History’s Scrap Heap: Families Sell Off Yards, and Legacy

By Nathaniel Popper

Published April 21, 2006, issue of April 21, 2006.
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LAS VEGAS — When Barry Kroot and his brother signed away the deed to their family’s scrap metal yard last month, they joined a new Jewish exodus.

Like many other scrap metal businesses in America, K&F Industries got started when a relative (in this case, Barry’s grandfather) came from a Polish shtetl to small-town America. Scrap metal was one of the go-to industries for Eastern European Jewish immigrants. Until a decade ago, industry insiders estimate, Jewish families owned almost 90% of American scrap yards.

The Kroots’ business in Indianapolis was a family affair. Barry and his older brother spent school vacations sorting out metal that came in from peddlers’ trucks. After college the brothers moved into office positions, overseeing the trucks rolling in and out with copper wire and steel beams. In recent years, though, as China’s need for raw materials drove metal prices soaring, suitors began calling on the Kroots’ scrap yard. Late last year, the Kroots had a family meeting and decided to sell the business to OmniSource, a Fort Wayne company that owns 35 scrap yards.

“Here you are, something that’s been in the family for really over 100 years,” said Kroot, 40, who has close-cropped hair and a chiseled jaw line. “It’s always had a Kroot name to it. To sign that away — there’s a certain feeling of guilt, if that’s the right word.”

Stories like the Kroots’ were commonplace when the annual scrap metal dealers convention met here in Las Vegas early this month. The globalized demand for scrap metal — along with stricter government regulations — has made it more difficult for yards to remain as local, family-run operations. Now, with metal prices at all-time highs, selling out has become tempting for many family owners. The president of the scrap metal association estimates that Jewish families now own about 50% of American scrap yards — down from 80% or 90% a decade ago.

For Barry Kroot, the shift was all too evident at the conference. “In the old days, it was the Kroots and the Rifkins and they were always here,” he said. “My dad made lifelong friends. It’s not as much like that today. There are far fewer family businesses because of what we just did. And the families that are left send executives instead of the owners.”

Scrap metal is one of the oldest Jewish businesses in America. As it goes the way of globalization, a particularly Jewish — if mostly unnoticed — way of life disappears with it.

The changing face of the scrap metal industry can be encapsulated in the family history of Joel Denbo, outgoing chairman of the Institute for Scrap Recycling Industries, which held the Las Vegas convention. Denbo’s business is based in Decatur, Ala., where he grew up spending every vacation and school break driving forklifts and bargaining with peddlers. He met his wife, Sara Miller, because her parents owned the scrap yard in nearby Huntsville and were among the only other Jews in the area. Miller and Denbo played together as children and came back to the area after college to start a family. Six years ago, the Denbos and the Millers combined their companies.

“My daddy tore down the jail that my granddaddy helped to build,” said Denbo, 52, chief manager of operations for Tennessee Valley Recycling. “That’s the kind of history we had in our little corner of the world.”

The Denbo operations began when Denbo’s “granddaddy,” Isaac, fled the shtetl of Bupt in 1907 after a bloody encounter with two non-Jews. Isaac went directly to Athens, Ala., because his uncle already had set up a animal hide trade there. The industry is filled with such serendipitous beginnings. One company began in Rock Island, Ill., because that was as far as a steamboat captain would take a young Jewish immigrant in exchange for the coat off his back.

The scrap metal industry was a natural choice for newly arriving Eastern European immigrants who wanted to start their own business. The industry was just beginning to boom at the turn of the century, because of a recent innovation in steel processing that made it practical to work with used steel. There were few established concerns to compete against, and entering the business required little investment beyond a wagon or buggy. It was an easy jump for peddlers from Eastern Europe.

“You could go to a demolition site with a canvas bag, collect iron and sort it out — that’s all it took,” said historian Carl Zimring, author of “Cash for Your Trash: Scrap Recycling in America.”

Zimring was drawn to studying the topic after hearing the story of his own great-grandfather, who moved from Austria to Waterloo, Iowa, partially to escape antisemitism and partially because an uncle needed help collecting scrap from local farms. Zimring sought explanations for the overwhelming Jewish presence in the industry and found many social factors, including the fact that no one was willing to collect trash except the immigrants. Zimring said that, in large part, “it’s an accident of timing. Had it been 70 years earlier, we would be talking about it as an Irish industry.”

If the founding was an accident, the Jewish character of the scrap metal world has become much more. Denbo, for instance, would plan his family vacations around the scrap metal conventions. Coming from Alabama, the conventions were the first chance for Denbo’s three daughters to experience a large community of Jews.

“As far as I was concerned, it was a Jewish organization,” said Ariel Denbo, 23, Joel’s oldest daughter.

Ariel and her father listed the childhood friends whose families had sold off their businesses. In Joel Denbo’s case, all three daughters have opted for other professions — Ariel a lawyer, another daughter a doctor — and it’s not clear who will take over the business from the next generation. Ariel said she wanted a life with more Jewish religious and cultural opportunities than Decatur or Huntsville could offer.

“We’re educating our kids to be other things,” her father said. “It isn’t like it was when we first started.”

For his last act as chairman, Denbo used his clout to invite Harvard law professor Alan Dershowitz to address attendees of the main breakfast. After dining on bagels and lox, Denbo introduced Dershowitz as the “foremost scholar of Judaic studies.” Like the convention as a whole, Dershowitz did not explicitly acknowledge that he was a Jew speaking to a Jewish audience, but he dropped lots of references to Israeli politics and to the Talmud.

The wealth that has come through the industry has been channeled back into Jewish philanthropy. The current chairman of United Jewish Communities’ executive committee, Morton Plant, is a former president of ISRI. The Jewish federation building in Indianapolis is named after Barry Kroot’s grandfather. Until recently, Jewish federation fund-raisers were a regular feature of the ISRI conventions.

The Jewish character of this world, while cultural rather than religious, has been intense. The incoming chairman who succeeded Denbo, Frank Cozzi, grew up in an Italian scrap metal family in Chicago. He said that his distinct memory from Christmas was of a group of Jewish scrap metal dealers sitting around his grandfather’s living room, kibitzing.

“I probably know as many Yiddish swear words as Italian swear words,” Cozzi said.

In part because of the cohesion of the old families and in part because of its hands-on nature, the scrap metal industry has resisted consolidation longer than many American industries. The reasons are evident at one of Las Vegas’s two main scrap yards, AA Midwest, which is owned by Scott Stolberg, who is also the president of the city’s main Reform congregation. The outside yard is centered around the loading dock, where pickup trucks drive in with loads of old plumbing and sheeting.

Stolberg deals with constant challenges that would be difficult for a distant owner to handle. As each truck drives up, his workers must calculate a price on the spot and determine whether the goods are legitimate. “There are a lot of chances in the scrap business to be taken advantage of — and you will be if you’re not on top of it,” Stolberg said.

Indeed, some of the companies that were most aggressively buying out scrap yards during the late 1990s have since gone bankrupt or are struggling financially. In the past three years, however, a new wave of consolidation began, driven by skyrocketing metal prices. Since 2003, the price of nickel, for instance, has doubled to $6.50 a pound.

The largest consolidators today include David Joseph, a Dutch outfit, and Metal Management, a publicly traded company. Some consolidators, though, are simply Jewish family businesses that expanded. OmniSource, which bought the Kroots’s business, is still run by the Rifkin family. Stolberg said that his family has been forced to expand just to stay on top of the business’s growing fixed costs: There are always new shredders, compactors and environmental tests needed.

The Stolberg family began in Chicago and expanded to Las Vegas in 1992, growing to 106 employees from only six. Scott runs the Las Vegas operations, and his brother runs the Chicago yards. Stolberg still involves himself in the minute aspects of the business. In a walk around the yard, he eyed up all the loads coming in: “I love going out to buy. There’s nothing like buying a bunch of stuff and knowing you’ve already got it sold and how much money you’re going to make.”

Stolberg couldn’t imagine selling his business. But then again, neither of his two teenage children is preparing to take over. Where Stolberg spent every vacation at the scrap yard, sorting rods and pistons, his son has little league and drum lessons and Hebrew school.

“Our activity was to go to work,” Stolberg said. “But I couldn’t put my kids out there doing the things I did at the age I did them. You just don’t do that today.”

The endgame is playing out in upstate New York, among other places. Metalico, a New Jersey-based company founded in 1997, began buying up yards in the area about six years ago. In Buffalo, Metalico bought three family yards. A year later it bought out two Jewish families in Rochester. Currently it is in the midst of closing a deal with a Jewish family yard in Auburn.

Peter Linder was one of the first to sell his business in Buffalo. His father had started the yard in downtown Buffalo, and Peter worked his way up to the executive offices from the forklift. Linder ran the business with his brother until 1997, when the brother left to become a rabbi. Linder said that after this happened, “a lot of the fun was stripped away.” In addition, the next generation had no candidates for taking over the business.

Still, the decision to sell wasn’t easy. “My father birthed this company out of the back of a pickup truck,” said Linder, who is now a consultant for families looking to sell their businesses.






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