SMS’s Goal is Expansive Growth Through Reduced Waste

Kerry Davidson’s labor, employment, and legal expertise has helped fuel Scrap Metal Services’ extraordinary growth

Kerry Davidson, Scrap Metal Services Photo by Dan Lopez

When Kerry Davidson first started working with Scrap Metal Services (SMS) as its outside labor and employment counsel in 2008, the company had one scrap yard and 50 employees. Davidson, with more than 20 years of law firm and corporate labor and employment work under her belt, was officially brought on board in 2013 to be the company’s first vice president of human resources and first in-house legal counsel. “They hadn’t had either of those roles in-house before. We were in the process of moving the headquarters from a double-wide trailer into a new building,” she recalls. “My first office was the conference room.”

The Illinois-based company was founded in 2005 by brothers Jeff and Rick Gertler. By 2017, it had become the fourth-largest ferrous scrap processing company in the US, handling 3.7 million tons of ferrous metal. It has nearly 30 different entities, with 650 employees and 20 locations, not including its operations in Mexico and Belgium. In addition to handling ferrous scrap, it also supplies nonferrous scrap commodities, offers ship, intermodal, truck and railcar dismantling, and provides scrap management, consulting and purchasing services. It also owns 50 percent of Fe Trading Group (FTG), one of the largest and fastest-growing scrap/commodity trading companies in North America.

“Jeff and Rick had a vision from the very beginning,” Davidson explains, “to expand through carefully-targeted mergers and acquisitions.” Davidson joined SMS soon after an early coup—the acquisition of All Star Metals (ASM), one of the largest ship recyclers in North America, and All Star Shredding (AS), both located in Brownsville, Texas.

The strategic growth at SMS has not slowed down. In August 2018, SMS was the winner of a hotly contested battle for the scrap management and processing contract at the Aperam steelmaking facility in Genk, Belgium. With customers in over 40 countries, Aperam shipped 1.9 million tons of steel in 2017. SMS will work in conjunction with its new Belgium affiliate, Scrap Metal Services Belgium (BSBV).

Davidson was involved in all stages of the deal. “I was there for the courting, the formulation of the contracts, the setting up of the Belgian entity, and the actual taking over of the employees, assets, and operation,” she says. “The goal was to have little, if any, disruption of their ongoing operations, so we worked hard to make it go as smoothly as possible. This was our first involvement with an international union contract, which made it especially interesting. We hope this will be the first of many deals with other European and South American businesses.”

To help manage the breadth and growth of its operations, in late 2018, the Gertler brothers formed a management board, naming themselves as chairman and co-chairman, and appointed a new CEO, Jeremy Kirchin, and CFO, Keith Rhodes. “This is part of their succession planning and will enable us to better chart our continued growth, while handling all the important daily strategic issues,” Davidson explains.

“The establishment of the Board and naming of a new CEO is a reflection of the growing sophistication of not just SMS, but of our entire industry,” she continues. As part of the “change management and transition team,” Davidson is in the process of visiting all of SMS’s locations to explain the new developments to the workforce and answer their questions. “We want everyone to see these changes as we do, i.e., beneficial to both the company and the employees. We’re not getting rid of any of the things that made us successful, we’re just adding to and improving upon them.”

Though Davidson continues to wear both the HR and legal hats, that is about to change, too. “We are actively looking for a vice president of HR,” she admits. “We’ve gotten too big to have just one person overseeing both areas.” In the interim, the company has partnered with an HR consulting firm that handles some of the more basic tasks, like pay scales, job descriptions, and employee surveys.

“Online programs have also been immensely helpful,” she adds. “They’ve allowed us to expand our bench strength and improve our recruiting and onboarding. Without these new technologies, we wouldn’t have been able to manage HR with so few resources. When I came aboard in 2013, no one really knew what an HRIS system was. Now we don’t know what we’d do without it.”

Technology also plays an increasingly important role in SMS’s core business. “We’re continuously looking for ways to improve the machinery, the actual shredders, etc., to increase the amount of scrap we recycle,” Davidson says. “That’s the name of the game, to recover as much as we can. The more material we can keep from going to a landfill, the more profitable we will be, and the greater our contribution will be to the world.”

“Kerry’s leadership has helped launch Scrap Metal Services on a domestic and international growth trajectory that is industry leading. Gallagher values Kerry’s partnership and ability to develop forward thinking risk management strategies that allow for continued expansion in all aspects of their business.” —Matt Bogue, Producer, Arthur J Gallagher & Co.