Turning scrap metal into money Featured

9:56am EDT July 22, 2002

Midland Aluminum Corp. didn’t like turning away business and upsetting long-time customers, but the specialty cuts they wanted were putting a strain on the bottom line. It wasn’t part of the company’s repertoire, explains President Chuck Pariano Jr.

Not only did it cost more to do the work — transactions pass through at least five different employees’ hands — but the custom orders created scrap metal, which Midland had nowhere to sell. “It wasn’t cost efficient to pull one piece of metal out from a 1,000-pound bundle to cut a single six-inch piece,” he says.

So it wouldn’t lose money, the Cleveland bulk metals distributor had to charge for an entire piece of metal when they requested a custom cut. That didn’t sit well with Pariano’s customers. “We were irritating them,” he says.

Last year, Pariano decided he’d had enough. Rather than continue to upset his customers — many of who had been loyal to the company for 30 years — Pariano opened a subsidiary, Midland Xpress Metals, to handle customized orders.

The subsidiary also solved a different problem. Explains Kurt Tarkany, manager of Midland Xpress, “We’d get calls all day long from people looking for small things, much smaller than we’d normally carry. There was no way to justify the cost of pulling a large sheet or pipe of metal from Midland’s stock, then cutting it down just to fill a single small order from a new customer.”

Midland’s problem isn’t unique. Many bulk distributors find themselves pigeonholed into servicing just one group of customers. The subsidiary solved that problem as well.

Since Midland buys its aluminum, brass, copper and stainless steel as part of large orders, then sells it — as is — whatever customers didn’t buy was left over as odds and ends in the warehouse. Now, those leftovers become part of Midland Xpress’ inventory. And the inventory grows regularly.

Tarkany says while Midland Xpress now handles the parent company’s special orders, the subsidiary’s real focus is on smaller companies, which need only a few metal pipes or bars, and do-it-yourselfers. The odd-sized metal produced from each custom cut finds a home in a different bin in the company’s inventory.

Tarkany says Xpress transactions require only one person instead of several departments worth of people.

“It’s a better use of our resources,” he says.

How to reach: Midland Xpress Metals (216) 267-7893