Scrap Mettle
United Scrap Metal is one grimy business. So why do so few employees ever want to leave?
By Arlyn Tobias Gajilan, FSB senior editor


CHICAGO (FSB Magazine) - What's not to love about showing up for work every day at United Scrap Metal (www.unitedscrap.com)? Just about everything--on the surface anyway. Situated on the rusty outskirts of Chicago, USM's 24-acre landscape brims with mounds of copper pipe, steel beams piled into pyramids, and bales of crumpled, twisted car parts. Throughout raw winters and stifling summers, Jose Ruiz and workers like him hand-sort the debris, preparing it to be melted down at nearby foundries. It is tedious, backbreaking, and hazardous duty. Still, "I wouldn't work anywhere else," says the 41-year-old Ruiz, a 15-year company veteran.

No, Ruiz isn't talking trash. Quiz his co-workers, and they issue similar oaths of loyalty. What keeps them from scouring the want-ads on an hourly basis? Part of the answer can be found walking through the yard a couple of times a day, easy to spot in her pink hardhat, silk and cashmere Hermes scarf, and faux fur-lined wrap. That figure is Marsha Serlin, who founded USM in 1978. CEO Serlin, 56, works closely with her son, Brad, 38, who is chief operating officer, to forge a close-knit company where the costly word "turnover" is rarely heard. The recycling industry suffers an average employee turnover rate of nearly 30% annually. USM, however, typically registers a rate of just 7.5%. Nearly 90% of Serlin's 115 workers have been with the company at least five years, and 49% of those have been around ten years or more. That is partly because the family atmosphere tends to be contagious. Benito Rosales, 55, who joined as the first full-time employee 25 years ago, estimates that he has recruited about 30 of his relatives.

Still, knowing someone on the inside isn't a deciding factor. Every applicant endures at least three interviews, whether applying for an opening in the scrapyard or for a spot on the senior management team. Round one is an interview with Brad, who screens aspiring employees for the kind of personal chemistry that he thinks will help maintain the clannish atmosphere. "I'm essentially looking for people who play well with others," he says. Civic-minded applicants involved with community groups, and networkers with trade association ties usually make it to round two: a meeting with rank-and-file members of a particular department. "People aren't happy when they have to work alongside someone they don't like or respect," says Brad, who weighs his staffers' opinions heavily and is more than willing to trash an application on their say-so. And if a potential hire does pass muster, he still needs Marsha's go-ahead. "By the time they get to me, we know they'll probably fit in," she says. "I'm more interested in what unique skills they'll be able to add." There's always a danger of hiring clones, she says. But it's her job to find new employees to complement her current crew.

The training process is also designed to make employees aware of--and connected to--the company beyond their specific job. To maintain USM's egalitarian feel, all hires destined for the front office must serve an initial five weeks in the yard. They do everything from sorting pipe to counting the soda cans brought in each morning by the homeless. According to Brad, it's important that those in the office know what goes on behind the company's dumpsters and forklifts. "Not everyone can hack it," he says. "But I like identifying those people sooner rather than later." Adds Marsha, deftly sidestepping a forklift in the yard: "The key is finding the right people and holding on tight."

That firm grip isn't achieved just by making everyone feel good, although "there are no outsiders here," Marsha says. The company, which estimates 2005 sales of more than $80 million, treats its employees to the kinds of perks that are more common in the larger corporate world: annual companywide bonuses, a 401(k) plan, flextime for family obligations, an annual $2,000 tuition-reimbursement program for work-related studies, onsite ESL classes for its 70% Spanish-speaking workforce, and bilingual seminars on securing home mortgages. As of 2005, every employee has health insurance coverage.

Such benefits aren't cheap. But management justifies the extra spending by weighing it against the alternatives--a higher turnover rate and unionization. Keeping a single yard worker a year or more costs about $3,500 less than hiring a new one. Why? It's pricey to perform the required pre-employment physicals, drug and alcohol screenings, and safety training. There's also the hassle of filing workers' comp, insurance, and other paperwork associated with new employees. Its relatively generous employment package has also helped the company ward off the Teamsters' attempts to organize its workers. USM's employees have four times voted against unionization. "Holding on to people has added to our bottom line," says Brad.

Employees have benefited too. Ruiz started out sorting scrap and chopping up lead cables. Now he oversees the retail recycling operation. "Because of this job, I was able to learn English and buy a house. Now I'm sending my daughter to college," he says. "I feel like I'm part of the family here, so why would I leave?"

What's not to love about showing up for work every day at United Scrap Metal? Just about everything--on the surface anyway. Situated on the rusty outskirts of Chicago, USM's 24-acre landscape brims with mounds of copper pipe, steel beams piled into pyramids, and bales of crumpled, twisted car parts. Throughout raw winters and stifling summers, José Ruiz and workers like him hand-sort the debris, preparing it to be melted down at nearby foundries. It is tedious, backbreaking, and hazardous duty. Still, "I wouldn't work anywhere else," says the 41-year-old Ruiz, a 15-year company veteran.

No, Ruiz isn't talking trash. Quiz his co-workers, and they issue similar oaths of loyalty. What keeps them from scouring the want-ads on an hourly basis? Part of the answer can be found walking through the yard a couple of times a day, easy to spot in her pink hardhat, silk and cashmere Hermès scarf, and faux fur-lined wrap. That figure is Marsha Serlin, who founded USM in 1978. CEO Serlin, 56, works closely with her son, Brad, 38, who is chief operating officer, to forge a close-knit company where the costly word "turnover" is rarely heard. The recycling industry suffers an average employee turnover rate of nearly 30% annually. USM, however, typically registers a rate of just 7.5%. Nearly 90% of Serlin's 115 workers have been with the company at least five years, and 49% of those have been around ten years or more. That is partly because the family atmosphere tends to be contagious. Benito Rosales, 55, who joined as the first full-time employee 25 years ago, estimates that he has recruited about 30 of his relatives.

Still, knowing someone on the inside isn't a deciding factor. Every applicant endures at least three interviews, whether applying for an opening in the scrapyard or for a spot on the senior management team. Round one is an interview with Brad, who screens aspiring employees for the kind of personal chemistry that he thinks will help maintain the clannish atmosphere. "I'm essentially looking for people who play well with others," he says. Civic-minded applicants involved with community groups, and networkers with trade association ties usually make it to round two: a meeting with rank-and-file members of a particular department. "People aren't happy when they have to work alongside someone they don't like or respect," says Brad, who weighs his staffers' opinions heavily and is more than willing to trash an application on their say-so. And if a potential hire does pass muster, he still needs Marsha's go-ahead. "By the time they get to me, we know they'll probably fit in," she says. "I'm more interested in what unique skills they'll be able to add." There's always a danger of hiring clones, she says. But it's her job to find new employees to complement her current crew.

The training process is also designed to make employees aware of--and connected to--the company beyond their specific job. To maintain USM's egalitarian feel, all hires destined for the front office must serve an initial five weeks in the yard. They do everything from sorting pipe to counting the soda cans brought in each morning by the homeless. According to Brad, it's important that those in the office know what goes on behind the company's dumpsters and forklifts. "Not everyone can hack it," he says. "But I like identifying those people sooner rather than later." Adds Marsha, deftly sidestepping a forklift in the yard: "The key is finding the right people and holding on tight."

That firm grip isn't achieved just by making everyone feel good, although "there are no outsiders here," Marsha says. The company, which estimates 2005 sales of more than $80 million, treats its employees to the kinds of perks that are more common in the larger corporate world: annual companywide bonuses, a 401(k) plan, flextime for family obligations, an annual $2,000 tuition-reimbursement program for work-related studies, onsite ESL classes for its 70% Spanish-speaking workforce, and bilingual seminars on securing home mortgages. As of 2005, every employee has health insurance coverage.

Such benefits aren't cheap. But management justifies the extra spending by weighing it against the alternatives--a higher turnover rate and unionization. Keeping a single yard worker a year or more costs about $3,500 less than hiring a new one. Why? It's pricey to perform the required pre-employment physicals, drug and alcohol screenings, and safety training. There's also the hassle of filing workers' comp, insurance, and other paperwork associated with new employees. Its relatively generous employment package has also helped the company ward off the Teamsters' attempts to organize its workers. USM's employees have four times voted against unionization. "Holding on to people has added to our bottom line," says Brad.

Employees have benefited too. Ruiz started out sorting scrap and chopping up lead cables. Now he oversees the retail recycling operation. "Because of this job, I was able to learn English and buy a house. Now I'm sending my daughter to college," he says. "I feel like I'm part of the family here, so why would I leave?" Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.