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Aurubis plant leader eager to build on history

You can measure Aurubis Buffalo’s plant in big numbers.

The 1.1 million square foot brass and copper mill generates about $500 million in annual sales. About 650 hourly and salaried employees work for the business. And its Germany-based parent has invested nearly $50 million in the North Buffalo site in the past four years.

Perhaps the biggest number of all is this one: 110 years. That is how long the plant has endured, under a host of names, including American Brass, as its ownership changed through the decades.

Jeffrey D. Nystrom wants to build on that history. Late last year, the 45-year-old Western Pennsylvania native was named president of Aurubis Buffalo, arriving eager for a new professional challenge.

He oversees a plant that Aurubis calls one of its eight “significant production sites” in the world, and the only one of which is in the United States. Aurubis, which bills itself as the world’s largest copper recycler, acquired the Buffalo plant in 2011 in a broader deal.

The Buffalo plant’s output goes into everything from roofing material to connectors for electronics in automobiles to brass hose nozzles. Nystrom talked about how an old plant manages to change with the times:

Q: What does the Buffalo plant do for its customers?

A: We have the ability to melt copper and roll it, do a primary rolling operation, cleaning and heat treating it, and then an intermediate roll to take it down to a small gauge, less than a hundredth of an inch in size. Simply producing a large coil of metal, that’s a good first step.

But we have a lot of customers that want a lot more, whether they want it coated, or plated, or whether they want it cut to certain sizes, or packaged in special ways so that when it comes into their shop, they can pick it up and work with it. We do a lot of downstream finishing operations that let us take that base product that we produce, that copper and brass product, and put it into a form that can be easily consumed by our customers. That’s a critically important component. It’s something that I’d say has gradually changed over the years.

Q: What kind of shape is the plant in?

A: It’s an older facility. It’s got some good equipment, but we’ve put a lot of money into upgrading the equipment we’ve had and trying to position ourselves to compete in North America. It is a very competitive market and those investments are important.

On top of that, to run the plant day in and day out, we have over $100 million in working capital. Having a strong parent like Aurubis, they are deeply ingrained in the metals business. Having a parent like that, they understand our needs, they take a very long-term view – German companies tend to do that. I think that’s a real plus.

And we’re a little bit of an extension. (Aurubis is) in the primary production of copper; they produce what’s known as copper cathode, which are sheets of 99 percent pure copper. We’re a little different business in that we do use some cathode; it’s a fraction of our total, but the vast majority of what we use is basically recycled brass and copper. In a big way, we are a recycling business. … It’s wire, it’s sheet, it’s trimmings from manufacturing operations. We take all that metal, we melt it and we convert it and run it through a variety of quality processes and produce a sellable product on the back end.

Q: How has the Buffalo plant’s production changed over the years?

A: If you go back 30 years ago, it probably produced six or seven different basic grades of copper and brass. A typical order size could be a quarter of a million pounds.

Today, we’re producing in excess of 24 different varieties of engineered copper and brass, also copper nickel silicon, and there’s a whole variety of very specialized grades of copper and brass that we produce for niche applications. Our order size today is probably a tenth of that; we produce a single coil. So you have a plant that was designed around large volume making; now we’re a lot more of a made-to-order operation.

It’s a challenge for us, but at the core of our businesses, we have some very strong processing equipment: our melting capabilities, our rolling capabilities, our ability to do what would I call an engineered heat treat.

Q: It’s been a tough market for worldwide copper prices. How does that affect your production?

A: The copper business has been challenging the last couple of years. One of the things about our business, as well as our parent’s business, is they’re not in the copper mining business. They’re in the conversion business. That is, they take or they buy concentrated copper ore and they basically turn it into a product, a cathode that can be sold on the open market.

We do much the same thing. Our business here is, we look for opportunities to find a copper or brass product where we can apply this recycling process that we have and produce a product that fits.

Q: Does that insulate you from copper price swings?

A: A little bit. One of the things we see is, when copper’s $4 a pound, there are businesses out there that are scouring every nook and cranny to find copper and brass to sell us. At $2 a pound, they’re not looking quite as hard. Some of the streams of recycled copper and brass just aren’t economical at $2 a pound. Those will kind of get squeezed out. At $4, they’re out there looking for every scrap they can find. It’s affecting our ability to source as much scrap as we would really like, but it’s not really affecting our overall business at this point.

Beyond that, we don’t have a single product, we have a kind of diverse family of products. Those segments are cycling opposite of each other sometimes. Sometimes when one is down, the other one is up.

We do see swings in our business here. And that’s a challenge because we’re working hard to operate our equipment at the right level of utilization all the time. We also have a highly skilled workforce. And it takes a lot of time and effort to train and develop that work force. When you have downturns, the last thing you want to do is lose that group of good workers. We’ve hired about 200 workers in the last three years. … You’ve got young 20-somethings the whole way up to people that are in their 60s who have worked at this plant for 40-plus years.

We have a union work force here [represented by Steelworkers Local 593] and they’re excellent. They’re highly knowledgeable and I think they understand the challenges we have in the business. They actively work with us and they understand the changes. They’ve been very good at helping us identify new ways to work.

Q: Aurubis has invested a lot in the plant. Is that all for now, or is more on the way?

A: We have some big projects that are pending right now. Our parent company is solid right now. One of the reasons they’re solid is they try to make very deliberate investments. So we’re going through the process of evaluating what are all of our options, how do we best do it, what’s the most cost effective, do we have the market to support it? That’s a really time-consuming process to really do all the due diligence. But the track record has been that we’ve found opportunities and they’ve been willing to step up and make the investments.