A. Tenenbaum Co. is 115 years old, but a year and a half of sky-high steel prices have made these the salad days.
The North Little Rock scrap dealer’s third-generation owner, Harold Tenenbaum, has learned never to predict how long the business cycle for a commodity will last, not even for business planning purposes.
“We do no forecasting,” he said bluntly. “This business has cycled for years. You have to be ready for the good times … and when it turns sour, hopefully you break even.”
Still, Tenenbaum is making hay while the sun shines. He is adding a $2 million high-tech metal-sorting line. The Tenenbaum family is also spending some money — upwards of $50,000 a year — to be primary sponsor of Riverfest for four straight years.
These days he’s skittish about revealing revenue figures — something the company shared readily a year ago. It’s entirely likely, however, that the $187 million in revenue that ranked A. Tenenbaum as the 33rd-largest privately owned company in Arkansas in 1983 was eclipsed in 2004. After all, it was in the last quarter of 2003 that steel prices began the ascent that has lasted through the first quarter of 2005.
Who’s in the Trunk?
Most of A. Tenenbaum’s employees, 140 of them, work at a subsidiary called Arkansas Aluminum Alloys in Hot Springs, which uses scrap aluminum to create ingots to customer specifications. Its biggest customer is Honda Motor Co., but Nissan is also a major account, Tenenbaum said.
Demand for the aluminum ingots, which are turned out 24/7, has been “OK,” he said, which is a sharp contrast with the brisk demand for the company’s primary business: shredding and reselling scrap metal.
Eighty employees handle the 500-600 tons of scrap that flow each day through the gates of the 45-acre compound on West Bethany Road in the Rose City section of North Little Rock. Nothing in the yard today will still be hanging around next month, Tenenbaum said.
The current market, he said, is nothing like the mid-1980s when “I stacked scrap for two and a half years because I couldn’t sell it for more than I’ve got in it.”
The scrap includes appliances, building materials, tin, aluminum cans, even brass shell casings from military and private firing ranges. Insulated wire is baled and shipped to salvage yards in China, where it still makes financial sense to hand-strip the scrap metal from the insulation. When Alcoa and Reynolds Aluminum shut down their Arkansas operations, A. Tenenbaum bought the scrap.
But the main source of scrap metal is automobiles.
“I can make your car go away in 30 seconds, and I don’t care who’s in the trunk,” Tenenbaum said, trying what is clearly a much-used joke on a new audience.
A shredder, which Tenenbaum said was “nothing but a glorified rock crusher,” can accept scrap items up to the size of a car, while larger items like buses, tanks and I-beams must first encounter a piece of machinery called a guillotine shearer. Late last month, a row of public transit buses from the St. Louis area, from which the engines had already been salvaged for resale, were lined up like so many French aristocrats waiting their turn.
Original Recyclers
A Tenenbaum Co. is a part of the Institute of Scrap Recycling Industries, a trade group that calls its members “The Original Recyclers.” Despite the advent of new technology and new markets on the other side of the world, Harold Tenenbaum said the scrap business is basically the same as when his great-uncle, Abraham, began the company in Little Rock in 1890: “We recycle metals.”
Abraham, who had emigrated from an area near the Germany-Poland border, sold the business to his brother, Julius. Julius eventually sold it to his son, Joe, who was Harold’s father.
The company was originally located on the Arkansas River in Little Rock, at the base of Rock Street where the Riverfront Amphitheater now sits. Harold Tenenbaum, back from college, opened the North Little Rock yard in 1971, and the federally funded Urban Renewal program sent the offices to North Little Rock in 1976.
Joe Tenenbaum preferred fishing to working, Harold said. He hired Bill Bushman as president of the company, and Harold ran the scrap yard until the day in 1986 when Bushman died of a heart attack in his office.
Harold Tenenbaum had only a basic knowledge of the financial side of the family business, but suddenly he was in charge. Fortunately, he said, “I’m smart enough to surround myself with people who are very smart.”
Tenenbaum buys scrap metal from “all over.” The company buys huge quantities, like the scrap from Alcoa’s and Reynolds Aluminum’s dismantled Arkansas operations. It also buys small quantities, right down to grocery sacks of aluminum cans collected one at a time by roadside scavengers trying to make ends meet. Tenenbaum has 70 can-recycling centers in eight states, and the company recycled 7.8 million pounds of aluminum cans last year at 30-32 cans per pound. That’s a lot of cans.
The company owns 400 trailers and 400 Dumpster-type roll-off boxes to make it easy to collect and retrieve scrap from regular sources. All of the hauling is done under a longstanding relationship with Bruce Oakley Inc., the North Little Rock trucking, barge and warehousing company that ranked 36th on Arkansas Business’ 2004 list of the state’s largest private companies.
The new metal-sorting facility under construction on the hard-packed, shrapnel-strewn dirt of the scrap yard will use an eddy current system — spinning high-powered magnets that can throw off even the nonferrous metals that won’t cling to standard industrial magnets — to mine more reusable metal from shredded cars and other scrap.
Iron is selling for $80-$100 a ton these days, Tenenbaum said. Five years ago, the price was about $30 a ton. Heavy demand from rapidly developing countries like China and India has contributed to the healthy price, and A. Tenenbaum does export a significant amount of scrap to China. But most of the scrap iron and steel it sells goes to steel mills up and down the Mississippi River.
The news that SteelCorr had spurned Arkansas and would instead build a new steel mill in Mississippi was only a mild disappointment to Harold Tenenbaum.
“I’d rather it have been in Arkansas, but as long as it’s on the river, I don’t care which side it’s on,” he said.
Getting the Word Out
The tenenbaum Family’s sponsorship of Riverfest, which began in 2004 and will stretch through the 30th anniversary in 2007, has given the nonprofit organization an uncommon level of financial security, Executive Director Deanna Shannon said.
It also was the company’s “first big jump” into general-audience marketing, according to Harold Tenenbaum. But unlike most advertising, it isn’t aimed at finding new buyers. Instead, Tenenbaum hopes to build some name recognition among potential scrap sellers including the guy who has a junk car in the yard that he needs to get rid of.
The family is a presenting sponsor and A. Tenenbaum Co. is underwriting this year’s headline performance by Hank Williams Jr.
Riverfest is high on a long list of favorite civic and charitable causes championed by Harold’s wife, Judy Tenenbaum. It is her goal, he said, to “unify Little Rock and North Little Rock,” something Riverfest has symbolically done since activities were first extended to the north side of the river in 2002.
Judy Tenenbaum is also involved with Central Arkansas Radiation Therapy Institute, the Susan G. Komen Foundation, Sister Cities and City Year, an AmeriCorps service program for young adults.
“The way she’s going to bring this all together is she’s going to get the City Year kids to help work Riverfest,” Harold said.
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