Pile of Scrap Ep. 1: This is Pile of Scrap
Watch the first episode of Pile of Scrap here.
Ryan Mallard, Daniel Zamora, and John Sacco
John Sacco: Hello. Hello. Hello. This is John Sacco, owner of Sierra companies. Sierra Recycling & Demolition. Sierra International Machinery. This is Pile of Scrap.
John: This is our first podcast and I'm excited. Um, we're celebrating our 60th anniversary at Sierra Recycling and Demolition. A lot of people in the recycling industry don't know Sierra has been a recycling company for 60 years. So, I thought for the inaugural podcast we'd bring in people who run our recycling and demolition yard. I got us joining here today, I got Daniel Zamora who is our operations manager and Ryan Mallard, who's our general manager of Sierra Recycling. Welcome guys.
Ryan & Daniel: Thank you.
John: All right. All right. First, how did you come to work here?
Ryan Mallard: You know, I worked for a telecommunications company here in town, um, and you guys were one of our business partners. We brought all of our copper wire, aluminum, scrap, things like that into your business. Um, later on I found out you guys are hiring for a field supervisor role. I applied and I got the job.
John: You told me a story that you and I met at a Joe Walsh concert here in Bakersfield.
Ryan: We did, at the BC amphitheater.
John: That was a great show.
John: But I don't remember meeting you there. Daniel, your story of coming here is interesting because our sons were playing soccer, I forgot where we were and I guess it was maybe Brandon Hankins or somebody said you had you, what'd you get laid off or what happened?
Daniel Zamora: Yeah, I was actually working at the time out of town. I was traveling the whole west coast and uh, knowing that as a truck driver, yes. Knowing that I was a family man, I hated to be out of town, away from the family. And uh, you heard that I was looking for something local. And uh, low and behold.
John: Well you asked me, I remember I go say, “Yeah, we're hiring and we need roll-off drivers,” and you said to me, “Well, how many days a week do I need to be out of town?” I said and I looked at you, “None!” I remember, so we, we put you through your driving test. This is really good because Larry Villalobos who was the head of our trucking fleet at the time, which on a training run if you will, he comes back and he says, “Mr. John, Daniel’s a real truck driver.” So, there you did start as a truck driver and here you are as ops manager. Yeah, that's crazy. Joe Walsh to general manager.
John: Well that's great. All right, so you know, we have different aspects of what we do here, we have a traditional scrap metal operation. We also have recycling and cardboard, and we also do field service works in the oil field, part of the demolition in our name. But I get asked all the time, demolition you blow things up. And I said, no we don't. So, Ryan, why don't you tell us what exactly Sierra does in the field; oil fields that is.
Ryan: Our primary goal in the field is to decommission material no longer used by oil producers. Um, so it could be everything from pipeline, old used pipeline to old abandoned tanks to steam generators, um, anything that they need to get off their asset list.
John: So, when you started here, we were doing… Compared to when you started here to what we're doing now, what's changed in doing that?
Ryan: We, we are a much larger player in the oil and gas industry. Then we were, when I started. I started with four crews here and we're still at four to five crews at a time now, but today we are isolating our own lines. We're, we're doing all of our own leg work, we're getting our own permits. We're, we were subcontracted through other maintenance companies when I started and today, we are our own prime.
John: So, they're calling us, and the general contractors are no longer calling Sierra. We are the people oil companies are calling.
John: Well, that's great. You know, I think that's for us as a company that's exciting only because you get out of that minor league level. Now we're the major league level and they come to us, you know, and that's how really, you know, your job in the field is where you got promoted to be general manager of all the Sierra Recycling & Demolition. Daniel let’s talk about your tasks from truck driver to ops manager. Tell us exactly, you know, tell me a day, typical day of you here at Sierra.
Daniel: So typical day, um, first of all, I not only do the logistics but also do maintenance. So, first thing is to come in and make sure that drivers are, our equipment is running good, that they're doing their, their pre-trips, getting their equipment ready to go out and that everything is working and offering property, um, getting them dispatched to where they need to go. Um, and then also fielding other calls from our other divisions of whether maintenance, you know, what needs to be worked on, maintained, upkeep, and then communicate with Ryan as far as what's coming in that we need to process, uh, and prepare to ship out.
John: So, from the time you started as ops manager to now it's different because now we're trying to ship to the ground every day. You still haven't quite figured that one out yet. I keep telling Ryan, I mean, I keep telling Daniel, “Daniel, you've got more scrap than you think, order more trucks.” [John mimicking Daniel] “Well, I don't want the trucks to come and I don't have scrap,” but we're getting there and you know, it's, it's a much better way to run a business because without, when you ship your inventory, that's what makes us profitable. And you know, I think our customers, you know, our slogan is we do what you do every day at Sierra International Machinery. Okay. We've been, we've been putting that out on our social media. Well it is, we do what do every day and we have learned through, you know, the travels that I've done in conversations with other, uh, – [sirens in background] thank God they're not coming here – that um, you know, you've got to ship your scrap. You have to ship your paper; you have to ship what it is you're buying every day and that's how you become profitable. So, you know, in the heat right now, you know on Bakersfield summer it's hot. What's the challenge of the heat here? Cause we don't have the cold in the Midwest where it's subzero, but we have the heat challenge. So tell us about that.
Daniel: Just making sure that everybody stays hydrated. Water is a big thing. You got to stay hydrated, stay focused. Um, it's easy to get off task in this heat. So we've got to watch out for each other, making sure that, that we're not only taking care of ourselves and watching what's going on around us, but also watching out for our partner who's next to us. Um, making sure that, that they're doing what they need to do, stay hydrated, get enough rest. Um, try not to be too strenuous when it's this hot cause when it's, when it's a hundred degrees here, ambient, it's gonna be a lot more in inside of our facility.
John: Yeah, that's it. How about the field? What, what requirements is our customers, uh, you know, requiring of us?
Ryan: Our customers require us to wear full FR clothing from pants, shirts
John: FR stands for?
Ryan: Fire retardant.
John: Yes. And it's heavy stuff.
Ryan: It is very heavy, and it takes a good two to three weeks for your body to get acclimated when the heat starts. It's not that bad in the winter time, but when you're out, wearing FRs in the summer, where it's a 105/108 and you've got to put on leathers and you're torching material or you're sitting in equipment; you're spotting equipment, it gets hot, very hot.
John: Well, yeah, that, but the body adapts. So, we know that that's part of what we got to do. We've got to watch it. The heat, you know, we have so many customers at Sierra that run in subzero, you know, from the Upper Midwest and um, you know, from Iowa to Minnesota to Maine where, you know, it drops down to minus 48 degrees and they're always, well, can we run the equipment? And you know, we think that at zero you shouldn't run your piece of equipment because it just takes too long to warm up the machine, to get the oil pumping through, even though the oil tanks have heaters. All the oil in the the piping and the cylinders, so we think at zero stop running. Um, and we've got customers that way up in Fort McMurry Canada, they're like “Zero! That's a balmy Day.” So I, you know, it is a little different, but you know, people always ask us about the heat. All right, so moving on, let's talk about yard cleanliness for a second because my dad's nickname, Mr. Clean. Did you know my father?
Daniel: I did not have the privilege.
John: You knew my dad.
Ryan: I did.
John: Okay. Dad's nickname, Mr. Clean and he got that nickname because he was an organization freak. Now, he was also a drill sergeant in World War II, and do we have any World War II pictures? Here he is right over here, World War II picture. So he was a drill sergeant in World War II. And so, you know, it's funny because you come down here and I hear it all the time. We are the cleanest scrap yard there is. Tell us about the challenges of being the cleanest Daniel.
Daniel: It's a constant battle. I mean, every day brings something different. Um, the material coming in, just trying to keep things organized, trying to stay ahead of it, you know, and not all the time. We can stay on top of it every single day, but we do our best to make sure that we do our housekeeping because that's going to prevent accidents. It's going to keep our customers safe, that's going to keep our employees safe and it's just going to give us a better environment to work in, to work in altogether.
John: Well, I think that segues into our next segment. We're going to talk about safety and the importance of safety at Sierra. So, I think for those who can see us and those who can't see us, let's put our safety gear on. I think people don't understand what it is, what Safety is in this industry and that we are the 5th most deadly industry, the recycling industry. That's crazy. When I was chairman of ISRI, we were the 4th deadliest industry. Now we're 5th. So, our efforts at ISRI as our trade associations is to be safer, it's working. Starting with you, Ryan, the oil fields, I mean…
Ryan: Everybody talks about oil field safety and how much they preach safety, safety, safety in the oil field, but the oil fields not doing anything different than what we're already doing here. Our main goal every day is that our employees go home the same way they came to work, in one piece. And we strive to do what we do here at our customers' facilities. We don't change anything. We still do JSAs here in our yard.
John: JSA, another acronym for?
Ryan: Job Safety Analysis.
John: And we're doing that in the field when we assemble equipment, you know, on our customer's yard when we go through this process.
Ryan: So, we're doing all those same things that, that we're supposed to do in the oil fields right here in our own yard. So nothing changes.
John: Daniel, you have a lot of people and a lot of moving parts here from the ferrous operation in the back to the non-ferrous to the paper. What's, what scares you the most? What, what is the safety aspect that keeps you up at night?
Daniel: You know, there's, there's so many moving parts. Um, anything can go wrong in any given time. So just making sure that we're proactive is the number one thing. And if something comes up, we have a close call, or something could have happened potentially been a lot worse than what it was. That's scary. Why didn't nobody see that before it happened? Why didn't we catch that ahead of time? So that's what keeps me up, is what can we do to be proactive to make sure that our customers are safe, and our employees are safe?
John: Well, look… Safety is a journey. You never arrive. You can never sleep to say; well we got the best safety department. Yeah, that doesn't mean anything. You know, you have a good safety program only at the end of the day when everybody goes home with all their fingers and toes and ears and body parts, and nobody's hurt. Every day you start at the bottom and you have to work towards the goal of safety, you know, and at ISRI one of the things, you know, safety there, the slogan of “Safely, Or Not At All” and the ISRI circle of safety. You've participated in some of the ISAC meetings, have you not?
Ryan & Daniel: We have not.
John: Felipe has. Okay, so you know, we participate on the trade association level as well because safety is so vitally important to everything we do. And you know, I appreciate it. You know, I wanted to put the [safety] hats on just for the sake of, “Hey guys, safety's important at Sierra,” and we bring it to our customers when we go into the field. So my favorite safety meeting of the year of course is Christmas. We have more fun giving away the Christmas gifts and seeing somebody win something like the big TVs, how excited they get. You know, that's always my favorite safety meeting. But you know, they can be tough.
Ryan: But I think our employees have also bought into safety and they take it home and that, that is the most important thing. You hear it from all the guys here is that they now do things differently at home than they did before they started working here at Sierra and they've bought in and that's the biggest thing.
John: So that’s the culture that we've tried to create over the years at Sierra. Let's talk about the culture. You know, when you guys go to a new hire, I know you talk about culture, what do you tell them?
Ryan: We just tell them that, you know, the most important thing here at Sierra, the most important thing here is safety. Without safety we don't have a company. If we didn't have the safety record that we currently have, we wouldn't have the customers that we have. We wouldn't have the material that we have. You know, we wouldn't have the longevity that this company has had over all these years.
John: Daniel, for you, for the new hires in the yard?
Daniel: You know, it's the respect and the teamwork that everybody has together. Uh, we really have a great group of guys and we strive to make sure that we bring the right people in, that are going to fit in, and they're going to work well as a team.
John: Well, every day. So, you know, before I became an officer in ISRI. I went to my dad and I said, “Hey, they want me to be an officer? Like I don't know if I have the time.” And he says, “You're crazy! You're going to be in the know, you have to do this!” Well, I did and what happened was I learned about stormwater. Here in Bakersfield, we get less than 6 inches of rain a year. Right? But we're treated by the water people, water board or the whoever it is as if we have 50 inches of rain a year and we're dumping into a river in our backyard, which we're not. So that was one of the things that being chairman of ISRI is stormwater. So, we repaved our yard, re-sloped it to where everything that touches metal goes through filters and into tanks, but we found out we still gotta spend a half a million dollars more this year to even be more compliant. Let's talk about what we're doing here at Sierra with the stormwater, the new stormwater filters and what we're implementing.
Ryan: So, what we're putting in is a system that will not allow any of our current water, stormwater to run off of our property. Everything that leaves this facility, every drop of water that leaves this facility – rooftops, asphalt, concrete, you name it – will be filtered out. And before it leaves this property, it will be completely filtered into nearly potable water.
John: That’s a big task, but you know, half a million dollars, you know, and as a business owner, the thought of spending a half million dollars and we get nothing from it. The only thing we get from it is saving from getting fined. But you know, you know you have to do the right thing. And I think that, you know, that's one of the things that has always been another part, I think, we just do the right thing. It's not fancy, just do the right thing. And with stormwater, it’s very easy to not do it, especially in an area like this, but we have to do it. And then, you know, and I think that's always our goal. We have to comply with all the regulations, safety, environmental, you know, but you know we're stewards of the land. You know, we are the real environmentalist. You know, people can tell. But you know what? Recycling facilities we're taking what's being discarded and we're doing it and processing it in an environmentally friendly way and getting it so it can be consumed again from scrap iron, paper, copper, aluminum, stainless steel, brass. You know, that's what we do. We're the original environmentalists, if you want the truth. But it seems like we're always at war with the regulators, it's never enough. But I always wonder, what happens if you eliminate all your recyclers? Where does all this material go?
Ryan: Back in the landfill.
John: Side of the roads, cars… Can you imagine the pollution if cars and appliances are just dumped on the side of the road, that CVCs from the freon being cut loose, the oils, the trent? We'd had the biggest environmental disaster that you could have. But we're doing our part and I, I think this is great. So, let's have a little fun here and talk about experiences, fun experiences we've had here. You know, it's a serious thing, but what's the funniest thing you've come across here at Sierra?
Ryan: Oh Man. To be honest with you, there's probably one a month. Um, some of the things that, that we see come pull in through this yard, uh, from customers. Will crack you up from time to time. Some of the things that we see out in the field is, uh, is pretty funny. And yeah, I couldn't name just one.
John: Well, I got it, I got one. This one, so it's been about a year ago. I'm standing out front and the car comes, it has a water heater in the back and the girl rolls down her window and says, “Excuse me, where do I take this to, to recycle?” I said, “Oh okay, go over to the scale.” So, she came back, and she goes, “Excuse me?” So, I walked up to her car and in the front seat of her car, she has a laundry basket of weed in mason jars that are going some, weed dispensary. I was just going like, I got about five feet to the car and I’m going, are you kidding me? She was so worried about recycling. I guess she was really being green cause there was a lot of green in our front seat. What about you Daniel?
Daniel: You know in logistics and doing a lot with DOT and trucking, I pay attention to a lot of the loads that I see coming in here, and it never ceases to amaze me how customers will secure items coming in to this facility, on their rooftops, on their trunks. And it's just, it just amazes me some of the, some of the ways they do it well,
John: Well, they're innovative. You know these people, you know, they make a living. Peddlers make a living bringing us scrap, you know. And you know, with the prices of commodity – paper, unfortunately – a lot of people who would go around to all the restaurants, you know, that commodity price is just horrible right now. So, uh, but yeah, they fill them up and they stuff the back seat of their cars and the passenger seat
Ryan: Oh… Every crevasse.
John: So yeah, they, they're getting everything filled, but you know, you got to admire that cause as they're hustling. And they’re making their living doing this and I think that's great. Well, you know, all right, another story I love is, okay, so you know, at Sierra International Machinery we innovated, and Emory has the REB-4 which we have a patent on the doors, and we brought it in here last June. So, we ran the machine for 4 months to get any bug out of it before we got it out into the marketplace and we pulled out the REB-2 250 horsepower, which is a powerful fast machine. But I’ll never forget, how upset everybody got when the REB-4 was leaving.
Daniel: I just want to know when we're getting one back.
John: Well, when we stopped selling them. I don't know. You know, the sales are strong, but it seems like it was so funny. Everyone goes, “Oh, Mr. John, when are we going to get the REB-4?” I don't know.
Ryan: Maybe never.
John: Hopefully never. Hopefully of our production, although, you know, we're finishing up in Georgia, you know, our 24,000 square foot expansion to our facility over there. Actually it's a separate building, so everything red, all the red machines, the two ram balers and conveyors are going to be built in the 46,000 square foot part and all the green machines, all the sheers and portable balers are going to be moving over and we should be done in about a month. And uh, so hopefully we'll be able to produce more. Actually, I think we need a portable REB-X here.
Ryan: I agree.
John: That would be a good machine to have. Yeah, go around and probably do some damage.
Ryan: We have the clientele for it.
John: It never ceases to have the clientele. So, this year we've spent some money. Let's talk about our capital expenditures this year. Trucks, rolling stock. Why did we, what was the event, what was the need for it? Not because our trucks were old, but because?
Daniel: You know, we have really good equipment, but they're getting old. They don't meet the criteria for emissions anymore for California. So unfortunately, uh, we have to trade them out and get updated equipment that are basically compliant.
John: And, and that's the motors, the Tier 4 motors.
Daniel: Tier 4 motors. On our yellow steel and then on our diesel equipment, we have to make sure they’re zero emissions as well.
John: So, what did we buy this year in trucks?
Daniel: So, we bought four trucks this year, four power units to replace some of our older ones.
John: So, we spent, you know, two were slightly used, have 50,000 miles, and two were brand new Peterbilt. So, what do we spend two, almost over half a million dollars there. Okay, now you had some needs for the oil field. Tell us about what we bought there.
Ryan: So, we were given an opportunity to start breaking up some concrete pads, 24-inch-thick concrete pads, and the need for that came a 7,000-pound hammer to attach to an excavator. So were able to purchase that, and then we liked the excavator that we were renting with it at the time and we were in the need for a Tier 4 Final excavator as well so it seemed like a great opportunity, which it has been a wonderful opportunity. But now we're down to some Tier 2 excavators that we need to get out of Sierra and introduce some new equipment similar to…
John: So how much more money you want to spend?
Ryan: Not 600,000!
John: Thank you! Well, you know, look, we gotta do it you know. Like anything else, my father has always taught me and my brother Philip from the very start: you put your money back into your business. You don't pull your money out and go live high on the hog because the business needs continuous investment. And so, you know, people who buy equipment from Sierra – buy the shears, the portable balers, the two-ram balers, the conveyors – you know, they're doing the same thing. And so, you practice what you preach. We're, we're doing the same thing too. You know, we're evaluating, you gotta spend money sometimes, but you know, there's a lot of advantages to spending money, you know, you get the tax code where you get a 100% deduction. You know, if you're making money, which we are, it's a good, you know, you're buying really at a 40% discount because you're saving the tax money you would have to pay. So that's important, you know, keeping it while we have it. What else are we going to need? I mean, I look out in the yard, I'm thinking, “okay, we're good,” but what do you guys think we're going to need here soon?
Ryan: Maybe a 1500-ton shear.
John: Well, get me more scrap. What do you think?
Daniel: Yeah, we still have some upgrading to do on some of our trucking.
John: How much more? You know, one thing about this industry you can spend, oh you can spend a lot of money. Every year. And you know, they all say that in the scrap industry, “You want to make a small fortune in the scrap industry? Invest a large one.” Now you always have to constantly spend money. You're always having to improve your operations because efficiencies, the costs of doing business is not going down. Labor costs are up. Look at 3.6% unemployment, we're at the bottom of the barrel. You know, we struggle in Georgia to find people. You don't have, there's nobody that we've hired who's unemployed. Everybody we hired is… then it’s getting them past our physicals and our drug testing because we have a zero tolerance because our clients in the field basically, you know our oil field customers demand it. And we actually have some customers on the machinery side who buy equipment, who also would demand that our employees, who before they go out to the job site that they've been in a drug protocol, you know, testing program and that we have a random uh, programs, but we haven't really lost anybody, you know, back to the culture. They know coming in.
Ryan: They do.
John: But you know what I hate, we hire somebody, they sit in a week in a safety class. They go out in the yard and day one they quit. That drives me nuts. They get the weeks’ pay sitting in a cool office, air conditioning, going through safety training and then they get one day out and t's 102 degrees, and they're turning in their gear.
Ryan: When I started here, my orientation was 40 hours with a group of guys day one, same thing happened. Two of them left because it was August. It was 102/103 degrees. And they said, this isn't for me.
John: They thought it was.
Ryan: We watched the videos. We knew what we were getting into.
John: Well, look, it's tough. It's not, you know, the labor business, you know, pull out old copper wire, sorting metals, driving forklifts in this heat. That's not an easy job, you know, and you gotta hand it to the people who do this every day and get out there and do it and you, you and your hats off. And that's why I love the year-end safety meeting. To reward the employees for their hard work, to reward them for really their safety. Cause, you know that they do a hell of a job. And to see them get those TVs, and the barbecues, and the fun things. I love that, you know, that's what we're here for. I mean, everybody's got to win, and I think that's really important to see our success and going forward. All right. Biggest change at Sierra since you've been here?
Ryan: Biggest change. Oh Man. You know, we are far busier than we've been in the 11 years I've been here. There are people going every which way in our facility, employees, people with a lot of things to do, but a lot of passion about what they're doing. So that's probably the biggest change.
John: Daniel, biggest change since you've been here?
Daniel: My office window. I went from 18 wheels to being in the yard.
John: Well, the biggest change I would say, you know, uh, this is the 19th of June and we lost my father 10 years ago and on June 23rd so it's still, the biggest change is not having him here. You know, to look at these pictures of dad and the old guys when they started and to know, well, I'm now that guy. I still have a quite grasped that 100%. Well, let's wrap this up, gentlemen. Thanks for the discussion.
Ryan: Can I say one thing?
John: Yeah, absolutely.
Ryan: Daniel said his office window changed, but technically Daniel's in a trailer in the back that still technically has wheels on it and a window.
John: Yeah. But he gets to look out into the warehouse. All Right, gentlemen, thank you very much. And that's it for the first edition of Pile of Scrap.