Last October, when Nikhil Shah, president of All Star Metals, talked about the Port of Brownsville ship recycler with us, he suggested VBR return in one year to see the changes slated to take place.
Today the largest recycler in the RGV, All Star Metals (ASM) has grown from a small shipyard to one of the largest ship recycling and metal scrap processing facilities in the nation. On August 8, 2012, ASM completed a strategic merger with SMS (Scrap Metal Services, LLC) a Chicago-based, privately held recycling industry leader with seven commercial scrap processing facilities and three mill services facilities spread across Illinois, Indiana, Pennsylvania, Ohio and Texas. SMS, which had a half billion dollars in turnover last year, buys and processes ferrous and nonferrous scrap metals which it markets directly to steel mills and foundries. ASM is the only ship breaker in the mix.
ASM developed its location on the Brownsville Ship Channel to the point that it employed 200 people and had earned industry accolades. But Nik Shah recognized that, led by the family unit that includes his wife and his brother, the recycling company could only grow so far. He viewed a strategic merger as a good opportunity to expand the business without taking risks.
All Star Metals assembled a package to market themselves with the help of an investment banker well versed in the scrap metal industry. Multiple suitors expressed interest in ASM, which was a finalist for the 2012 American Metal Market Scrap Company award and has the highest environmental and safety rating from OSHA. Shah said that the brothers who operate SMS had the same from-the-ground-up knowledge of the metal industry as the Shah family. “We felt they were the right fit. We are really fortunate to find a strategic partner that will not only mentor us but take us in as part of their family.”
“They were not only interested in the assets of our company; it was the management team that attracted them,” Shah said. “We have a young management team that will stay in place.”
ASM has short-terms plans for growing not only in Brownsville but across the Valley during the next six to eight months. Without the merger, an expansion would have stretched over several years. “We are going to be able to grow our company at a faster pace. MSM is going to help the Valley grow.”
Shah continues to wear steel-toed work boots and move easily around the shipyard.
“I still do exactly what I did before. The only thing that has changed is we are now able to market more tons into Mexico because of scrap availability from our other locations,” said Shah. “Now it gets fun. It’s not less responsibility. It’s more, because as a group, you have to account to others. In the same sense, because of our integration, everyone is supporting you to make the right decision. We run our divisions, our operations, independently, but we support each other in what we do,” from equipment to programs and sourcing.
Now when Shah says ‘our’ company he is now referring both to ASM, in which the Shahs still retain an ownership interest, and to SMS.
For more of this story by Eileen Mattei, pick up a copy of the October edition of Valley Business Report, on news stands now, or visit the “Current & Past Issues” tab on this Web site.