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May 1, 2009

RISING BEYOND OBSCURITY

Norfolk Iron & Metal, at 101 years of age, demonstrates anew exactly how far you can go with classic business principles, hard work and respect for your customers.

Richard Robinson, Norfolk Iron president, and Arnold Robinson, executive vice president
Photo by Bob Ervin

Let’s start with a little candor. You’ve heard of Norfolk, Virginia, home of the huge Norfolk Naval Shipyard, and perhaps also of the original Norfolk, Norfolk County in the United Kingdom.

Chances are excellent, however, that you’ve never heard of this Norfolk, the one in northeastern Nebraska.

And we have to ask, why is that? After all, the late Johnny Carson, who hosted The Tonight Show for 30 years until 1992, grew up in Norfolk, and his official museum is there. What’s more, the Hall Brothers—William, Rollie and Joyce—operated a stationery store, gift shop, smoke house and postcard business in Norfolk for many years before moving to Kansas City to establish Hall Brothers Engraving, the greeting card business we now know as Hallmark.

And that’s not all. Norfolk has been the victim of government abuse. First populated by a group of disgruntled Lutherans in 1866, the town was called North Fork, after the Elkhorn River branch. It was, and in these parts still is, spoken of as, simply, “Norfork.” But the federal postal bureaucracy in the 1880s concluded that Norfork must surely be an error, and renamed the town Norfolk. Certainly, this is at least mild cause for note.

More to the point today, however, is the fact that Norfolk is home to Norfolk Iron & Metal Co., which, despite its great distance from population centers geographically and culturally, is among the largest metals service centers serving the vast Midwest. With sales of more than $550 million a year, Norfolk Iron & Metal, or NIM, demonstrates that simple business principles, hard work and a steady dedication to building customer relationships can overcome just about any obstacle.

“Our theory is that we build for the long term,” says Richard Robinson, the third-generation president of NIM, which, in the depths of the Great Recession, is building a 140,000-square-foot, $20 million addition plus temper mill at its Norfolk warehouse. “We don’t get caught up in the short term, for the next quarter or year.”

Norfolk Iron, in fact, has a history of building when signs point to reining in costs. Its first new structure in modern times, erected on 100 acres of farmland outside of town, was a 90,000-squarefoot warehouse and office building that began operations just as the recession of late 1979-early 1980 struck.

“With cranes and everything, I think we spent $2.5 million on it,” says Robinson, who was a metals industry neophyte, not long out of college, when he told his CEO mother Margaret that it was time to exit downtown Norfolk. “It was terrifying, just when the economy crashed.” NIM opened a new warehouse in Greeley, Colorado, in September 2000, and another in Emporia, Kansas, in December 2001, on the eve of one of the worst periods ever for the metals industry. “It seems like we have the knack to do major expansions right when the economy crashes. It’s a skill we’ve acquired,” Robinson says.

The “skill” also seems to work in reverse. NIM’s first shipments from a new warehouse in Durant, Iowa, were on June 1, 2008, during a period of staggering steel price inflation. “We opened that one at the height of the market so we could stock it with some of the most expensive material ever,” says Robinson.

If you take the long-term view, Robinson says, all these misfortunes of timing even out. Says Richard’s son Arnold, the executive vice president responsible for all the company’s branches, “Our customers know us. When we make a promise, we keep it. We’ve got a good strong company, yet we’re flexible and dedicated to making ourselves a better company that’s always responsive to customer needs.”

Norfolk Hide and Metal Co. was started in 1908 by Russian immigrant John Robinson (his original name has been lost to the family), a former farmer who, as a very young man, came to America in 1903 to avoid service in the czar’s army, warlike service that was forbidden for Jews. Robinson lived in Fort Dodge, Iowa, for a short time, earning $5 a week raking iron in a junkyard. With his savings, he purchased a horse and wagon and went into the junk business, eventually working his way to Norfolk, the hub of northeastern Nebraska.

Endlessly frugal, Robinson used savings to buy a lot and erect a brick building, employing the yard for the iron that he purchased in little bits from anywhere he could find them. For five years, the pile grew, but Robinson wouldn’t sell at the deflated prices of the day. Bills mounted. Then one day, with the war in Europe raging, iron prices shot higher, and Robinson sold the entire pile, paid his bills and became, “overnight,” a man of means.

“You see, I had no capital,” Robinson told The Norfolk Press in 1917 as an explanation for why he chose the junk business. “I could do nothing for myself without capital. It doesn’t take much capital to go into the junk business. Americans do not care to dirty their hands. They are particular about their jobs. What I gathered and sold they did not care for. To them, it was only waste. I could buy it for little. It is hard work and dirty work, but it pays, and I wanted something I could make money at.”

Under John Robinson, Norfolk Hide and Metal prospered in scrap iron, hides, furs and wool. Robinson paid fair prices and attracted business from North and South Dakota, Wyoming, Kansas, Nebraska and Iowa.

Robinson died in 1960. His son, Arnold, took over the business. A World War II veteran, Arnold had counseled his father to get out of the hide and scrap businesses and to move, instead, into steel distribution, which proved to be a good decision. But in 1974, while on vacation in Arizona, Arnold died while playing golf with Richard, a University of Arizona sophomore. Arnold’s wife Margaret, with no business experience, assumed control of the company. Richard joined her when he graduated with a civil engineering degree in 1976 and spent the next two years learning all aspects of the business.

At Richard’s recommendation, Margaret agreed to leave behind John Robinson’s crowded old downtown building and expand the business on nearby farmland. Richard moved into management, and Margaret, in 1982, became one of the first two women elected to the University of Nebraska Board of Regents. She died in late 2002.

Under Richard, Norfolk Iron has expanded substantially, with the warehouses in Kansas, Iowa and Colorado, and a joint-venture coil processing facility with Steel Warehouse in West Rock Island, Illinois. NIM owns its own fleet of 120 tractors and 200 trailers, 150 of them equipped with sliding protective Conestoga-style covers that add to driver safety while protecting the steel beneath. None of the trucks is more than five years old. Similarly, all the company’s warehouses were greenfield projects built by Norfolk Iron. “We like to do things our way,” Robinson says.

Norfolk Iron is also among the service center industry’s most sophisticated operators. With a 13-state, million-square-mile territory, the company can promise next-day delivery to 85% of its customers; about 50% of what it sells undergoes some further processing. All trucks are equipped with global positioning equipment, and with its own computer software, NIM can monitor continuously the location, speed, delivery history, estimated arrival times and load on every one of its vehicles. Using meticulous records, the company loads each truck to fit the exact specifications of every customer along the long, long way. Much of the territory is, after all, largely empty, with customers widely spaced across the Great Plains routes.

“There are home-grown manufacturers in the smaller cities, and that’s why we cover such an extensive area,” Robinson says. “We go out a few hundred miles from each plant, and it’s a little of everything when it comes to customers.”

Two of Richard and Betti Robinson’s three sons work in the family business. Jeff, Arnold’s twin, is responsible for sales in Minnesota. The youngest son, Evan, is a stockbroker in Phoenix.

Forward caught up with Richard Robinson in Norfolk, in an office that includes on the wall a framed, collectible handwritten note—the content not related to the company or the Robinson family—penned by Albert Einstein. “It’s just there to remind us to always shoot for greatness,” Robinson said.

What are some of the business principles that you follow?
We stick to our core business, carbon steel. No stainless, no aluminum, because we don’t know how to handle them the right way. We want to do what we do best.

Our business is in constant evolution, but we try to keep it simple. We recruit good people. Our goal is to be a well-run company that does a good job. We’re out here by ourselves, but we compete with everybody because when you’re spread out as we are, you run into every other service center. So we try not to react to what our competitors are doing, but instead react to what our customers need.

No matter what anyone says, it’s a commodity business, so you differentiate yourself with service, which is critical, and with quality. We like to do things the customer’s way. Too many companies say, “This is what we do,” even if the customers don’t want it that way. We listen carefully to our customers and respond quickly to them.

That’s one reason why we bar code everything at our warehouse, and why our processing— lasers, temper milling, everything—is state of the art. We can’t be the same today as we were yesterday, so we put a lot of money back into the business to modernize. Some might consider this a luxury, but it’s not a luxury, it’s an advantage in the marketplace.

We also don’t like to outsource. We have our own maintenance department. We own our own trucks and we have our own drivers. We have our own MIS [management information system] department and our own credit department. We don’t sell our credit to someone else. We believe in modernization because with a modern truck fleet, you don’t have breakdowns.

Has the technology that you’ve employed been helpful?
It’s not so much the technology, but what you do with it. The trick is to mine the information to become more efficient, to get more out of the data. Everybody has mountains of data that aren’t in a form where they can ever look at it and put it to use. We’re trying to put it to use, to where our managers can notice, maybe, a route that is especially strong, to learn what we’re doing on that route that we can apply to all routes.

We run a backup server operation in Greeley so that if we have a problem with technology in one place, we can immediately switch to another so that customers never notice the change. Everything is totally redundant. In Iowa last summer we lost some functionality because of the floods, so we simply switched to Norfolk and kept deliveries going.

It’s a much more immediate world than it used to be. In the old days, a lot of orders came via mail. I can’t remember the last time we got an order via mail. Now, everything happens literally at the speed of light. People want answers at the speed of light. You know what I regret? I miss phone conversation. Back in our day, you lived on that telephone. It was growing out of your hand and ear. Now it seems like the business has grown much less personal. A lot of e-mail, a lot of texting. But I’d rather visit with people and find out what’s going on.

To what extent do employees participate in decisions?
All of our doors are always open. Anyone can talk with me about any part of the business. Because we’re a family-run business, we can make decisions right away.

Here’s an example: We have two different kinds of racking systems that were developed by employees on the shop floor. One rack is made here, and it’s designed to give us a place to store extra material from broken bundles with full bundles of the same material. It makes it possible to maintain traceability on all of our material, and it means we break open a new bundle only when we really need it.

The second rack is made so that it only holds material of the right width. So we never get in a situation where we place material of one width on top of other materials of a different width. Both of those ideas came from our people.

Some family-owned businesses have trouble luring in members of the next generation. You’re fortunate to have two sons in the business.
We have a rule with our family members. They can’t join the business until they’ve worked elsewhere for five years or more. I want them to make their early mistakes somewhere else.

When my father died, I told my mother that I would leave school and come help her. She said I could leave school, but I wouldn’t have a job if I did.

My son Jeff is an excellent salesman, and he likes living in Minnesota. Our outside sales reps are relationship people. We do a lot of team selling, and it’s nice having two sons in sales building relationships.

Arnie (with a background at Omaha Steaks and in politics) is in charge of the branches because of something I found a few years ago. The remote branches always think the home branch gets a better deal, no matter what the business. But when you put a family member in charge of the branches, they have an advocate, someone they can call and get right in.

Does Norfolk Iron suffer in a recession like this?
Of course we’d like a little more business. But we can use the slowdown to reorganize our warehouse to make it more efficient. I don’t know how many times in the last few months we’ve had to change game plans. The market’s changing, and you’ve got to stay with it.

In a market like this, everybody is willing to sell any quantity. Everyone’s reaching out farther. So you have to prove yourself every day to every customer.