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PBN article

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PBN article

  1. 1. INDUSTRIES Sims Metal at home on waterfront SHOWING METAL: Scrap metal loaded onto a ship at Sims Metal Management on Allens Avenue in Providence. Scrap metal has been Rhode Island’s leading export for years, despite the trade generallykeeping a lowprofile. PBN PHOTO/MICHAEL SALERNO By Patrick Anderson PBN Staff Writer 12/15/14 Bill Huling, director of New England operations for Sims Metal Management, stepped back as another dump truck banged off the roll-on scales, reversed up to a three-story mound of broken metal chunks and, with the crash of a building collapse, dropped several additional tons at its foot. Desolate-looking behind a security fence and the wall of scrap from the Allens Avenue pavement, Sims’ Providence harbor-front export terminal was reverberating with activity and the rattle of cascading iron on a frigid November Friday. “They’re getting ready for the ship to come in,” Huling said, as a gust blew a mix of metal dust and marine-paint fumes at the workers attending to the scrap pile. The ship was the Falcon Trader II, a 623-foot long Filipino-flagged freighter that would arrive two days later and spend the Thanksgiving holiday being stuffed by longshoremen with ferrous metal. While scrap metal has been Rhode Island’s leading export for years, the trade generally keeps a low profile, reflective of its often poor public image and occasional disputes with officials and neighbors. Since Sims purchased its new Allens Avenue terminal in 2011, the company has had
  2. 2. 2 to address violations from state environmental officials, defend itself from an abutter lawsuit and other critics. But despite those hurdles, three years after Sims decided to make Providence its New England base, the company appears to have settled in for the long haul. Earlier this year, the Providence City Council approved a zoning change requested by waterfront businesses that solidified Allens Avenue’s industrial zoning and will prohibit any encroachment of other uses. While neighboring Allens Avenue scrapyard Rhode Island Recycles Metals remains locked in a compliance fight with state environmental officials, Sims has not had any issues since it signed a consent agreement with the R.I. Department of Environmental Management in 2012. And in what some may consider a surprise, the ship-repair business that Sims took over when it bought 242 Allens Ave. from the owners of Promet Marine Services, has not been forced out by scrap metal as some had feared. “I like to think it has gotten better,” said Huling, back in the warmth of his pier-side office, about the ship-repair side of the business. “Anytime you go from a family business to a large, publicly traded corporation, there will be a culture change and a learning curve. But the last year or two we have found our groove and are now very profitable.” The Promet purchase, for $16.8 million, came after Sims had been looking to expand in southern New England, where national competitor Schnitzer Steel Industries Inc. had been the only exporter. (Schnitzer ships from a ProvPort facility in Fields Point.) Huling said Sims identified Providence and Allens Avenue because of its deep-water channel, the city has one of only two in New England, and proximity to complimentary facilities nearby. At the same time it bought the Allens Avenue terminal, Sims also purchased a property just off Interstate 295 in Johnson, where it built a $30 million automobile shredder that reduces cars to ribbons in a matter of seconds. And Sims also operates a scrap yard just to the south of Allens Avenue in Fields Point, where it handles and exports nonferrous metal, alloys like aluminum and copper that do not contain iron. As it stands, Sims, whose corporate headquarters is in New York, employs 120 people in Rhode Island, split roughly equally between Providence and Johnston. When it entered negotiations for the Promet property, Huling said the company had no intention of keeping the ship-repair business. But when the sellers, David and Joel Cohen, offered it, Sims realized it had a viable niche with a decent revenue stream. Many of the Promet workers also had welding and engine- repair skills that scrap-metal businesses utilize anyway. Although Huling will not say how much Sims has spent on Allens Avenue, investments include re-dredging the berth next to the pier to a depth of 38 feet and renovating the onsite office building. So what exactly goes on behind the scrap pile? Essentially, Sims is collecting scrap metal from around New England, breaking some of it down into smaller pieces, negotiating contracts to ship and sell it overseas, and then loading it onto boats when they come in. There are two scrap piles on the property: the big one is heavy-melting steel comprised of the large pieces visible from the highway, and a smaller pile is made up of more delicate strands that come out of the Johnston shredder.
  3. 3. 3 Huling said just under half the volume shipped out of the Allens Avenue terminal comes through Johnston. Like other exporters, Sims gets its metal from a mix of sources. They include larger dealers such as Rhode Island Recycled Metals, feeder operations (including in Johnston, Worcester, Mass., and New Haven, Conn.) and “peddlers,” small mom-and-pop businesses or people off the street. One thing Sims doesn’t do, because it was unable to get the necessary permits, is break down metal vessels their owners feel are not worth repairing. With so many old fishing boats passing through the shipyard – for engine work, repainting and other maintenance – recycling the ones that aren’t worth saving would come with natural efficiencies. Asked whether Sims wanted to be able to break down ships, Huling makes a stabbing motion to his chest implying a level of pain caused by not being allowed to. On average, Sims brings in one ship per month similar to the Falcon Trader II, which was loaded with about 45,000 tons of scrap before setting sail for Turkey. As Rhode Island’s scrap-metal exports have grown, Turkey has become the leading overseas destination for the commodity, followed by Germany and Egypt. Rhode Island scrap-metal exports began taking off just as the national economy peaked in 2006 and 2007, and then surged further as the recession took hold. In 2011, Rhode Island exported a record $695 million worth of “waste and scrap,” according to U.S. Commerce Department figures, before receding the last two years to $566 million in 2013. That surge in exports roughly coincides with the expansion of scrap-metal businesses on the Providence waterfront – including the arrival of Sims – and a period of high metal commodity prices. More recently, however, the price of scrap has been going down, both over the past few years and over the past three months, Huling said, putting pressure on margins. Low prices are bad news for people collecting scrap, but welcome news for police who have been fighting metal theft since the recession. Huling said Sims is now focusing on the peddler market more than it has in the past, because larger dealers have the leverage to extract higher prices. For people unhappy with the scrap trade – for environmental, aesthetic or other reasons – Huling points out that Sims is in the recycling business. Without scrap yards, metal would be pouring out of landfills. But he added that declining prices mean it’s less likely that scrap yards will continue to grow and proliferate in Providence. “I think we are beyond [scrap-metal saturation] at this point.” Huling said. “In 2007 and 2008, when scrap prices were the highest I had ever seen, we saw an influx of people here because they could make money. I don’t see it happening again unless cities really ramp up recycling.” •

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