Small Town Scrap Metal Company Survives Price Plunge

Can two brothers leave behind the bright lights of Memphis and find success amid piles of scrap metal in a rural Arkansas town?

Judging by the arrival of people bringing in all types and shapes of metal — from kitchen appliances to old cars — and the departure of semitrucks loaded with cut and sorted steel, Mike and Ted Cochran are doing just fine in Osceola, Ark. (pop. 7,673).

“When we opened up Osceola Iron and Metal five years ago, we were skeptical at first,” Mike said. “In year two, prices took a deep plunge and if we were not a family-owned and operated company we might have gone out of business, like many others in our industry did at the time. Our overhead was low because we did most of the work ourselves. Prices improved, a big power plant was built nearby and we got the contract to buy their scrap metal. In time, we also landed some big accounts from local manufacturing plants. Since then things have worked out well.”

“What we have been able to accomplish here has exceeded our expectations,” Ted said. “We buy a lot of vehicles. During one period last fall we crushed out about 200 cars; that’s about 7 million pounds of scrap. Overall, we are processing 25 to 30 million pounds of metal a year, and hope to continue to increase that number.”

Longtime Interest In Scrap Metal

The brothers grew up in the auto salvage business in Memphis, joining their father’s firm right out of high school.

“While we were always messing around with cars, we developed an interest in scrap metal,” Ted said.

“So when this property in Osceola, which had been a scrap metal yard since 1960, became available at a good price, we decided it was time to try something else.”

They quickly realized that scrap metal was a much better way to make a living than the auto salvage business.

“Selling car parts is much more difficult,” Mike said. “Any time you are dealing with the public and taking their money, you have a lot of gripes and complaints. In scrap metal you are paying the customers, so they are usually content. Our biggest problem is people trying to sell items that don’t belong to them.”

There are, of course, other challenges. Recently the brothers purchased an adjoining 4 acres, expanding their location to 12 acres.

“We needed to get better organized,” Ted said. “With more space, we are able to go through things a little better, separate it and upgrade our product. For example, when we buy a load of metal, some people will throw in items such as electric motors. We need space to pick out the good stuff. By sorting material more thoroughly, we are able to increase our profits.”

Excavators Quickly Make Impact

While the additional 4 acres will help the brothers provide a better product, much of the heavy lifting for moving and loading the material is handled by a pair of Doosan crawler excavators.

“Four years ago we were looking for a shear to cut metal,” recalled Mike, “and we found the unit we were looking for down in Georgia. Turns out the shear manufacturer had five of his own scrap yards where he had been running Doosan excavators for years. We needed something to operate the shear, and he really liked how the Doosan machines worked with his products. At that point we didn’t know much about Doosan, but figured a person who has been in the business for 40 years must know what he is doing.”

The brothers believe the Doosan excavator and shear combination does as much work as at least 10 guys cutting all day with torches.

“We were immediately satisfied with the DX255LC because we started making money with it right away,” Ted said. “In fact, the excavator and shear are a key part of our business, cutting long iron into more valuable short steel. That’s a major factor in generating profits.”

He pointed out that this equipment combination is on the job 40 hours a week, with the operator working in a very comfortable cab with excellent all-around visibility.

“Whether it’s 20 degrees or 100 degrees, it can be hard to motivate yourself to get out there and snip iron all day,” he said. “With this cab, you get in, turn the heat or air on, listen to the radio and produce product in comfort hour after hour.”

After a couple of years of solid performance by the DX255LC, the Cochran brothers purchased a second unit, a DX225LC-3. The new Doosan excavator is equipped with either a magnet or grapple. Both attachments move shredded material.

“The second machine, which we bought from H&E Equipment Services, the Doosan dealer in Memphis, Tenn., has worked well for us,” Ted said.

DX225LC-3 Delivers On Demand

In addition to the superior cab, which is quieter than previous models, other features of the Doosan excavators that really stand out for the brothers include:

• The 166-hp, 6-cylinder, iTIV-compliant diesel engine passes the plenty-of-power test every day, helping the excavator lift all shapes and sizes of metal

• Excellent reliability due to durable structural materials and superior long-lasting components

• The smooth-operating machine displays very precise control of all operations, including easier and safer movement of lifted loads

Although they were concerned at first about parts availability, the Cochran brothers report only good experience with its parts situation.

“That has not been a problem,” Ted said. “Parts for the Doosan excavators have always been readily available.”

Doosan guarantees machine-debilitating parts within 48 hours, or in most instances the company will pay for a rental.

Having a buyer nearby has also helped the brothers’ firm be successful. No. 1 and No. 2 mixed iron and structural iron are shipped regularly to the Nucor-Yamato Steel Company melting plant located 21 miles away.

“Working with them has been great for us,” Mike said.

Buying metal and processing it into a saleable product keeps the eight employees at Osceola Iron and Metal busy. Those eight employees include the two owners.

“We are all workers. Nobody has a position around here; we all have a job,” Mike said.