Rubbish has been good to Portland's Schnitzer family. Their company, founded more than a century ago as Alaska Junk, has evolved into a...
Rubbish has been good to Portland’s Schnitzer family. Their company, founded more than a century ago as Alaska Junk, has evolved into a worldwide supplier of scrap metal and finished steel products — not to mention a place where you just might find that transmission for the ’77 Firebird in your garage.
The core of Schnitzer Steel is its scrap business. The company collects old autos, railcars, construction debris and other scrap metal, primarily at its major facilities in Tacoma, Portland, Oakland and Everett, Mass. There the scrap is shredded, loaded onto ships and sent to China, South Korea, Turkey and any number of other fast-growing, metal-hungry countries.
Scrap accounts for three-quarters of Schnitzer’s revenues, but its two other segments — steel manufacturing and auto parts — are important, too. The company’s Oregon minimill buys steel from the scrap division, melts it in a 108-ton capacity electric arc furnace and turns it into rebar, wire rod and other products.
And at Schnitzer’s more than three dozen U.S. and Canadian auto-parts yards, customers pay to scavenge usable parts from junked cars; what’s left goes to Schnitzer’s scrap division, if feasible, or is sold elsewhere.
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The global recession derailed Schnitzer’s impressive growth record last year; revenues fell by nearly half, from $3.6 billion to $1.9 billion, and the company lost $32.2 million. But Asian demand held up relatively well, D.A. Davidson analyst Brent Thielman said, and the company has done a good job of keeping expenses down.
With global demand — and scrap prices — on the rise again, Thielman said, Schnitzer is well-positioned to resume its growth track: He expects revenues in fiscal 2010 to approach $2.4 billion, with a net profit of around $63 million.
“We are the biggest reservoir of junk metal in the world by far,” he said. “That’s something I think these guys can leverage.”