Thomas Metals Group moves into Springfield scrap market

Oklahoma City-based Thomas Metals Group is a relatively new player in the scrap metal industry, and the company is increasing its Springfield metal-processing efforts.

Thomas Metals in November opened a 15,000-square-foot processing facility on five northwest Springfield acres at 1012 N. FR 123.

The company is leasing the space from Eric Roberts of Javalina LLC, according to the Greene County Assessor's Office.

Since launching in Oklahoma City in spring 2007, Thomas Metals has purchased ferrous and nonferrous material from machine shops, fabricators and manufacturers in Springfield and Tulsa, said founder and CEO Shawn Thomas, who declined to name area clients.

Springfield was chosen because of its size, strong manufacturing base and access to major roadways, he said. It's also key due to the proximity to a port near Tulsa, Okla., where the company also added a full processing facility in November. Both moves were related to an exclusive, long-term lease secured at Johnston's Port 33, on the Arkansas River, Thomas said.

"We'll ship a vast majority of materials from that point," he said, adding that water transit is less expensive than truck or rail.

The scrap materials purchased from Springfield companies will then be transported by truck to the port, where they'll travel east on the Arkansas River, connect with the Mississippi River and arrive in New Orleans to be shipped to international markets such as Turkey or China.

"It used to be that material generated locally would stay local. But now, we can get it from a local source, but sell global," Thomas said.

Selling to an international market helps the company expand on its core philosophy that scrap metal is a commodity.

"Companies generate scrap as a by-product," Thomas said. "That by-product is a commodity, and the idea is to take that to a global level."

Bob McCarty, who manages the Springfield operations for Irving, Texas-based Commercial Metals Co., said the scrap metal sector has suffered as much as other industries in the global recession. Because scrap metal is closely tied to manufacturing, it fluctuates in relation to manufacturers, he said.

"The less a product is being made, the less demand there is for scrap metal," said McCarty, whose employer operates more than 50 locations in the U.S., China and Poland that recycle metals, according to www.cmc.com.

In the first quarter of fiscal 2010, ending Nov. 30, publicly traded Commercial Metals (NYSE: CMC) posted a loss of $31.2 million on 588 tons of domestic scrap metal processed and shipped. The company's outlook for 2010 is positive with an emphasis on growth markets such as China. China's gross domestic product is expected to increase by more than 9 percent, which should buoy scrap metal prices, Commercial Metals' quarterly report said. Australia and Croatia are noted as recovering markets, and Poland is expected to see declining prices during the winter months, according to the report.

According to American Metal Market, scrap ferrous prices averaged $214.53 per gross ton in November, down from the 2009 high of $257.06 in September. The previous year's average was $353.60 per gross ton, with a peak of $519.24 in July 2008.

Locally, McCarty said it's difficult to determine whether the Springfield market can sustain another scrap metal company. The market also saw startup Springfield Iron & Metal enter the fold in 2007.

Thomas said his company's success would be tied to its customer service model. The company is taking a consultative sales approach, he said, and can advise clients on how to get the most of their material by optimizing the separation of materials and increasing the amount of scrap that can be sold.

"By virtue of the number of clients we have and visiting different types of environments, we have been able to learn and understand where those efficiencies can be found. We know what works and what doesn't," he said.

Andy Benson, general manager of Thomas Metals' Springfield operations, said the company is concentrating on the customers it already has in the area.

"We're serving where we can, fitting in where we can, and hopefully, adding jobs along the way," he said.

Benson said locally, Thomas Metals employs five full-time workers. At this point, he is the only one that handles sales, he said. Companywide, Thomas said, the business has 50 employees.

Thomas said the company's lease agreement - arranged through Deb Scott of Wilhoit Properties - includes the option to expand by 15 acres and add 36,000 square feet of space.[[In-content Ad]]