This past summer, I had the opportunity to talk with Kenny Fischer. Those of you with decades of experience in the scrap industry likely remember his name as well as the name of the St. Louis-based company that he was with for approximately 14 years: Diversified Industries Inc. Those of you for which neither name sounds familiar, read on to learn about Fischer, the many connections other scrap companies in the St. Louis area have to Diversified and its founder Benny Fixman as well Fixman’s approach to the business.
Fixman had been a business partner of Fischer’s father, who owned a scrap company called Arrow Metals in St. Louis. Their business partnership, Fischer Fixman Metals, lasted only a few years because Fixman had what Fischer describes as “these very innovative ideas of what he wanted to do,” and they did not necessarily correspond with what his father wanted to do.
Fixman formed Diversified Metals after Fischer Fixman dissolved, specializing in industrial scrap and wire chopping. Fischer joined the company in 1964.
Fischer eventually ended up in the trading office as a buyer. “One of the problems with being brought up in the metals trading business is you become a deal junkie: the adrenaline,” Fischer says. “I mean, at two o’clock when the markets closed, we would all go work out because we had so much [adrenaline]. So, everything else is boring by comparison.”
But the thrills were just beginning for Fischer, as Diversified would soon go public under the name Diversified Industries Inc. and begin acquiring companies within the metals sector as well as outside of the industry.
He eventually was promoted to president of Diversified, which was known then as the largest nonferrous recycling company in the world. Fischer was responsible for auctioning off the company’s assets when it filed for bankruptcy in 1978. He later went on to co-found a company in the auction industry.
In addition to consulting, Fischer is running business development for Meron Inc., an L.A.-based general engineering and electrical contractor specializing in construction management and solutions, including solar, for reducing or eliminating recyclers’ power bills.
Q: How did Benny and Diversified perfect wire chopping?
A: [H]e went and stole a guy named Bob Ballard from Essex Wire. Essex Wire had begun chopping, and Bob was an engineer. And [Benny] brought Bob in. And with Bob’s knowledge and Benny’s push and money, they perfected the chopping business so much so that Essex Wire became one of our biggest clients. That’s how good we became at doing it. We had one line for copper and one line for aluminum.
We invented a water-table system that was able to separate the 1 percent of the copper from the [polyvinyl chloride] plastic. It was expensive, but when you think of 1 percent of 22 million pounds a month, it adds up. Plus … and this was 1974, we were able to sell the PVC scrap to a guy in Los Angeles.
[Benny] was just very, very inventive, and so were the guys who worked for him because that’s the kind of guys he hired: thinkers.
Q: What was your reaction when you learned about the bankruptcy filing?
A: I was stunned. But what I knew is Benny would survive. And out of it came Kataman Metals. Benny had a good friend, a guy named Shig Katayama. So, they form Kataman Metals, which today is still a big trading company.
Actually, that’s where my son works. He’d been at three other companies, but he wound up there a couple of years ago.
Q: You mentioned that a lot of scrap company owners got their starts at Diversified.
A: The president before me was a man named Morris Lefton, and Benny had acquired Morris’ company. When Morris left [Diversified], he opened up the trading company Metal Exchange, which today is run by his son [Mike Lefton]. My immediate boss when I became a buyer was Sheldon Tauben. He formed a company called Metalsco when he left. His son, Bret, runs that company today.
Q: Do you have any advice for scrap yard owners who are facing challenges brought about by the current economic environment and the pandemic?
A: Hang in there; you’re a vital, vital industry. Everybody needs this product in some way, shape or form. So, get inventive, go out of the box, specialize in something, if you want. … [T]his is such a needed and vital industry that if you can hang in there, you will succeed because this, of course, this is going to pass eventually. Just hang in here. We need you.