Pioneers in Recycling: What’s New Now at Markovits & Fox?

In attempts to preserve its long-standing solid business position, this San Jose firm has made progressive thinking a priority. Here’s how this multimaterial processing and trading enterprise has remained in the forefront of recycling and how it plans to move ahead.

Markovits & Fox has had its share of chances to display a pioneering spirit in reacting to a changing environment. One particular change that might have dealt a crushing blow to the 104-year-old San Jose, California, business was the dramatic reduction in the early 1980s in the area's heavy manufacturing industry, a major source of scrap to Markovits & Fox at that time. The company, which had been established in 1886 as San Jose Bottle Yard to collect bottles, rags, sacks, and bones, had evolved into a ferrous and nonferrous metal processor. With heavy industry on the decline due to rising land and labor costs, iron purchases in particular dropped off substantially. The need to replace this business sparked strategies that, once implemented, helped create the company picture seen today.

Focus on Nonferrous

As iron sources diminished, new nonferrous sources emerged with the growth of the Silicon Valley. While Markovits & Fox continued to handle iron, it focused on the increasing opportunities for processing high-tech scrap.

To take advantage of these opportunities, the company had to find consumers for the computer scrap it would be handling. Purchasing Manager Al Charron explains: "Brass mills and nickel producers had come up with new alloys to meet the demands of the electronics industry, but what were they going to do with the scrap? We went out and tackled that. Consuming mills had to be sought out to put this material back in the mainstream. We were the first ones to take this material and find people who could maximize its value."

Reorganizing and expanding the firm's purchasing arm also was needed. "Now we might purchase from five specialized machine shops in one month what before we might have brought in from one large equipment manufacturer," says Larry Fox, who is in charge of marketing operations. "This evolution brought on a much larger purchasing department with the ability to cater to many small lots."

Working in this function are Bruce Fox and Al Charron, with a team of more than 10 people including buyers and support staff. Says Bruce, "The company is buying everything: aluminum, copper, brass, nickel alloys, precious metals-if it's metal, we handle it."

Aluminum Is Key

Aluminum represents the largest-volume commodity Markovits & Fox handles in both the physical operations of the company and in its trading business.

Responding in the '70s to San Francisco Bay-area can companies' increasing production of aluminum cans, Markovits & Fox began baling their resulting scrap. Once the cans started coming out in large quantities, companies such as Kaiser, Reynolds, and Alcoa wanted to collect them and needed help. "We said we'd do it," says Chief Executive Officer Marvin Fox, "though many other scrap companies weren't ready to because they thought the quantities were too small and the economics didn't justify it. But we tried to get as much assurance as possible and then took some risk. We hoped the can business would work out, and gradually it did-we became very big in that area." To date, the company has processed more than 5 billion cans.

Expanded operations meant additional machinery. In 1975 the company installed a 500-horsepower hammermill shredder for processing the aluminum cans. A 1,500-horsepower hammermill was installed in 1980 primarily for shredding aluminum sheet, although it's also used for extrusions, stainless steel, and light-gauge iron.

By producing a consistent and quality product, Markovits & Fox has successfully introduced to many smelting operations the efficiencies of shredded materials. Still, the company also bales. It added a Logemann high-reduction baler in 1986. Besides aluminum, the machine is used to process stainless steel, copper, brass, and plastic. As the company increased its aluminum processing capability, it greatly expanded its aluminum trading. Larry Yockey came on board as manager of this area after 15 years of experience at Kaiser. With the help of Linda Dodd and Cyndi Denicore, he has further developed the company's aluminum trading to a primary function at the firm. Trading in aluminum, copper, and stainless steel today represents more than 40 percent of Markovits & Fox's overall sales dollars.

While most of the metal the company trades-primary and secondary-never comes into the plant, it is an advantage to have the aluminum trading arm located onsite. Yockey is able to take a look at many of the materials his brokerage competitors never see.

The trading division deals with domestic primary aluminum producers, secondary smelters, rolling miffs, billet makers, aluminum can manufacturers, and other generators and users of scrap aluminum. In addition, it trades overseas with major smelters, rolling mills, and other specialty users of primary and secondary aluminum.

Will Copper Follow In Aluminum's Footsteps?

Despite the efforts devoted to aluminum, other materials have not slipped through the cracks. A significant amount of attention in recent years has been directed toward copper, particularly, on the part of Larry Fox.

When Larry joined the firm in 1982 it had experience in wire chopping, but it was an aspect of the business that Larry thought worth improving and expanding. With Tom Sorci, operations manager, and David Mighdoll, the company's chief financial officer and controller, he embarked on a study aimed at enhancing the wire chopping operation. The resulting proposal led to the purchase in 1985 of a full-scale, state-of-the-art granulation system--with mostly Triple/S Dynamics components--for processing aluminum and copper wire.

"The chopping line has exceeded our expectations," says Tom. "It's really been a shot in the arm. ... It's gotten a lot of our people excited."

Perhaps the most excited has been Larry. As he watched the increased volumes of copper processed with the new chopper, he thought it time to develop a copper trading business. Once again Markovits & Fox focused on an opportunity that could evolve from its physical operations.

"Handling a larger volume of copper got us involved with more people to buy from and sell to," Marvin explains. "As we developed sales contacts, we wanted to use them to our greatest advantage--not just for the material that might be generated in our yard."

A manager of copper trading was hired last year: Rick Sinclair, who joined the firm with many years of copper trading experience from Northern Telecom and Gerald Metals. Rick does business with several of the large wire and cable manufacturers, telephone companies, copper refineries, smelters, and brass mills. Like Larry Yockey, he benefits from trading at a site with physical operations for the materials he's dealing with: "It gives you credibility," he says.

Fox agrees: "By having our roots in the physical business, we know the trials and tribulations of the processor ... we're familiar with the items we're trading."

The resulting benefit to consumers is what Markovits & Fox is banking on. Says Marvin, "We're looking for our copper business to expand in somewhat the same manner our aluminum business did."

Worldwide Metal Sales

In addition to domestic business, Markovits & Fox's sales span Asia, Europe, Mexico, Canada, and South America.

To forge positive working relationships with end users and trading companies in the vast Japanese marketplace, the company maintains an office in Tokyo: FBM Metals. There, Toshio Miyata, an industry veteran, conducts all the company's sales activities in that country with the assistance of Yuki Nakaya.

More Than Metals

Markovits & Fox is licensed by California under AB 2020, the state's beverage container law, passed in September 1996. In keeping with the licensing agreement, the company takes in plastic, glass, and nonaluminum metal containers, besides aluminum cans. Says Al Charron, "We buy from different cities that have set up curbside programs ... we work with them on how to make a product that is acceptable to sell to processors like us."

"With plastic we're open to whatever market opportunities arise," says Bruce Fox, "and we'll pursue them as they come up. With the plastic bottles, we've been at the forefront. While a lot of people [licensed under AB 20201 are taking them because it's required, we're actively looking to bring them in."

More Than Materials

Supporting all these operations are practices that can make or break a firm. A main one is customer service, and in that area Bruce believes Markovits & Fox is "a Cadillac operation. ...We pride ourselves in taking care of suppliers properly."

This care includes assisting suppliers with getting the best price for their material. Manager of Special Metals Marketing Larry Laczko says, "'A supplier might not really know what he has, so we do prechecking in purchasing. The more information we can get about a material, the more accurately we can measure its value, and we strive for that. … We emphasize accurate weights, fair prices, and quality service-that's what we're known for." Assisting in the upkeep of this reputation are scalemen and traffic coordinators Joe Alvarado, John Bettencourt, and Steve Bravo.

According to Bruce, care of customers also includes easy-in, easy-out access to the 20-acre facility, which was planned with this efficiency in mind. No piece of equipment was ever installed without management's first looking at the effect on overall plant flow.

Keeping the plant clean is a top priority, says Al Lance, who is in charge of maintaining not only the overall facility but its 193 pieces of serviceable equipment. Approximately 80 percent of the plant grounds are paved with asphalt or concrete, and grounds are regularly cleaned by a street sweeper.

Tom Sorci points out the steps taken to please the company's consumers. "We're very quality-control conscious; we maintain a high-quality product. That means we have people presorting prior to shredding, segregating different grades, and removing alloys that would be detrimental to a particular package. We go the lengths of having two to three individuals on the other end of the line remove any objectionable material."

A Family Feeling

Customer- and consumer-oriented practices such as these at Markovits & Fox are complemented by those directed toward personnel. In managing the 110 employees of the firm, the principals say they try to foster a family atmosphere.

"We have a lot of people who have been with us for a long time," says David, mentioning several 30-plus-year employees, including Oscar Molano, metal department foreman. More than half of the employees have been on board 10 years or more, 19 are 20-year employees, and nine are 25-year company veterans. "We refer to our company as our family," says Larry Fox, pointing out the many father-son, brother, and cousin relationships among employees. "We want everybody to feel we're all in this together; we all have a stake in this."

Part of fostering that feeling means abiding by management principles like participative decision-making. Says David, "A lot of day-to-day decisions are made at the operating level. We feel that's the best place for them to be made, within the framework of company policy."

Tom mentions training and advancement as highlights of personnel policy. "Most individuals who have been here a long time have come up through the ranks," says the operations manager, who started on the firm's labor force. "As we've expanded I've trained and brought up several people along with me. It's nice to have the opportunity to do that."

"But it's also nice," points out Rick Sinclair, who's been with the company one year as opposed to Tom's 27, "when they hire someone from the outside occasionally, too." Rick goes on to say that the principals "encourage you to go after additional business. Tom and I are looking at a copper-related project right now that may lead us in some new directions. That kind of a project is backed by Marvin, Rob, and Larry Fox. They're prepared to invest in people and ideas."

According to several employees, good gut instincts on the part of management fuel success, along with technical sophistication--not just in the processing equipment but in the office computerization and financial analysis system.

Also inherent to the success of the firm is its community involvement. Rob Fox, company president, mentions several local organizations with which he and Marvin are involved, saying, "The community has been good to us, and we try to give something back. Aside from that, we feel it's important to be involved locally so people realize our business is a significant part of the community." Markovits & Fox frequently hosts plant tours for civic leaders to increase their awareness of private-sector recycling. Efforts such as these plus attendance at community meetings must be ongoing, Rob says, "otherwise people in government might not think of you as a resource when they're considering legislation or a program that affects our industry."

These are just some of the thoughts Rob has passed on to his son, Bruce, one member of the family business's fifth-generation management team, which also includes Marvin's son, Larry, and son-in-law, David Mighdoll. In considering the younger generation's increasing role in running the company, Rob says, "I'm sure the business will take on a much different complexion in the '90s"--something he is not worried about. "I feel very good about the future of our business," he says, and his brother agrees.

In attempts to preserve its long-standing solid business position, this San Jose firm has made progressive thinking a priority. Here’s how this multimaterial processing and trading enterprise has remained in the forefront of recycling and how it plans to move ahead.

Markovits & Fox has had its share of chances to display a pioneering spirit in reacting to a changing environment. One particular change that might have dealt a crushing blow to the 104-year-old San Jose, California, business was the dramatic reduction in the early 1980s in the area's heavy manufacturing industry, a major source of scrap to Markovits & Fox at that time. The company, which had been established in 1886 as San Jose Bottle Yard to collect bottles, rags, sacks, and bones, had evolved into a ferrous and nonferrous metal processor. With heavy industry on the decline due to rising land and labor costs, iron purchases in particular dropped off substantially. The need to replace this business sparked strategies that, once implemented, helped create the company picture seen today.

Focus on Nonferrous

As iron sources diminished, new nonferrous sources emerged with the growth of the Silicon Valley. While Markovits & Fox continued to handle iron, it focused on the increasing opportunities for processing high-tech scrap.

To take advantage of these opportunities, the company had to find consumers for the computer scrap it would be handling. Purchasing Manager Al Charron explains: "Brass mills and nickel producers had come up with new alloys to meet the demands of the electronics industry, but what were they going to do with the scrap? We went out and tackled that. Consuming mills had to be sought out to put this material back in the mainstream. We were the first ones to take this material and find people who could maximize its value."

Reorganizing and expanding the firm's purchasing arm also was needed. "Now we might purchase from five specialized machine shops in one month what before we might have brought in from one large equipment manufacturer," says Larry Fox, who is in charge of marketing operations. "This evolution brought on a much larger purchasing department with the ability to cater to many small lots."

Working in this function are Bruce Fox and Al Charron, with a team of more than 10 people including buyers and support staff. Says Bruce, "The company is buying everything: aluminum, copper, brass, nickel alloys, precious metals-if it's metal, we handle it."

Aluminum Is Key

Aluminum represents the largest-volume commodity Markovits & Fox handles in both the physical operations of the company and in its trading business.

Responding in the '70s to San Francisco Bay-area can companies' increasing production of aluminum cans, Markovits & Fox began baling their resulting scrap. Once the cans started coming out in large quantities, companies such as Kaiser, Reynolds, and Alcoa wanted to collect them and needed help. "We said we'd do it," says Chief Executive Officer Marvin Fox, "though many other scrap companies weren't ready to because they thought the quantities were too small and the economics didn't justify it. But we tried to get as much assurance as possible and then took some risk. We hoped the can business would work out, and gradually it did-we became very big in that area." To date, the company has processed more than 5 billion cans.

Expanded operations meant additional machinery. In 1975 the company installed a 500-horsepower hammermill shredder for processing the aluminum cans. A 1,500-horsepower hammermill was installed in 1980 primarily for shredding aluminum sheet, although it's also used for extrusions, stainless steel, and light-gauge iron.

By producing a consistent and quality product, Markovits & Fox has successfully introduced to many smelting operations the efficiencies of shredded materials. Still, the company also bales. It added a Logemann high-reduction baler in 1986. Besides aluminum, the machine is used to process stainless steel, copper, brass, and plastic. As the company increased its aluminum processing capability, it greatly expanded its aluminum trading. Larry Yockey came on board as manager of this area after 15 years of experience at Kaiser. With the help of Linda Dodd and Cyndi Denicore, he has further developed the company's aluminum trading to a primary function at the firm. Trading in aluminum, copper, and stainless steel today represents more than 40 percent of Markovits & Fox's overall sales dollars.

While most of the metal the company trades-primary and secondary-never comes into the plant, it is an advantage to have the aluminum trading arm located onsite. Yockey is able to take a look at many of the materials his brokerage competitors never see.

The trading division deals with domestic primary aluminum producers, secondary smelters, rolling miffs, billet makers, aluminum can manufacturers, and other generators and users of scrap aluminum. In addition, it trades overseas with major smelters, rolling mills, and other specialty users of primary and secondary aluminum.

Will Copper Follow In Aluminum's Footsteps?

Despite the efforts devoted to aluminum, other materials have not slipped through the cracks. A significant amount of attention in recent years has been directed toward copper, particularly, on the part of Larry Fox.

When Larry joined the firm in 1982 it had experience in wire chopping, but it was an aspect of the business that Larry thought worth improving and expanding. With Tom Sorci, operations manager, and David Mighdoll, the company's chief financial officer and controller, he embarked on a study aimed at enhancing the wire chopping operation. The resulting proposal led to the purchase in 1985 of a full-scale, state-of-the-art granulation system--with mostly Triple/S Dynamics components--for processing aluminum and copper wire.

"The chopping line has exceeded our expectations," says Tom. "It's really been a shot in the arm. ... It's gotten a lot of our people excited."

Perhaps the most excited has been Larry. As he watched the increased volumes of copper processed with the new chopper, he thought it time to develop a copper trading business. Once again Markovits & Fox focused on an opportunity that could evolve from its physical operations.

"Handling a larger volume of copper got us involved with more people to buy from and sell to," Marvin explains. "As we developed sales contacts, we wanted to use them to our greatest advantage--not just for the material that might be generated in our yard."

A manager of copper trading was hired last year: Rick Sinclair, who joined the firm with many years of copper trading experience from Northern Telecom and Gerald Metals. Rick does business with several of the large wire and cable manufacturers, telephone companies, copper refineries, smelters, and brass mills. Like Larry Yockey, he benefits from trading at a site with physical operations for the materials he's dealing with: "It gives you credibility," he says.

Fox agrees: "By having our roots in the physical business, we know the trials and tribulations of the processor ... we're familiar with the items we're trading."

The resulting benefit to consumers is what Markovits & Fox is banking on. Says Marvin, "We're looking for our copper business to expand in somewhat the same manner our aluminum business did."

Worldwide Metal Sales

In addition to domestic business, Markovits & Fox's sales span Asia, Europe, Mexico, Canada, and South America.

To forge positive working relationships with end users and trading companies in the vast Japanese marketplace, the company maintains an office in Tokyo: FBM Metals. There, Toshio Miyata, an industry veteran, conducts all the company's sales activities in that country with the assistance of Yuki Nakaya.

More Than Metals

Markovits & Fox is licensed by California under AB 2020, the state's beverage container law, passed in September 1996. In keeping with the licensing agreement, the company takes in plastic, glass, and nonaluminum metal containers, besides aluminum cans. Says Al Charron, "We buy from different cities that have set up curbside programs ... we work with them on how to make a product that is acceptable to sell to processors like us."

"With plastic we're open to whatever market opportunities arise," says Bruce Fox, "and we'll pursue them as they come up. With the plastic bottles, we've been at the forefront. While a lot of people [licensed under AB 20201 are taking them because it's required, we're actively looking to bring them in."

More Than Materials

Supporting all these operations are practices that can make or break a firm. A main one is customer service, and in that area Bruce believes Markovits & Fox is "a Cadillac operation. ...We pride ourselves in taking care of suppliers properly."

This care includes assisting suppliers with getting the best price for their material. Manager of Special Metals Marketing Larry Laczko says, "'A supplier might not really know what he has, so we do prechecking in purchasing. The more information we can get about a material, the more accurately we can measure its value, and we strive for that. … We emphasize accurate weights, fair prices, and quality service-that's what we're known for." Assisting in the upkeep of this reputation are scalemen and traffic coordinators Joe Alvarado, John Bettencourt, and Steve Bravo.

According to Bruce, care of customers also includes easy-in, easy-out access to the 20-acre facility, which was planned with this efficiency in mind. No piece of equipment was ever installed without management's first looking at the effect on overall plant flow.

Keeping the plant clean is a top priority, says Al Lance, who is in charge of maintaining not only the overall facility but its 193 pieces of serviceable equipment. Approximately 80 percent of the plant grounds are paved with asphalt or concrete, and grounds are regularly cleaned by a street sweeper.

Tom Sorci points out the steps taken to please the company's consumers. "We're very quality-control conscious; we maintain a high-quality product. That means we have people presorting prior to shredding, segregating different grades, and removing alloys that would be detrimental to a particular package. We go the lengths of having two to three individuals on the other end of the line remove any objectionable material."

A Family Feeling

Customer- and consumer-oriented practices such as these at Markovits & Fox are complemented by those directed toward personnel. In managing the 110 employees of the firm, the principals say they try to foster a family atmosphere.

"We have a lot of people who have been with us for a long time," says David, mentioning several 30-plus-year employees, including Oscar Molano, metal department foreman. More than half of the employees have been on board 10 years or more, 19 are 20-year employees, and nine are 25-year company veterans. "We refer to our company as our family," says Larry Fox, pointing out the many father-son, brother, and cousin relationships among employees. "We want everybody to feel we're all in this together; we all have a stake in this."

Part of fostering that feeling means abiding by management principles like participative decision-making. Says David, "A lot of day-to-day decisions are made at the operating level. We feel that's the best place for them to be made, within the framework of company policy."

Tom mentions training and advancement as highlights of personnel policy. "Most individuals who have been here a long time have come up through the ranks," says the operations manager, who started on the firm's labor force. "As we've expanded I've trained and brought up several people along with me. It's nice to have the opportunity to do that."

"But it's also nice," points out Rick Sinclair, who's been with the company one year as opposed to Tom's 27, "when they hire someone from the outside occasionally, too." Rick goes on to say that the principals "encourage you to go after additional business. Tom and I are looking at a copper-related project right now that may lead us in some new directions. That kind of a project is backed by Marvin, Rob, and Larry Fox. They're prepared to invest in people and ideas."

According to several employees, good gut instincts on the part of management fuel success, along with technical sophistication--not just in the processing equipment but in the office computerization and financial analysis system.

Also inherent to the success of the firm is its community involvement. Rob Fox, company president, mentions several local organizations with which he and Marvin are involved, saying, "The community has been good to us, and we try to give something back. Aside from that, we feel it's important to be involved locally so people realize our business is a significant part of the community." Markovits & Fox frequently hosts plant tours for civic leaders to increase their awareness of private-sector recycling. Efforts such as these plus attendance at community meetings must be ongoing, Rob says, "otherwise people in government might not think of you as a resource when they're considering legislation or a program that affects our industry."

These are just some of the thoughts Rob has passed on to his son, Bruce, one member of the family business's fifth-generation management team, which also includes Marvin's son, Larry, and son-in-law, David Mighdoll. In considering the younger generation's increasing role in running the company, Rob says, "I'm sure the business will take on a much different complexion in the '90s"--something he is not worried about. "I feel very good about the future of our business," he says, and his brother agrees.