Keywell’s Keys to Success

This stainless and alloy scrap processing firm has made a name for itself through its commitment to quality and service to its customers and its recognition of employees who provide them.

Other Keywell senior managers are quick to point out the same thing. "The key to our operation is personnel--from yard workers to operations people to top management," notes Barry Hunter, one of the firm's senior vice presidents, chairman of ReMA's public relations committee, and chairman of the stainless steel and special alloys committee of the Bureau International de la Recuperation (BIR). What's unique about Keywell's employees, he says, is that, throughout the organization, "there is recognition of our expertise in a specialized, critical product line," processing stainless steel and high-temperature alloy scrap.

In addition, points out Michael Rosenberg, also a senior vice president, Keywell managers bring to the company "professionalism," which he defines to include "thorough attention to the smallest details and consistency in working with customers." Furthermore, says the man who twice served as president of ReMA's Chicago Chapter, the company's staff members work well both internally--with their fellow employees--and externally--with customers on both the supply and consuming ends.

Functioning as a "team operation," as Plant describes it, is vital to a company the size of Keywell, which now owns in full or part 14 plants and/or offices in the United States and abroad, and employs 310 people domestically. Therefore, he's made building and maintaining that team one of his primary concerns.

Plant's attention to employee recruitment and retention has paid off, believes J. Mark Lozier, executive vice president. Keywell has been able to assemble a roster of big names in the industry, losing only one employee in four years, he points out, and “clear and total credit belongs to Morton and his reputation. He's made people want to be associated with the company."

Offering Employees Ownership and Freedom

Keywell's benefits and management style also have helped it recruit and retain top people. One benefit many in the firm point to as an important management retention tool is allowing key personnel to purchase stock in the company. In 1986, a leveraged buyout of Key International Manufacturing--the publicly held corporation that owned Keywell as well as firms involved in real estate, plastics, and fasteners--allowed the scrap company to establish itself as a Subchapter S corporation and privately offer shares in the company. Today, there are 33 shareholders, all of them employees or former employees.

Offering top managers ownership in the company is a logical way to promote corporate success, says President Richard Odle. "If you own a piece of a company and it grows and you're rewarded, you're motivated to stick with the company and help it further succeed," he points out.

This idea of giving to employees in the hope that they'll give to the company in return is evident in Keywell's management philosophy as well. According to Rosenberg, personnel are given "the latitude to make decisions up and down the line. Although there are general rules and constraints imposed on employees, he says, "from the general manager level up, there is significant freedom to make decisions. People welcome the opportunity to display their independence."

Rosenberg notes that the accessibility employees have to one another also helps the company keep its valued personnel content. Similarly, Plant says, employees are kept "very well informed of what's going on in the company. We want everyone to feel like part of the team."

Growing Globally and Locally

Keywell's latest focus on its employees came in the recent formation of the Keywell Development Group, a company unit charged with developing the skills of younger employees in anticipation of eventually making them responsible for major accounts.

The development unit has another primary task: exploring international expansion. Although the company has partial ownership in two overseas firms, giving it a certain amount of international presence, Plant calls Keywell "weak in export by design," with 95 percent of its scrap sold domestically. That number could shift slightly, however, because of the recent opening of Keywell GmbH, which Lozier describes as a one-person office in Berlin responsible for "exploring all opportunities--including acquisitions and partnerships"--in the area. It's an interesting move considering that Keywell's two main competitors in the United States are owned by German firms.

While it's unlikely Keywell's senior managers would make such a move if they weren't interested in making a larger impact on the international scene, they emphasize that the company will not lose sight of the domestic consumers it has always served. Noting the recent changes in Eastern Europe and the internationalization of numerous industries, Rosenberg notes that “Keywell must have a global presence, but that in no way diminishes our attention to our roots--our primary domestic markets.”

The formation of Keywell GmbH is just one example of what Jack Forebaugh, a senior vice president, believes has been a significant part of the company's recent success: "We mind our business to make sure things are in top shape and take advantage of opportunities when they present themselves."

Examining Keywell's history reveals how apt that statement is. The company was established in 1924 as a family-owned ferrous processing business with a single plant in Detroit. Although it changed its emphasis to stainless and alloy scrap in the 1950s, it wasn't until 1982--the year Morton Plant and his brother Arnold, a senior vice president and chairman of ReMA's stainless and alloys committee, joined the firm--that the company really began to expand. A 10-acre Baltimore plant (which now serves as headquarters) was added that year. The following year, a facility in Midland, Pa., was opened on the property of J&L Specialty Products Corp. (the plant is on 17 acres of leased land). Another year later, in 1984, Keywell purchased a 44-acre facility in Chicago, now the site of most of its administrative offices. Expansion continued in 1985, when the firm opened an office in Port Elizabeth, N.J., to buy and sell scrap for its growing facilities. And in 1987, Keywell purchased Vac Air Alloys, then one of its customers and today reportedly the world's largest processor of vacuum-grade secondary superalloys and titanium. The acquisition included an 8-acre facility in West Mifflin, Pa., a 93-acre plant in Frewsburg, N.Y., 79-percent ownership in Turret Alloys (Sheffield, England), and 30-percent ownership in Metalloy GmbH (Hamburg, Germany).

With all that expansion, Keywell has grown from the $35-million-per-year company it was in 1982 to one 10 times that today, according to Morton Plant. The bulk of that sales volume stems from stainless scrap, which, at 250,000 to 300,000 tons processed per year, accounts for 80 to 85 percent of the business, he says. High-temperature alloys provide 10 to 12 percent of Keywell's sales volume, with the remainder made through handling ferrous, aluminum, brass, copper, and some precious metal scrap.

Keeping Facilities Alike

Although the plants are on different-sized lots, they all operate in a similar fashion, each with an outdoor processing plant and a covered warehouse area where high-grade alloys are tested, processed, and secured. This similarity, Morton Plant says, allows the company to standardize operations. Nevertheless, because there are slightly different circumstances and materials handled at each, the senior vice president responsible for each plant is given the autonomy to run his facility as he deems necessary, as long as it's within established general guidelines.

A regular Monday morning conference call connecting all offices is held to ensure that all of the facilities are kept informed of what the others are doing, as well as to share market information and establish price ranges. In addition, a networked computer system connects all of the offices and allows personnel at each plant to learn about the transactions at others instantly. This is particularly important since many of the traders buy for all of the offices.

Equipment at the plants was recently upgraded--financed primarily through internal funds, according to Morton Plant. Between 1988 and 1990, says Lozier, Keywell invested $5 million in new equipment in an effort to increase productivity and decrease maintenance costs, which has become reality, Morton Plant points out. Today, the company's estimated $14-million total investment in equipment includes six hydraulic balers, three large hydraulic shears, and 18 hydraulic cranes. In addition, each facility has a radiation detector that monitors everything that goes across its scale, at least one Kevex X-ray analyzer, and one to five spectroscopes, with the Frewsburg facility operating analysis equipment so sophisticated it's occasionally used by the U.S. government to test cobalt purchased for the Department of Defense Stockpile.

Transportation used by the plants does vary, although rail is used by all to ship to most consumers. The Vac Air Alloys division operates trucks that run all over the country. Of the other plants, only Baltimore and Detroit--which handle ferrous scrap--have their own roll-off trucks, but they run only in the immediate area of the plants

Venturing Into Now Territory

The Keywell expansion story doesn't end with Keywell plants or even with a German office. Between 1985 and 1990, in an effort to find more stainless material for its domestic consumers, Keywell established separate joint ventures with Chatham Iron & Metal Co. (Savannah, Ga.), Gulf Metals Industries Inc. (Houston), LMC Metals Division of Simsmetal USA Corp. (Richmond, Calif.), and Naporano Iron & Metal Co. (Newark, N.J.), none of which had specialized in stainless and alloy scrap prior to the arrangements.

Why did Keywell take the joint venture route instead of simply opening its own plants? For one thing, explains Morton Plant, they required minimal investment. More importantly, however, "They gave us the opportunity to work in those areas with well-known, well-respected companies," he points out, "which provided instant credibility."

Although he believes the joint ventures are working well, Morton Plant says it's unlikely that Keywell will enter joint ventures with additional partners in the United States for a while. "We're fairly well represented around the country now," he says, so any new facilities would stand the chance of conflicting with existing sites and partners. The greatest room for expansion in the joint venture area, he says, might be in additional plants with existing partners.

Maintaining Service and Quality

The geographical representation Keywell's plants and joint venture facilities have afforded it allow the company to buy from scrap processors all over the country. The firm does buy 10 percent of its scrap supplies from industrial accounts, but, Morton Plant emphasizes, "we will not go into a city where we're buying scrap from a processor and try to buy directly from their scrap source."

That's just one of the unwritten standards Keywell maintains in its relationship with its suppliers. In fact, says Arnold Plant, "Service and quality to our customers on both ends is our absolute specialty. We think it's important so we concentrate on it." Odle agrees: "Keeping our customers happy is our priority."

What does Keywell do to ensure that? One major part of that service is regular contact with all of its scrap suppliers. In an effort to maintain good relationships with the scrap processors it buys from, Hunter explains, Keywell encourages its suppliers to call the company's managers not only when they have business to be transacted, but also when they need information from a stainless expert.

Regular communication--daily contact, in fact--with its consumers is also high on the Keywell list of business philosophies, as is dedication to "consistent quality and delivery," says Forebaugh. Specialty mills have high standards of quality for the material they'll buy, so Keywell has always had to make producing quality shipments a priority. Since the acquisition of the Vac Air Alloys division, Morton Plant says, the company has further improved its quality. Because vacuum-grade scrap is graded so stringently, he says, "their extensive quality controls rubbed off on us."

Keywell serves its consumers in other ways as well. At the Baltimore plant, for instance, which is located next door to Eastern Stainless, Keywell loads scrap directly into the charging pots the specialty mill sends over, saving the mill a handling cost. The company is also offering some of its consumers premixed scrap heats to their specifications. This service is currently limited, but, notes Morton Plant, "I'm reasonably confident that in the next couple of years it will be offered on a much larger scale."

This stainless and alloy scrap processing firm has made a name for itself through its commitment to quality and service to its customers and its recognition of employees who provide them.

Other Keywell senior managers are quick to point out the same thing. "The key to our operation is personnel--from yard workers to operations people to top management," notes Barry Hunter, one of the firm's senior vice presidents, chairman of ReMA's public relations committee, and chairman of the stainless steel and special alloys committee of the Bureau International de la Recuperation (BIR). What's unique about Keywell's employees, he says, is that, throughout the organization, "there is recognition of our expertise in a specialized, critical product line," processing stainless steel and high-temperature alloy scrap.

In addition, points out Michael Rosenberg, also a senior vice president, Keywell managers bring to the company "professionalism," which he defines to include "thorough attention to the smallest details and consistency in working with customers." Furthermore, says the man who twice served as president of ReMA's Chicago Chapter, the company's staff members work well both internally--with their fellow employees--and externally--with customers on both the supply and consuming ends.

Functioning as a "team operation," as Plant describes it, is vital to a company the size of Keywell, which now owns in full or part 14 plants and/or offices in the United States and abroad, and employs 310 people domestically. Therefore, he's made building and maintaining that team one of his primary concerns.

Plant's attention to employee recruitment and retention has paid off, believes J. Mark Lozier, executive vice president. Keywell has been able to assemble a roster of big names in the industry, losing only one employee in four years, he points out, and “clear and total credit belongs to Morton and his reputation. He's made people want to be associated with the company."

Offering Employees Ownership and Freedom

Keywell's benefits and management style also have helped it recruit and retain top people. One benefit many in the firm point to as an important management retention tool is allowing key personnel to purchase stock in the company. In 1986, a leveraged buyout of Key International Manufacturing--the publicly held corporation that owned Keywell as well as firms involved in real estate, plastics, and fasteners--allowed the scrap company to establish itself as a Subchapter S corporation and privately offer shares in the company. Today, there are 33 shareholders, all of them employees or former employees.

Offering top managers ownership in the company is a logical way to promote corporate success, says President Richard Odle. "If you own a piece of a company and it grows and you're rewarded, you're motivated to stick with the company and help it further succeed," he points out.

This idea of giving to employees in the hope that they'll give to the company in return is evident in Keywell's management philosophy as well. According to Rosenberg, personnel are given "the latitude to make decisions up and down the line. Although there are general rules and constraints imposed on employees, he says, "from the general manager level up, there is significant freedom to make decisions. People welcome the opportunity to display their independence."

Rosenberg notes that the accessibility employees have to one another also helps the company keep its valued personnel content. Similarly, Plant says, employees are kept "very well informed of what's going on in the company. We want everyone to feel like part of the team."

Growing Globally and Locally

Keywell's latest focus on its employees came in the recent formation of the Keywell Development Group, a company unit charged with developing the skills of younger employees in anticipation of eventually making them responsible for major accounts.

The development unit has another primary task: exploring international expansion. Although the company has partial ownership in two overseas firms, giving it a certain amount of international presence, Plant calls Keywell "weak in export by design," with 95 percent of its scrap sold domestically. That number could shift slightly, however, because of the recent opening of Keywell GmbH, which Lozier describes as a one-person office in Berlin responsible for "exploring all opportunities--including acquisitions and partnerships"--in the area. It's an interesting move considering that Keywell's two main competitors in the United States are owned by German firms.

While it's unlikely Keywell's senior managers would make such a move if they weren't interested in making a larger impact on the international scene, they emphasize that the company will not lose sight of the domestic consumers it has always served. Noting the recent changes in Eastern Europe and the internationalization of numerous industries, Rosenberg notes that “Keywell must have a global presence, but that in no way diminishes our attention to our roots--our primary domestic markets.”

The formation of Keywell GmbH is just one example of what Jack Forebaugh, a senior vice president, believes has been a significant part of the company's recent success: "We mind our business to make sure things are in top shape and take advantage of opportunities when they present themselves."

Examining Keywell's history reveals how apt that statement is. The company was established in 1924 as a family-owned ferrous processing business with a single plant in Detroit. Although it changed its emphasis to stainless and alloy scrap in the 1950s, it wasn't until 1982--the year Morton Plant and his brother Arnold, a senior vice president and chairman of ReMA's stainless and alloys committee, joined the firm--that the company really began to expand. A 10-acre Baltimore plant (which now serves as headquarters) was added that year. The following year, a facility in Midland, Pa., was opened on the property of J&L Specialty Products Corp. (the plant is on 17 acres of leased land). Another year later, in 1984, Keywell purchased a 44-acre facility in Chicago, now the site of most of its administrative offices. Expansion continued in 1985, when the firm opened an office in Port Elizabeth, N.J., to buy and sell scrap for its growing facilities. And in 1987, Keywell purchased Vac Air Alloys, then one of its customers and today reportedly the world's largest processor of vacuum-grade secondary superalloys and titanium. The acquisition included an 8-acre facility in West Mifflin, Pa., a 93-acre plant in Frewsburg, N.Y., 79-percent ownership in Turret Alloys (Sheffield, England), and 30-percent ownership in Metalloy GmbH (Hamburg, Germany).

With all that expansion, Keywell has grown from the $35-million-per-year company it was in 1982 to one 10 times that today, according to Morton Plant. The bulk of that sales volume stems from stainless scrap, which, at 250,000 to 300,000 tons processed per year, accounts for 80 to 85 percent of the business, he says. High-temperature alloys provide 10 to 12 percent of Keywell's sales volume, with the remainder made through handling ferrous, aluminum, brass, copper, and some precious metal scrap.

Keeping Facilities Alike

Although the plants are on different-sized lots, they all operate in a similar fashion, each with an outdoor processing plant and a covered warehouse area where high-grade alloys are tested, processed, and secured. This similarity, Morton Plant says, allows the company to standardize operations. Nevertheless, because there are slightly different circumstances and materials handled at each, the senior vice president responsible for each plant is given the autonomy to run his facility as he deems necessary, as long as it's within established general guidelines.

A regular Monday morning conference call connecting all offices is held to ensure that all of the facilities are kept informed of what the others are doing, as well as to share market information and establish price ranges. In addition, a networked computer system connects all of the offices and allows personnel at each plant to learn about the transactions at others instantly. This is particularly important since many of the traders buy for all of the offices.

Equipment at the plants was recently upgraded--financed primarily through internal funds, according to Morton Plant. Between 1988 and 1990, says Lozier, Keywell invested $5 million in new equipment in an effort to increase productivity and decrease maintenance costs, which has become reality, Morton Plant points out. Today, the company's estimated $14-million total investment in equipment includes six hydraulic balers, three large hydraulic shears, and 18 hydraulic cranes. In addition, each facility has a radiation detector that monitors everything that goes across its scale, at least one Kevex X-ray analyzer, and one to five spectroscopes, with the Frewsburg facility operating analysis equipment so sophisticated it's occasionally used by the U.S. government to test cobalt purchased for the Department of Defense Stockpile.

Transportation used by the plants does vary, although rail is used by all to ship to most consumers. The Vac Air Alloys division operates trucks that run all over the country. Of the other plants, only Baltimore and Detroit--which handle ferrous scrap--have their own roll-off trucks, but they run only in the immediate area of the plants

Venturing Into Now Territory

The Keywell expansion story doesn't end with Keywell plants or even with a German office. Between 1985 and 1990, in an effort to find more stainless material for its domestic consumers, Keywell established separate joint ventures with Chatham Iron & Metal Co. (Savannah, Ga.), Gulf Metals Industries Inc. (Houston), LMC Metals Division of Simsmetal USA Corp. (Richmond, Calif.), and Naporano Iron & Metal Co. (Newark, N.J.), none of which had specialized in stainless and alloy scrap prior to the arrangements.

Why did Keywell take the joint venture route instead of simply opening its own plants? For one thing, explains Morton Plant, they required minimal investment. More importantly, however, "They gave us the opportunity to work in those areas with well-known, well-respected companies," he points out, "which provided instant credibility."

Although he believes the joint ventures are working well, Morton Plant says it's unlikely that Keywell will enter joint ventures with additional partners in the United States for a while. "We're fairly well represented around the country now," he says, so any new facilities would stand the chance of conflicting with existing sites and partners. The greatest room for expansion in the joint venture area, he says, might be in additional plants with existing partners.

Maintaining Service and Quality

The geographical representation Keywell's plants and joint venture facilities have afforded it allow the company to buy from scrap processors all over the country. The firm does buy 10 percent of its scrap supplies from industrial accounts, but, Morton Plant emphasizes, "we will not go into a city where we're buying scrap from a processor and try to buy directly from their scrap source."

That's just one of the unwritten standards Keywell maintains in its relationship with its suppliers. In fact, says Arnold Plant, "Service and quality to our customers on both ends is our absolute specialty. We think it's important so we concentrate on it." Odle agrees: "Keeping our customers happy is our priority."

What does Keywell do to ensure that? One major part of that service is regular contact with all of its scrap suppliers. In an effort to maintain good relationships with the scrap processors it buys from, Hunter explains, Keywell encourages its suppliers to call the company's managers not only when they have business to be transacted, but also when they need information from a stainless expert.

Regular communication--daily contact, in fact--with its consumers is also high on the Keywell list of business philosophies, as is dedication to "consistent quality and delivery," says Forebaugh. Specialty mills have high standards of quality for the material they'll buy, so Keywell has always had to make producing quality shipments a priority. Since the acquisition of the Vac Air Alloys division, Morton Plant says, the company has further improved its quality. Because vacuum-grade scrap is graded so stringently, he says, "their extensive quality controls rubbed off on us."

Keywell serves its consumers in other ways as well. At the Baltimore plant, for instance, which is located next door to Eastern Stainless, Keywell loads scrap directly into the charging pots the specialty mill sends over, saving the mill a handling cost. The company is also offering some of its consumers premixed scrap heats to their specifications. This service is currently limited, but, notes Morton Plant, "I'm reasonably confident that in the next couple of years it will be offered on a much larger scale."