As local rumors abound, the founder and owner of MetalX has confirmed a dozen or more terminations at its Delta processing plant due to shifts in the metal scrap market.
CEO and President Danny Rifkin said between 15% and 20% of the company’s local 55-person workforce at 7300 State Highway 109 was let go through a gradual process between May and October. They were included in a total of about 45 employees terminated from MetalX plants, three of which are located in Auburn and Waterloo in Indiana.
A total of 210 employees remain at the sites after the terminations.
The job losses came after a year in which both ferrous scrap and aluminum prices dropped about 55%, Rifkin said. Other attributing factors include import tariffs for steel and aluminum and a global and domestic oversupply of metallic raw materials.
“In our business or any commodity business, volume is directly related to price,” Rifkin said. He said economic and political conditions in Turkey, a large consumer of U.S. scrap primarily from the East coast, has caused a decrease in demand for steel products there.
“It’s essentially caused (metallic raw materials) to back up on the East coast,” he said. That situation, combined with declining domestic steel prices and material demand, has created an oversupply situation in the domestic scrap industry.
“Scrap stops flowing. People stop collecting. It diminishes the flow of scrap, especially to collectors like ourselves.” Rifkin said. Consequently, MetalX was forced to adjust its total staffing to fit the volumes expected to flow into its facilities over the next several months.
When the terminations began the company’s terminals were probably overstaffed, since the company had anticipated more rapid growth in the industry, Rifkin said. “We certainly were in a different mindset than today,” he added.
He said employees were terminated rather than laid off “because we’re not certain when markets will recover.” He said the industry is cyclical, and the current downturn will likely last six to 12 months.
In September and October, metal prices fell over $70 dollar per ton in just 60 days. “We had to take more dramatic action in October than we had in prior months,” Rifkin said.
Should MetalX see a reaction in the market leading to higher volumes, or should it receive new business to add to its base, the company would hire to meet the increase, he said, adding, “Everything we do is reactive to conditions.”
Reach David J. Coehrs at 419-335-2010.