Pile of Scrap Ep. 11: Scrap Never Sleeps – PNW Metal Recycling, Inc.

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Hank Doane, Sean Daoud, John Sacco, and Fouad Daoud

Transcription

Intro: The following is an original audio series from Sierra International Machinery: Pile of Scrap with your host John Sacco.

John Sacco: Hello. Hello. Hello. This is John Sacco and this is Pile of Scrap. And today, I have the honor and privilege of being in Portland, Oregon at PNW Metals Recycling, Inc. This is a quite an interesting story and an interesting company. And, I have Fouad Daoud, his son Sean Daoud, and Hank Doane. And, your father's not here. I was hoping he was going to be here.

Hank Doane: Me too. We'll try to get him out next time.

John Sacco: Well okay, I like it. ‘Next time.’ So, this is an interesting company because of the background and all the different partners and how this company came to be and it came to be a player in the Pacific Northwest. So, the first question out is who – who wants to handle the original history? Which one of you want to take it? Dad, do you want to take it? Son? Hank? Who wants to take it?

Fouad Daoud: I'll have Sean. Go ahead.

John Sacco: Okay, Sean. Give us a little background here of how PNW came together and all the different families that we’re dealing with.

Sean Daoud: Well, I mean all the different families have a lot of history with one with each other. Um, my dad had, uh, first started his career at Schnitzer. He met Hank’s father, Mick, and they had done a lot of traveling together, different job sites and created that relationship. So in 2013, when we formed PNW Metal Recycling, it had been a two-year process of reviewing information and going through all of the dialogue that we need to get to that point for the, for our joint venture operation in Longview. And the goal was to start an export facility, load cargoes. When we are able to do that in 2014 in September, when we loaded our first one, we could see that the cohesion was there and that, you know, our families get along very well. So, for about three years we dated, got to know each other intimately, in a sense. And you know, the market had kind of done its fluctuation in ‘15, ‘16. It just – it made sense at that point that, you know, we had to bring things together to be more efficient, more effective. And so, in April of 2017 we completed our merger between R.S. Davis Recycling and Rivergate Scrap Metals and it became PNW Metal Recycling, Inc.

John Sacco: Okay. So, the Bors families are also involved with this, correct?

Sean Daoud: Yes. So, George bore started Rivergate in 2004 and then my father bought in, in 2007 and Justin George's son had already been working there since the start of the company. I came aboard and ‘08 shortly after high school before I started college. And then Bert, George's eldest brother had bought into the business in 2013 and then Hank, his father, had started at R.S. Davis Recycling in 1970…

Hank Doane: 1975.

Sean Daoud: And his grandfather started it in…

Hank Doane: 1963.

John Sacco: A lot of history here.

Hank Doane: Yup.

Fouad Daoud: Yes, sir?

John Sacco: You have a very interesting story. Well, okay. I am the son of an immigrant from Italy and people are very familiar with that. But, you are the immigrant from Lebanon. What year did you come to America?

Fouad Daoud: In ‘87.

John Sacco: And when did you, all of a sudden, get thrown into the scrap business that you haven't been able to leave?

Fouad Daoud: Well, actually I – I came to United States to visit because I have a, uh, big family here on my mom's side. And, uh, my aunt will talk to me into staying. And, uh, I actually, I started Schnitzer ­– with Schnitzer when Sean was born. Uh, he was two months old and, uh, I applied at Schnitzer and they talked him into it – into staying because it was so hard for me to be in that environment. But I stayed, um, and I, uh, worked for Schnitzer for 17 years and then I decided to leave Schnitzer for the better for me, for better investment. And, I came, talk to George and we bought it in the company and we created Rivergate and we put a shredder. Um, and this is where we’re at today. We have PNW.

John Sacco: How many yards are in PMW? Hank.

Hank Doane: So, we have five facilities that operate in by scrap. We have another transload facility where we'll load rail cars.

John Sacco: Where – where are all these facilities?

Hank Doane: So we have Portland, we're sitting in Portland. We have Longview where we load our bulk ships. We have – Gresham's a feeder yard. Clackamas is a feeder yard. Hermiston’s a feeder yard. And then Umatilla is our transload facility.

John Sacco: That's a lot of operation.

Hank Doane: It is.

John Sacco: And so, with the Bors’ – George’s son works at the company?

Sean Daoud: Justin is.

John Sacco: Is George involved?

Sean Daoud: Yes.

John Sacco: Okay. So, is Bert involved as well?

Sean Daoud: Correct.

John Sacco: Okay. So, your dad and you, your father is involved still. So, you've got a lot of cap–capabilities here. So, five yards isn't that dramatic because there's somebody covering someplace that all times, right?

Hank Doane: Yeah, exactly.

Fouad Daoud: Well some of these yards was existing, so it's not like we – we open them up again. So, it was – the merger was easier to put together this company.

John Sacco: Okay. Who said it? Who was the first one to say let's put these yards together? Cause somebody had to say it, submit it – type it in email.

Fouad Daoud: Well this was the goal from when I left Schnitzer is to install a shredder. This is, um, between me and George. He always wanted a shredder, so he talked him into coming in and do it together. Uh, and the goal was to have an export yards from the getgo and it's here and it's a lot of work. Actually, it gave me a heart attack.

John Sacco: You actually had a heart attack?

Fouad Daoud: That’s right.

Sean Daoud: Yup. He did. Right before our first cargo. Uh, August – August of 2000…

John Sacco: It's not funny, but everybody's chuckling here with a smile.

Hank Doane: We made it through it.

Fouad Daoud: I made it through it, yes. Yes.

John Sacco: Well, God bless you made it through and I think that's, you know, that's – let's put it together, then you have to bring everybody. You got all these families. Okay. You're from Lebanon. The Bors, as children, came from the Netherlands, Holland, Netherlands, However…

Fouad Daoud: Actually, the Bors family came from, uh…

John Sacco: Aren’t they Dutch?

Fouad Daoud: Yeah, they're Dutch, yeah.

Sean Daoud: Yeah.

Hank Doane: Yeah, they’re Dutch.

John Sacco:  The Netherlands.

Fouad Daoud: They were immigrants too.

John Sacco: Yeah. So, a lot of the immigrants here. Now, the sons. How do you guys get along? How was this – did you guys know each other from years ago or all of a sudden you guys were kind of thrown together when somebody said, when pops over here says, “hey, let's put this together.”

Sean Daoud: No, we knew – we knew each other. And you know, Hank, Justin, Jamie have a few years on me, but so, they knew – we knew of each other growing up. Um, you know, but with our time, uh, with the joint venture, even before that, Hank and I spend a lot of time through ISRI, through the chapter. An, he's the one that got me involved. Also, with Jim Dukehart. And I mean, but even today, I see Hank as an older brother. I mean, it's great advice that he gives, good leadership with everybody else. And same thing with Justin, Jamie. The three of them have a lot of experience. And so, I still see them as siblings, people I can look to and – and take advice from the experiences they've had. And, and it's – we do family things together, hang out together.

John Sacco: So when – when – when they came to you and your father, everybody says, “okay, we're going to put this together,” what was your thought? Was it like ‘my pie is shrinking?’ or ‘I think I'm going to get a bigger piece of the pie because this thing is going to grow?’

Hank Doane: Yeah, that's how we thought about it. We actually had just finished developing our Clackamas yard from three to nine acres. We'd just kind of closed the book on that and I thought, ‘alright, another project right away’ when he approached my dad and then we sat down and went to lunch and said, ‘you know, I think that's the right move’ and that's exactly how we thought about it. You know, it's a bigger piece of the pie. Sure, there's some risk to get there, but there's also risk if we don't do anything.

John Sacco: Right.

Hank Doane: Because of the way the market was shifting on us. Well, in Portland you kind of have the David versus Goliath because there’s Schnitzer here, there's Metro. Very large companies Schnitzer publicly held and here you guys, now, are battling against them and you're succeeding. So, what settin’ you guys apart? What makes you guys so different that allows this growth? And – and I'm here today and I'm touring this facility and it's absolutely the state of the art. You guys are putting your money where it needs to be, but what's setting you apart? What makes you different from these companies? Who wants to handle that? Dad, you want to handle that?

Fouad Daoud: Well, it's not about competition. It is what you need to do for your business. I mean, just, uh, just focus on day-to-day things, uh, has to be done and then plan on the future. Um, this is how we do it every day. We, you know, Metro or Schnitzer, they're going to be there forever. I mean, we're going to compete with them for many years. Um, but we have to do on our side is to be more, uh, operation-wise, productive everyday, make sure our – all our equipment is running, producing daily .Um, and as I told you before is the word “PIPE.” Uh, we – we focus on that. Um.

John Sacco: The purchase intake, production…

Fouad Daoud: Expense, sales.

John Sacco: And sales.

Fouad Daoud: We focus on that every single day. And plus, with the new generation coming up, taking it to different level. Um, so they keep us awake every night.

John Sacco: Well you don't have much gray hair. Your son hasn't really drug you through the – too bad.

Fouad Daoud: It’s all gone. I gave some of it to him.

Sean Daoud: It's all coming my way.

John Sacco: Are you getting it? All right. So Hank, you know, in talking before this, you – you – you kind of were passionate about what settin’ you apart here.

Hank Doane: Sure.

John Sacco: What is, what is your method here? What's making ­– what's successful for you personally and it's helping the company?

Hank Doane: I think what sets us apart comes down to our people and, you mentioned it before, our ownership group is – we're active owners. So, we're in the business everyday with our hands on every aspect of it. Coaching, helping our people do the right thing. We think of them as family as well. So we're three families running the company. We think of our employees as the ­– as the family as well, and our customers is the extended family. And then secondly, I think being nimble, you know, we can make decisions very quickly. Whereas some other companies that you've mentioned, because of the size and the bureaucracy that goes with it, it's difficult to do that.

John Sacco: So, you told me you operated the shear here in the yard. It's a Sierra shear. Full disclosure, you are a Sierra customer. I always tell people in the podcast whether they are or not. What was your favorite job, though?

Fouad Daoud: We should have the free blades.

John Sacco: Huh?

Fouad Daoud: Free blades.

John Sacco: Free blades. Okay. What's – what was your favorite piece of equipment to operate as – as a kid? You know, you – you – you came in here and you went – what was your favorite piece and what was it that made it so – so that was somethin’ that you loved? Because my dad never let me operate equipment when I was a kid. “Nope, you're not going to do it.”

Fouad Daoud: He’s smart. Sorry.

John Sacco: All right. That's fine. But what, what was your favorite piece? Uh, we had an old, uh, we still have it, uh, Liebherr 924. The first piece of equipment, material handler I learned to operate on. And the fact that – that what that machine does that feeds the shear, can feed the shredder, unloads the trucks, load the trucks, pick out stuff from the piles, soar, whatever it needs to do. That's the go-to machine. We have front end loaders, we have forklifts, they're all useful. But the material handler is my favorite piece of machine to operate. And the 924 specifically was my favorite piece and thank God it's still in the fleet today.

John Sacco: What about you, Hank?

Hank Doane: I enjoyed running the loaders so when we bought one of our facilities, we went in and cleaned out a couple of acres worth of cars that had been there for decades because it was a parts shop and we went in and we crushed that whole side of the yard. So I enjoyed, you know, for however long it took, I think it was a week of just going in and solidly running that loader. I thought that was a good time.

John Sacco: What did they make you run in your job over at Schnitzer? What – what piece of equipment?

Fouad Daoud: None. They won't let me touch any – any machine. Uh, actually when I started, I was a ­–sat as a laborer on the non-ferrous dock and they just let me stay there. The ­– even forklift, they won't let me touch it. But six months later, I had to get out of the union and became a, uh, assistant non-ferrous buyer because it was a big layoff and they don't want to let me go. So, they put me in, uh, management, they call it. And, um – and this is how I got into marketing and ­– and work my…

Sean Daoud: He does have a favorite piece of equipment though. When we were building the shredder out, we were laying gravel out on the – on the property and we bought a rolling machine. So, it was a vibrating roller. And he – that's the machine that he would run. Only him. We ran it once – special for him.

Fouad Daoud: Actually, it’s not because you're from Sierra and you own Sierra. This is my favorite machine. When I first started, I did run it myself. And the beauty I bought it is it make the scrap beauty, you know, beautiful. It's – it’s – it’s – it’s how it cut. How, you know, and then – how you maintain it. Um.

John Sacco: So, you know, listening to this, okay, every one of you has grease on your hands, underneath your nails. None of you went from college, even though you're college educated, to an office. From you being a laborer working non-ferrous with your hands, you guys operating equipment and learning how to maintain all that. So, part of your success, as I see it is the fact that you know, what's – what each piece of equipment is supposed to be doing. You know, you know you – you take care of your – your customers, but you guys know what it takes to run the yard. Is that a fair statement?

Sean Daoud: Yeah.

Fouad Daoud: Yup.

Hank Doane: Absolutely.

John Sacco: So, who's the best operator amongst all of you? Who can still operate a machine today? When's the last time you were in one?

Sean Daoud: About a week ago.

John Sacco: Yeah? Little Phil got out on our, uh, one of our material handlers a couple weeks ago and he was loading the thousand-ton shear in our yard. It was fun to see. So, we made a little video about it out on our social media on that. So, it was great.

Hank Doane: Well, and to mention some of the people not here too. I mean, Justin of the Bors family, Justin Bors, he can operate any piece of equipment in the yard. My sister Jamie, who's our Controller’s been buying scrap across our scales since she was 14. So, she knows the business as well inside and out. Bert can run a material handler. George, same way.

Hank Doane: Amazing on a – on a mobile shear, right?

John Sacco: Bert’s got ­– Bert’s got an interesting story, okay.

Fouad Daoud: We don’t let him on machines.

John Sacco: Well, Bert, because he was here, sold out, ended up in Las Vegas, opened up in New York yard, bought some equipment from us, sold that yard, came back over here, now he's back in it. So, you know, he – he's like the – the – the scene from The Godfather. Every time I tried to get out, they pull me back in. That's Bert. Never going to get out.

Fouad Daoud: I don't think he'll, uh, he'll, I think he come, uh, he's gonna retire in a couple months, but he's – he wants to come every day, so.

John Sacco: Yeah. That's retired. Oh yeah.

Hank Doane: His phone will keep ringing.

John Sacco: Yeah. That's what I want when I retire; to come to work every day. No, that's not what I want. All right, so listen, we're in Oregon. Very environmentally conscious state, like California. You've got five yards. Now you guys, somebody's got to talk about the environmental regulation, what you're doing and how burdensome or maybe not so burdensome it is to run your facilities.

Hank Doane: Yeah, I would say we operate in probably one of the most stringent parts of the country. And then you couple that with the rainfall that we receive. Storm water and air is a huge issue out here. So, you know, we employ a full-time environmental consultant with a team of people to handle all of that for us, and we keep a close eye on him because that's what you have to do to operate here. So, the playing field is the same for everybody in the state, and we operate with our agencies to do what we need to do.

John Sacco: So, of your five yards, how many of them are actually on a – with a river running in the back of it or…

Sean Daoud: Just one.

Hank Doane: Yeah, just, just this one.

Sean Daoud: Throw on the Columbia slip.

Hank Doane: Yup.

John Sacco: Let’s talk the future. You've got a lot of young, energetic men in your operation. Uh, I would say there's a lot of chance for growth. Now, obviously you don't want to stay away, but you guys aren't satisfied being at this level, are you?

Hank Doane: No, I mean, my goal is always to become the lowest cost producer of the commodities we're producing. So, we have moves to make and we're doing a lot of things infrastructure-wise right now that will get us to that point. But, we really want to focus on our region and be as efficient as we can be.

John Sacco: So, you listened to their ideas. Okay. Now the – his father, you and the board, George and Bert, the patriarchs of this thing, and you listen to the kids creating their plans, what do you see?

Fouad Daoud: I see growth. Um, and if they're going the way they are going, I think they can get this company to a different level. Um, but one day, what's enough is enough, you know? Well, how ­– how far – how much do you want to grow? Um, it all depends to them and you know, uh, for their – their own kids if they want to be in the business.

John Sacco: Well these two want in, I know that. They're all in.

Fouad Daoud: There's these two. They are, but the matter of the Schnitzer kids only, you know, directions are still there. Uh, the rest of them, I know most of them, they're not interested. So, this why they – they're completely out.

Hank Doane: Well that's one nice thing about our group is, at this point, you know, Jamie's got two kids. I've got three kids. Justin has two kids. I'm sure at some point…

John Sacco: Hey, you got to start manufacturing here. What are you waiting for?

Hank Doane: He’ll be a grandpa.

John Sacco: How old are your kids?

Hank Doane: I've got a six-year-old boy. I've got a three-year-old daughter and a six month old. It's still too early to tell if they want to come into the business. See, I have a 20-year-old daughter. She's a junior at USC. And um, she's ­– her plan – she's goin’ big. And I always tell her, you know, the scrap industry has been great for the family. Uh, we've done very well, but Gio, you can go bigger. And she's uh, you know, like she had an interview with Boeing for internship and L'Oreal and so she – she – and Google, so she's like – she wants to go big time. She loves the big city. I don't think she's ever coming back to Bakersfield. And my 17-year-old son. He's 17, so I never know. You never know. But, he's a good kid and he always asks every single day after school, he calls me, “Dad, how are you doing?” “Great. Great.” Next thing out of that, “Did you sell a machine?” Oh, I love when I go, “Hey, guess what I did today?” “You sell a machine?” “Yeah, I did.” He asked me every day, so he's always pushing me.

Hank Doane: Right.

John Sacco: My kid.

Fouad Daoud: I know. Yeah. I mean, same thing. He called me at 10 o'clock and Hank sometimes call me at one o'clock in the morning, “Hey, we got to talk on the phone.”

Hank Doane: Scrap never sleeps.

John Sacco: Scrap never sleeps.

Sean Daoud: Eat, sleep, scrap.

John Sacco: Neil Young Russ never… Or whatever that was, I forget that song.

Fouad Daoud: One of the thing I say, and don't ever forget who taught you the business. You know, like myself, you know, what I learned the businesses from Schnitzer and uh, Chuck Ford, Terry Glucoft. We had so much fun these days. I mean, those days. And uh, same thing. I tell them, you know, don't – don't forget who taught you the scrap. You know, your parents, your customers. Always, always remember that.

John Sacco: Remember where you came from. I, you know, and – and that's important.

Fouad Daoud: Who you are.

John Sacco: And who you are. You know, I think that's the beauty of this industry. You know, I travel all over the United States. I travel all over the world. I just came back before I came here. I was in Budapest at the BIR and talking to people in the industry, again, generational businesses. And you know, I think we're the last great industrial generation family business. I mean, we're really industrial. Okay. We are supplying, we are the suppliers to the steel mills, to the foundries for you know, steel, aluminum, copper, stainless and all the other recyclable products. And it's still ma’, pa’. It’s still family businesses, but it's very industrial. I think we're one of the last, if you really think about it, small family businesses, but within an industrial output, if you will.

Hank Doane: Yeah, right in the beginning and the end of the manufacturing process and you think about the amount of jobs it creates in the United States and worldwide. It's incredible. I mean the U.S. has 150,000, 185,000 direct jobs from recycling.

John Sacco: Right? It’s a $77 billion industry in the United States. Um, you know, we have a footprint out there. So, that leads me into ISRI. Both of you have been very active in ISRI. I was a former chair. We just finished a board of directors meeting and you like being involved on the national level and Hank, are you just gonna stay local or do you want to get involved on national? Are you just going to let Sean do that?

Hank Doane: We're just going to keep pushing Sean out there. Well, I think, you know, I was, I did the chapter presidency for the chapter, which Sean's going to be stepping into hopefully next April and you know, had some involvement at the national level being on the board. And it was a great experience. I also had my first child, or my wife did during that time, so I kind of made the decision while they're young, I want to be around, but I could see myself getting back involved.

John Sacco: Well it's been very real for me on a personal level. I loved it. I mean I got to interview George W. Bush, a former president, forget the political party, still a former president in front of 2000 people and that it's a thrill that I still remember and I got to talk with president Clinton. I got to talk to Condoleezza Rice and I've got to talk to, um, a lot of people because of my involvement.

Fouad Daoud: Have I told you it looked like Sean Hannity?

John Sacco: Well hey, I do a pretty good bill Clinton. Some people say I look like him. But again, I don't know. No, I don't look like Sean Hannity. All right, so, probably should wrap up here. Look, I like to go around and really, this has been fun and it's great. I am so proud of both of you. And then knowing where you were and what you did and the risks you took leaving. Starting with you, I want to give you the last word for this podcast. What would you like to say? What of everything we've talked about and everything. What do you want to say?

Fouad Daoud: Well, gosh, I don't know. Hope things get better and I hope this, our industry, back like used to be, you know, everybody have better communication with each other and understanding, uh, there's a lot of competition today, but competition is good, there's good for the business, healthy. Um, and we 100% would like to be green. Uh, and we support any – any ideas out there. We're want to help the Earth.

John Sacco: I always say the scrap recycling industry. We are, we were the original environmentalist, the original, think about it. Everything that we have taken in over the years. If it wasn't for us, where was it going to go? Hank, last word to you. What would you like to say?

Hank Doane: I just want to say thanks to our ownership group and, uh, our employees for believing in us and just want to be appreciative to everything they do every day. And also, you know, the biggest thing I've taken from working with my dad and you know, heard a lot growing up is treat others like you want to be treated. And no matter what I'm doing, whether it's, you know, working with our employees or working with customers, that's always in the back and the front of my mind, so.

John Sacco: Sean?

Sean Daoud: Both what my dad and Hank said, uh, but also that, you know, thank you for thinking of us. I think it means that we're doing something right, that we're on your radar and you know, hopefully we can continue to do, to do what we've done so far to continue the growth and be successful.

John Sacco: Well, this visit today in the conversation, we had a lunch, the yard tour and everything and knowing what you do, you guys are going to be very successful. Um, no matter what these markets are doing, even though we're kind of down right now, they all come back. They never stay down forever. We've never seen that. You guys are going to be very successful. And I think you're a lucky father to have a son like this. And I know your father's got a proud and Bert and George the same thing with their siblings here. And uh, I think I just see great things coming from PNW and I look forward to your continued success and the friendship that we have built based on the trust level, knowing that we do what you do every day. And I think it's great. Sean, stay with ISRI. I think you've got a future there, young man.

Sean Daoud: Appreciate it.

John Sacco: And it's a lot of fun. Well, anything else, my friend? Thank you. And that's it. This is it for this episode of Pile of Scrap.

Conclusion: This has been a Sierra International Machinery original audio series. Thanks for listening. Please share this podcast and make sure to subscribe.

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