It’s been seven years since brothers Andrew and Paul Gallo took over leadership at DMS Metals Ltd., formerly Don Mills Steel and Metal (1974) Ltd., their family’s metal recycling facility in Stouffville, Ontario, but the brothers have been consistently looking for ways to take the business to the next level.
Andrew spent two years practicing law before transitioning to a leadership role at DMS Metals, and Paul came to the business after receiving a bachelor’s degree from the University of Western Ontario.
“The plan was always to continue with the legacy that our dad built and take it to the next level,” Andrew says. “We knew it would be really hard for him to have to sell the business. I’ve been able to bring some skills from the legal world, and Paul’s always had a knack for business. We’ve built up some good momentum since we started, and the plan is to keep that going.”
DMS Metals Ltd. operates a 25-acre scrap recycling yard just north of Toronto. The company employs 35 people and provides ferrous and nonferrous recycling services, as well as brokerage services.
“When we first transitioned to full time in the business, our dad would tell us that if we wanted to truly grow the business that we needed to invest in an automotive shredder—and we thought he was crazy because of the magnitude of such a machine,” Andrew says.
“But, as time went on and we navigated Ontario’s competitive marketplace, we realized that he was right.”
Paul confirms that it was certainly intimidating to consider getting into the auto shredding business and making that kind of an investment. But by 2018, both brothers felt as though they were ready to take that step for their business.
The brothers began to shop for an auto shredder in April 2018. By January 2019, DMS Metals purchased an M6090 shredder with a nonferrous downstream system supplied by Wendt Corp., Buffalo, New York. The equipment was up and running in January 2020 and has been operating for about a year.
Paul says they decided to invest in an auto shredder for many reasons, but the main reason was to become less reliant upon the megashredders operating around them.
“We really want to be self-sufficient with processing materials, not having to rely on the behemoths in our area,” he says. “We have now made ourselves much more competitive with all of the materials that come through our door.”
Wendt Corp. worked with DMS in the summer and fall of 2019 to install the M6090 auto shredder and nonferrous downstream system.
Andrew says the installation took about six months. Although weather is sometimes a concern for outdoor equipment installations in Ontario in the fall and winter seasons, he says DMS lucked out with mild weather conditions. “We were certainly concerned about how inclement weather could impact the installation, but we ended up having a good winter, so we are lucky in that regard,” he says.
DMS added 10 new employees with the addition of the Wendt M6090 shredder and nonferrous downstream system. Paul says the auto shredder hit its target of processing 8,000 to 10,000 tons per month by its second month of operation. He adds that Wendt was helpful in getting the machine up to speed to meet that target.
The brothers say the new nonferrous downstream system also has helped DMS Metals to improve its processing capabilities.
“The actual shredder is just half of the equation,” Paul says. “If we didn’t have the nonferrous downstream system with it, we’d be in the same boat as before, having to rely on other processors. We’ve increased the number of products that we can sell directly to consumers, which puts us in a much better position.”
DMS decided against directly connecting the shredder and nonferrous downstream system. Instead, material that is shredded drops to the ground, and mobile equipment operators pick up and transport the nonferrous materials to the offline separation system.
Andrew says having the two machines operating independently enables more strategic processing with better versatility.
The Gallo brothers also received maintenance tips from Wendt Corp. and some of that company’s customers that they used to develop a plan that would work best for their facility. Before the installation, Paul says they visited five other scrap yards using the Wendt M6090 to get an idea of how the machine worked.
“That community was very helpful,” he says. “We were able to develop a maintenance program around what we learned and what would work best for our company. We learned that while we’re all trying to accomplish the same things with maintenance, everyone ends up doing things a little differently,” Paul adds.
“Once we began shredding, we established our own [maintenance] method—for every hour of shredding, we spend about 30 percent of that time on maintenance,” Andrew says. He adds that most of the maintenance is preventative in nature.
Wendt has been helpful in the months since the installation if DMS ever runs into issues with the new equipment, Andrew says.
“Wendt was helpful through the whole process. There was a time not long after we started shredding when we had a small hydraulic issue,” he says. “We called Wendt at 8:30 in the morning. They sent a technician from Buffalo, New York, who was on-site at 11 a.m., and we were back shredding before 1 p.m.”
Since starting its auto shredder and nonferrous downstream system, DMS experienced some supply-related challenges in the spring of 2020 arising from the COVID-19 pandemic.
“A lot was shut down,” Paul says. “The supply chain was in shambles; a lot of our customers—the mills, the foundries—weren’t running.”
The second quarter of 2020 was a tough time to buy and sell material, but DMS never shut down, and it continued to move material through its yard. While it took several months to get back on track, Paul says material is flowing as strongly at the end of 2020 as it was prior to the pandemic.
Andrew and Paul say they also are fortunate that they were able to install the auto shredder and nonferrous downstream system just before the pandemic hit North America.
One big advantage to getting into the auto shredding game last spring is self-sufficiency.
“Prior to having a shredder, we were at the mercy of dealing with other local auto shredders,” Andrew says. “As we started to grow, we found it was harder and harder to place our tons competitively,” he adds.
DMS also had been receiving more consumable (i.e., shreddable) items in recent years as Toronto’s population has been growing.
The brothers also have been working to grow DMS’ brokerage business. Paul says having auto shredding services gives them another offering for some of these customers.
Paul describes their shredding operation as more tailored than those of megashredders. “We can get through tons if we need to, but because we’re smaller, we’re also set up in a way where we can run specialty items and maintain the quality that needs to be maintained with these types of foundry items, both on the ferrous and nonferrous side,” he says.
“We’re more than just an auto shredder,” Andrew says. “We make over half a dozen different products—which includes some specialty items.”
Overall, the recent investment has helped DMS to become a more competitive yard with more opportunities to grow. Andrew says the investment has made him enthusiastic about DMS’ future. “We can process a lot more tons now,” he says. “It’s allowed us to buy different types of items more aggressively. It’s opened up a lot of doors with foundries and mills, as well, because we’ve been able to make a lot of different products we hadn’t been able to before.”
Andrew says that some new business from the shredder led to an acquisition opportunity. In the fall of 2020, DMS acquired Midwest Metals, which is in Creemore, Ontario, just an hour northwest of the company’s main yard in Stouffville.