapyards, what kind of materials do you bring in given the regulations and the laws and the rules that we have to adhere to in California? Doug Kramer: Right. So we have two yards. One of them is a ferrous operation, so it is buying all grades of iron, steel, cast iron scrap. And our other yard is our nonferrous facility where we buy all grades of aluminum, brass, copper, stainless steel and high temperature alloys. John Shegerian: Got you. And do you put them in shredders? Do you just sort them? How do you handle them once they’re on your property? Doug Kramer: We have a variety of different mechanical operations that we have. We do shred. We shear. We bale. We briquette. We torch. We plasma cut. The only two things that we don’t do to metal to prepare them for their final destination are surface conditioning or shot blasting. John Shegerian: Got you. Doug Kramer: So other than that, we do it all. John Shegerian: Given that you grew up in the business and your grandfather started it, it’s a different world economy now from the time your grandfather ran the business with your dad, now that you and your brother and your dad are there how does the world economic platform affect what’s going on at Kramer Metals now given the price of oil, steel, gold, silver and all the commodities, which are trading at unprecedented times here in April 2015? What kind of outlook does that give you, and how do you then encourage new products or get into new lines of business to hedge against economic factors that we have all never seen before? Doug Kramer: That’s a good question. I don’t know that I necessarily have a good answer for you. It’s something that we struggle with every day. My brother and I have recently gotten more into plastics. John Shegerian: Okay. Doug Kramer: Some of our customers have demanded kind of single-stream recycling efforts, and they don’t want to go to two or three different companies, so we have taken on plastics in that regard. So that is one way or dealing with that. There are factors that are beyond our control, and so we don’t try to control things we can’t control. We work very hard to have an efficient operation. We work very hard at the relationship that we have with our employees and making sure that our employees buy into our vision of how we want the business to run and the efficiencies. We do the best that we can do. John Shegerian: That’s in your control. Doug Kramer: That is within our control. Right. John Shegerian: Got you. At Kramer Metals, what kind of customers are coming in? Is it industrial customers? Is it the man or woman off the street? What does your customer mix look like? Doug Kramer: We do have some public business, the man-and-woman-off-the-street type of thing, but we are primarily an industrial company. We primarily service industry. John Shegerian: Got you. And what does a day in the life of your employees look like? How many employees do you have and what does their work schedule look like? Doug Kramer: We are about 30 employees now. We are down considerably from where we were. Generally, our drivers will get in any time between 6:30 and 7:00 in the morning. The trucks are out the door by 7:00 on their stops. The facility employees are in by 8:00. They have an 8:00-4:30 day. The trucks are 7:00-3:30, 4:00, maybe 4:30 depending on how busy we are. John Shegerian: Six days a week? Seven days a week? Doug Kramer: We were doing six days a week. With the conditions that prevail right now, we cut out Saturdays unless we need to be there. John Shegerian: Got you. Doug Kramer: Otherwise, Saturday was actually our large public day. That was the day we were really open primarily for the public. John Shegerian: Got you. Technology can be both a friend and a foe. How is technology a friend to Kramer Metals in terms of how does it allow you to reduce labor costs and actually be more efficient in terms of how you process your materials? Doug Kramer: Certainly, what you are seeing on this floor today is a good example of what the efficiencies are of good technology. This equipment is incredibly efficient. It’s efficient not only in terms of the speed with which it processes scrap but also in terms of the energy that it consumes. Obviously, by using mechanical means of preparing material and the more mechanical processing we can do the faster and more efficiently we can handle and process our scrap. But it takes people to do what we do. So to think that we can’t do it without having good employees who can manage that flow and understand what they are putting in to those machines who can identify upgrades and downgrades, that’s kidding yourself. So on the machinery side we rely upon technology in terms of information management. Obviously the more information we can get the better. The more of the right information we can get the better, I should really say, because there is more information that you can handle anyways. John Shegerian: Speaking of right information. We talked a little bit about – a couple minutes ago, we mentioned the headwinds that come from the globalization of the industry and things that are out of your control and your colleagues control and the industry’s control in terms of the prices of oil, the price of energy and steel right now. How is that – the globalization – a friend of Kramer Metals in terms of giving you more opportunity to sell? And since these emerging economies in China and India, and even though maybe they’re taking a little dip and rest right now they are sure to come back at some point, how is that a friend to Kramer Metals for the long term? Doug Kramer: Well, certainly, we’re located on the Pacific Coast. John Shegerian: Right. Doug Kramer: So being on the coast and being proximal to the ports in Los Angeles is a natural in terms of taking advantage of the Asian markets. John Shegerian: Right. Doug Kramer: Our business and our philosophy, however, is heavily weighted toward supporting U.S. industry. So we export and do a lot of exporting, but we export what we have to. John Shegerian: Got you. Doug Kramer: We don’t export things that we can otherwise sell into the domestic market. John Shegerian: Domestic. That’s so interesting. Doug Kramer: I think it’s extremely important to protect and to support U.S. domestic producers of metal. And the only way that I can really do that is to practice what I preach. If we can’t move the metal into those markets, then we will take advantage of whatever market is available. But given the option my preference is to serve the U.S. industry. John Shegerian: Got you. For our audience that just joined us, we have got Doug Kramer with us today. He is the President of Kramer Metals. You can learn more about Doug’s company and his family at www.kramermetals.com. This is the ISRI edition of Green Is Good, and to learn more about ISRI, please go to www.ISRI.org. Doug, you are in a family business – as you shared. Your grandfather started it. It is so fascinating as I get to know more and more people of ISRI over the last 10 years, people of our generation, great people like you and your family. It seems like the recycling industry, the scrap industry is so steeped in family legacy. Can you share a little bit more about your grandfather, where he came from – starting the company and the evolution of Kramer Metals with our audience? Doug Kramer: Sure. My grandfather was an immigrant from Latvia. He came here in the early 1900s. Actually, my grandfather when he was a young man was a bootlegger. He was a mobster. John Shegerian: Wow. Doug Kramer: And after he had some kids and thought the better of being in that life and not being around for his children, he packed up and he moved west and got into house moving and collection of scrap and things like that and eventually morphed himself into being a scrapman, a junkman. John Shegerian: And where was his first location? Doug Kramer: My grandfather didn’t actually have a location. John Shegerian: OK. Doug Kramer: My grandfather actually started the business out of the backseat of the family car. In those days my family lived in east Lost Angeles. John Shegerian: OK. Doug Kramer: He rented garages from a lot of the widows that lived in east L.A. They didn’t drive. John Shegerian: Like in the Boyle Heights area? Doug Kramer: In the Boyle Heights area is where my family grew up. John Shegerian: Wow. Doug Kramer: And they rented garages and he would keep his brass and his copper and all of his prepared ready-to-go goods in their garages and he paid them rent every month. My dad and my uncle actually got our first yard, which was about the size of this booth here, in probably the early-to-mid ‘50s and then slowly and methodically began growing the company through the ‘60s, ‘70s and ‘80s to where we currently operate our two locations now. John Shegerian: And which cities are they in? Doug Kramer: We are in Los Angeles. We are located in Los Angeles. John Shegerian: In Los Angeles. So you are really a homeboy of Los Angeles. Born and bred. Doug Kramer: I am. Born and bred. John Shegerian: Wow. Doug Kramer: You bet. John Shegerian: And do you ever still go back to Boyle Heights of where your grandpa was and your dad was? Doug Kramer: You know, actually, very recently I was with my older son and we were talking about where grandpa grew up. It was on a Sunday, so we were actually driving home. And I said, “Why don’t we go up there and let me show you?” And I drove him by his grandfather’s old home and showed him where they lived. He could not believe that. I drove him around that east L.A. neighborhood, which is now substantially different than it was when I was a kid. John Shegerian: Right. Doug Kramer: And showed him where he comes from. John Shegerian: Where he comes from. His real roots. Doug Kramer: It’s a lot different than where he lives. John Shegerian: Right. Doug Kramer: Yeah. John Shegerian: And how is it working you and your brother together? Is that something that really works well? Doug Kramer: It’s the greatest. Who do you trust more than your blood, you know? John Shegerian: Nobody. Doug Kramer: So my brother recently joined us. My brother had a company that he sold and he came to work for us after he sold his business. He had been there for a short time before and then came back to it. Having my brother there allows me to do what I do with ISRI. John Shegerian: Got you. Doug Kramer: And it’s allowing my dad to take some time to be with my mom and his grandchildren. So it’s pretty great. John Shegerian: Speaking of grandchildren, is there talk or do you feel that some members of the next generation will one day join Kramer Metals? Doug Kramer: I guess my feeling about that is really the same as my dad’s. John Shegerian: OK. Doug Kramer: I would never push it on them, and I’m not interested in pushing it on them. John Shegerian: Got you. Doug Kramer: They love to come down. They love to be around it. They are comfortable and familiar and they are right at home in the scrapyards. They’ve grown up there like I did, for sure. My feeling is that I will work really hard and my brother will work hard to build it for them. And at the point at which they don’t want it, there is no ego attached to it. We’ll do whatever we have to do, but it’s their choice. John Shegerian: It’s their choice. That’s right. Doug Kramer: If they love it and they want it, it’s theirs. John Shegerian: You said just a couple minutes ago that your brother’s involvement allows you more latitude to be involved with ISRI. And we are here at the annual ISRI Convention here in Vancouver. The first time it has ever been in Vancouver, British Columbia. On your lapel, you are wearing a beautiful button. Our audience probably can’t see it, but it says “Charter Member.” Can you explain what membership you have with ISRI and what your leadership position is at ISRI and why ISRI is important to you and Kramer Metals and other great companies like Kramer Metals? Doug Kramer: Sure. I am currently the National Chairman of ISRI. John Shegerian: Wow. Doug Kramer: I am finishing my first year as Chairman. I will have one more year to go. We are charter members of an initiative that we launched under Jerry Simms, which has – fortunately for me, I get to launch what Jerry started. John Shegerian: Right. Doug Kramer: Which is the circle of safety excellence, and it is a group that has decided that safety is the number one core value of their business and that their employees, customers and the public that surround their yards, that their safety is the most important thing every single day every hour that they operate. John Shegerian: That is great. Doug Kramer: We have agreed to share information about incidences, injuries, occurrences, safe practices, best management techniques for the purpose of benchmarking ourselves against not only the other ISRI members but against the entire industry. It is my goal, it is our goal as ISRI, to be one of the safest industries in the United States and we are going to get there. John Shegerian: And it’s all about safety first. Doug Kramer: Safety first. John Shegerian: You’re halfway through your term and I know you’re busy and we’ve got to get you out of here in a second or so, Doug. What do you foresee for the second half of your term? And give us a little visibility on the next 10 years for ISRI. Doug Kramer: Well, the next year of my term, there is a lot to do still. There is a lot left to do. I am extremely fortunate. Mark Llewyn, who is next in line, he is the Chair-Elect now. Fortunately, Mark and I are good friends and have been for a long time and Mark shares a lot of my vision and a lot of the feelings that I have about a lot of different topics when it comes to ISRI and the direction ISRI should go. We are working hard to strategically plan and to embark on some real strategic planning going forward for the association. My plan is to get to where I want to be as far as members participating in safety, for ISRI to continue to be the voice of the recycling industry in this country and globally and to position this trade association – to leave it better than how I found it really. John Shegerian: That’s awesome. Doug Kramer: As far as the future for ISRI is concerned, the future for ISRI, I think, is very bright. ISRI is not just a domestic leader. ISRI is really now a global leader in the recycling industry, and with the partnerships and friendships and alliances that we’ve formed with our neighbors here in Canada, with our international federations and associations, we are definitely a force to be reckoned with and I want to make sure we stay that way. John Shegerian: Under your leadership, it is going to stay that way. Doug Kramer: That’s the plan. John Shegerian: And we really appreciate your time today, Doug. Doug Kramer: Thank you. John Shegerian: You are very inspiring. You are very humble. For our audience out there, this has been the ISRI special edition of Green Is Good. We have got Doug Kramer. He is not only the President of Kramer Metals. And to learn more about Kramer Metals, you can go to www.kramermetals.com. He is also the National Chairman of ISRI. And this is the special edition of ISRI. Doug, you are definitely leaving this organization better than you found it, and you are making the world a better place, and for that, we say thank you and you are truly living proof that Green Is Good.