It’s unusual for family businesses to last multiple generations, yet the scrap industry offers examples of companies that have successfully resisted this trend. For a closer look at one such company, read this issue's cover profile, “Standing strong.” The Shapiro family and its ancestors have owned and operated Texas’ Austin Metal & Iron for more than 105 years, and brothers Ike and Jim Shapiro are the fourth generation of the family to own the business.
Family businesses are a powerful economic force. According to the Conway Center for Family Business, Columbus, Ohio, “Recent research has shown that continued family control can be efficient, since families are … able to positively affect the resource inventory and usage of their firms, apply a long-term perspective allowing for unique strategic positioning, have less human resources problems and higher firm values or drive new entrepreneurial activity.”
The tenure of leadership in family businesses also tends to be four to five times longer than in nonfamily businesses, but the environment for innovation in these businesses improves when more generations of the family are involved, the Conway Center says.
“The scrap industry continues to propel innovation and economic growth across the generations.”
Family businesses also do a slightly better job at employee retention: 9 percent of a family business’ workforce turns over annually compared with 11 percent at nonfamily firms, according to a Harvard Business Review study.
“They create a culture of commitment and purpose, avoiding layoffs during downturns, promoting from within and investing in people,” the Conway Center says of family businesses.
Austin Metal offers a good example of employee retention. One-third of its employees have been with the company for at least 10 years; while some have been working there for more than 30 years. The company also shows its employees loyalty, never having laid off an employee in its history.
Family-business owners’ entrepreneurial activity can extend beyond the original business. “On average and over the family’s history, these families controlled 6.1 firms, created 5.4 firms, added 2.7 firms through merger and acquisition activity, spun off 1.5 firms and shifted industry focus 2.1 times. These families exhibit a significant level of entrepreneurial activity over time, in terms of rearranging the portfolio of activities through founding activity, mergers and acquisitions as well as divestments,” the Conway Center says.
Again, the Shapiro family serves as an example, having recently founded a copper trading business, St. Louis-based Generation Metal Trading LLC, with trader Mark Pagano. To learn more about this venture, visit www.RecyclingToday.com/article/austin-metal-iron-recycling-texas-shapiro-family.
The scrap industry, and its proliferation of family-owned companies, continues to propel innovation and economic growth across the generations.