Founded in 1906 as a one-man scrap metal operation, Schnitzer Steel Industries, Inc., has become one of the nation's largest recyclers of scrap metal, a leading provider of used and recycled auto parts and a manufacturer of finished steel products.
With an extensive national and global reach, the company achieved $3.3 billion in revenues in fiscal 2012 and was ranked #631 in the 2012 Fortune 1000 list of companies. Schnitzer Steel common stock is traded on the NASDAQ Stock Market under the symbol SCHN.
With corporate headquarters based in Portland, Oregon, the company represents the complete cycle of reuse through its three integrated operating segments, the Metals Recycling Business, the Auto Parts Business and the Steel Manufacturing Business.
Metals Recycling Business
The Metals Recycling Business collects, trades, brokers, processes and recycles metal, both ferrous (containing iron) and nonferrous (not containing iron).
Raw scrap metal is purchased from industrial manufacturers, railroads, auto salvage facilities, metal dealers and individuals. The metal generally comes from obsolete machinery and equipment such as autos, railroad cars, railroad tracks, home appliances and demolition metal from buildings and other obsolete structures. As part of the company's vertical integration, we also purchase crushed auto bodies from our Auto Parts Business facilities, where geographically feasible. Purchased materials arrive at our 58 metals recycling facilities daily by ship, barge, rail, truck, car and even individuals on foot.
Our proximity to large industrial suppliers and major railroad routes, deep water ports and major highways provides us with a competitive advantage. We purchase raw material from the Western U.S. and Canada, Hawaii, Alaska, the New England states, the Southeast and Puerto Rico.
Once the raw scrap metal arrives at one of our yards, it is processed by sorting, shearing, shredding, torching and baling. This results in metal processed into pieces of a size, density and purity required by steel mills and foundries for melting and use in the production of new finished steel and other metal products. Smaller, more homogeneous pieces of processed metal have more value because they are more easily utilized by steel mills and foundries.
One of the most efficient ways to process metal is to use shredding systems, such as those installed at nine of our facilities. A shredder can reduce auto bodies, home appliances and other metal into fist-sized pieces in seconds. Shredded material is then carried by conveyor under magnetized drums which attract the ferrous materials and separate them from the nonferrous materials. The remaining nonferrous metal is sorted and graded before being sold or is sold unsorted. Processed recycled metals are sold to domestic and foreign customers including ferrous metals sold to our Steel Manufacturing Business (highlighting another example of our company's vertical integration). We ship to our customers primarily via bulk cargo ships, railroad cars and trucks and achieve cost efficiencies by taking advantage of our export facilities at seven deep water ports and locations close to major railroads and highways. In fiscal 2012, our recycling facilities processed over 5.1 million tons of ferrous metal and nearly 629 million pounds of nonferrous metal.
Depending on market conditions, we can also provide scrap metal to global markets by purchasing processed ferrous metal abroad and selling it to steel mills around the world.
We are also involved in several joint ventures that provide us additional opportunities for recycling metals and other materials.
Auto Parts Business
The Auto Parts Business runs one of the nation's leading self-service used auto parts networks. Our 57 locations in 15 U.S. states and Western Canada are dedicated to supplying our customers with low-cost, quality used auto parts.
In general, we purchase used and salvaged vehicles from tow companies, private parties, auto auctions, city contracts and charities. Generally, the parts are then removed and sold through our stores although some repairable vehicles are sold as is. The remaining portions of vehicles are crushed and sold to metal recyclers (including Metals Recycling Business facilities where geographically feasible) which process them into sellable recycled metal.
Our Pick-n-Pull self-service stores generally accommodate older, end-of-life vehicles and are geared towards retail customers such as "do-it-yourselfers". Each facility stocks a large number of domestic and foreign cars, vans and light trucks which are continually replaced by new arrivals to offer our customers a wide and fresh selection of parts from which to choose. At these self-service stores, the customer pays a nominal admission fee, finds a vehicle with the desired parts and removes them without the assistance of our store personnel. After a vehicle has finished its time in the customer area, our staff removes remaining recyclable nonferrous materials and "core" parts that can be sold wholesale such as engines, transmissions and alternators, and sells them at auction. The remaining auto body is crushed and sold as ferrous scrap metal.
Steel Manufacturing Business
The Steel Manufacturing Business purchases recycled metal through the Metals Recycling Business and turns it into high-quality finished steel products. Operating as Cascade Steel Rolling Mills, we produce a wide range of products at our state-of-the-art mini-mill such as reinforcing bar (rebar), coiled reinforcing bar, wire rod, merchant bar and other specialty products. Our mini-mill is the only one in the Western U.S. that can obtain all its recycled metal through its own affiliated metal recycling operations. In fiscal 2012, the division sold 447,000 tons of finished products.
Cascade Steel's electric arc furnace (EAF) is more energy efficient and environmentally friendly than traditional blast furnaces. Processed scrap is melted by the EAF and then cast into semi-finished goods called billets. On-site rolling mills convert the billets into the finished products.
Cascade Steel sells to customers primarily located in the 10 western states from its mill in McMinnville, OR (near Portland) a distribution center in El Monte, CA (near Los Angeles). Typical customers are steel service centers, construction industry subcontractors, steel fabricators, wire drawers and major farm and wood product suppliers.
|By The Numbers
|Recycled metal sold
||5.4 million long tons
|Finished steel products sold
||447,000 short tons
|Metals recycling facilities
|Metals recycling locations with export facilities
|Auto parts locations
|As of end of fiscal year 2012 (8/31/2012) except items with asterisks (*) are as of 1/8/2013.
Growth and Resilience
Schnitzer Steel has grown into a global leader in the steel industry through value-creating acquisitions and constant improvements to our processing, manufacturing and information technologies. Over the last three fiscal years, we have spent $248 million in capital improvements to maintain our competitive advantage as an efficient metals recycler and manufacturer.
Our company's flexible business model and platform is built to perform in both strong and weak markets. Our business model and experienced staff allows us to quickly adjust to changing supply costs and market demand. Our strong supply chain and access to high volume processing facilities and deep water ports – on both U.S. coasts, and in Hawaii and Puerto Rico – enables us to ship recycled metal anywhere in the world in response to changing market conditions. All of these taken together form the foundation of business platform with considerable advantages in the global marketplace.
A fundamental driver of our business is the long-term growth of global demand for recycled metal. We are primarily an exporter, buying scrap metal in the United States, processing it for shipment, and selling it to steel mills and foundries that are serving emerging markets. Our unique and flexible global platform will become an even greater asset as developing countries drive more of the world's economic growth.
Our growth strategy has been a large part of our success in the past and will continue to be in the future.
Our strength and success is directly related to our focus on sustainability. We've worked hard over the years to integrate that focus into every layer of our culture.
Sustainability starts with our business model. Recycling metal instead of using virgin ore to create new steel products saves energy and natural resources. By using recycled metals, the steel industry saves enough energy each year to power 18 million households. Recycling one ton of steel conserves 2,500 pounds of iron ore, 1,400 pounds of coal and 120 pounds of limestone. Creating products from recycled steel instead of virgin ore uses 40% less water and reduces mining wastes by 97%. And of course, each auto part that is reused is one less part that needs to be created, not to mention the metals, plastics, and other materials that would need to be produced.
However, sustainability doesn't end with our business model. All of our businesses are constantly working on reducing our environmental footprint. Over the years, we've improved our processes and controls, invested capital to increase our efficiency and decrease our energy use, and fostered a culture of resourcefulness and accountability. For example, some of our metals recycling facilities have installed state-of-the-art storm water collection systems to protect the surrounding communities and ultra-efficient power substations to reduce energy use. All of our auto parts locations follow a standardized environmentally friendly process to remove and recycle vehicle fluids and hazardous materials before parts are removed. Overall, we've shown that it is possible to operate profitably while maintaining a focus on sustainability and being responsible stewards of our environment.
Steel Recycling Institute
Steel Recycling Institute
Institute of Scrap Recycling Industries, Inc
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