Not a Paper Tiger

April 1, 2000

15 Min Read
Not a Paper Tiger


Several years ago, The Peltz Group decided to focus on its core business - buying waste paper and selling it to paper mills and making the investments necessary to grow, succeed and excel in a dynamic industry. That strategy has paid off in a big way for the Milwaukee-based company, which has grown to become one of the country's largest independent paper recyclers.

The Peltz Group, a family owned company with the classic Midwestern values of hard work and honesty, knows the importance of credibility and integrity in a volatile, international industry. The company also knows that its greatest asset is its relationships with customers. Those relationships mean that The Peltz Group can move paper from almost anywhere in the country to mills throughout the United States, Canada, Hong Kong, China, Mexico, Korea, the Philippines and more.

The Peltz Group has been in the recycling industry since 1953 when brothers Nathan Pelz and Joseph Peltz [see "All in the Family" on page 222] started the company. The founders' sons, cousins Harry Pelz and Arnie Peltz, together with partner Shawn Lavin, now own the company.

"We've got a dedicated team of employees, and we work hard to maintain our good reputation," says Harry Pelz, partner and company president.

Arnie Peltz, partner and company vice president, adds, "The waste industry has seen tremendous change in management and attitude through acquisitions. We've been here throughout it all, and that consistency means a lot to our customers."

The paper recycling industry is a tough business where prices can fluctuate wildly from month to month. Some of Peltz's competitors are huge, and customers - both the paper mills that buy the waste paper and those that generate it - are consolidating.

A Growth Strategy Still, The Peltz Group's long-term strategy keeps it growing. The company has approximately 350 employees in six states, serves markets from Canada to the Pacific Rim and handles more than 145,000 tons of waste paper per month.

The company has six facilities in Wisconsin and Ohio. It also brokers paper for hundreds of customers worldwide, finding the buyers for all paper grades under any market conditions. And the company operates brokerage offices in Toronto, Chicago, Atlanta, Milwaukee and Los Angeles.

"When the paper markets are good, it would be easy to offer our paper to the highest bidder, but that's not a smart approach," says Brian Fielkow, the company's chief operating officer. "You need to remember the people who stuck with you in a bad market. That's our approach, and it's that long-term view that really has established this company."

"One of our greatest strengths is providing waste haulers with reliable, dependable service, guaranteed movement of their waste paper and better prices, even in a down market," says Lavin, partner and vice president.

The Peltz Group guarantees its customers 100 percent movement of their waste paper 100 percent of the time, no matter the market. "That's an important commitment in this industry," says Harry Pelz. "We've stayed strong through a lot of markets when others have failed. We make the commitment to our customers, and if the markets are bad, the papers are not going to sit on our customers' floor. They're going to sit on our floor."

The Peltz Group's confidence comes from its knowledge and understanding of the markets and its strong relationships with paper mills all over the world, according to Lavin. "We've been creative in our marketing approaches, and we've passed the benefits on to waste haulers and other customers."

The Peltz Group also offers brokerage and marketing services, according to Lavin. "We work with waste haulers who collect, sort, process and bale their scrap paper, and then use us to market it," Lavin says.

While the company also works with a few other commodities such as aluminum, plastics, and printers' metal plates, its niche and passion are in waste paper.

Technology Pays Off The Peltz Group invests in technology to process and market paper more efficiently. "Several years ago, we recognized that mixed grade paper is here to stay," Harry Pelz says.

"We decided to invest in technology and equipment that would allow us to get more out of mixed grades."

The A-1 Recycling Center, the company's main plant in Milwaukee, is a good example of that philosophy. In the mid 1990s, A-1 was a 50,000-square-foot facility that handled about 6,000 tons of paper per month and shied away from mixed grades. Today, the facility is twice that size, processes more than 12,000 tons per month and handles mixed grades.

"Mixed grades were not a focus for us five years ago," Fielkow explains. "In order to make any money, you have to add labor, and that can be costly. But we looked at the industry trends, and this renovation made sense."

The $2.5 million Milwaukee renovation included expanding and enclosing the processing plant to make it more accessible to trucks, and installing a new baling system and automated cardboard sorter. The baling system can produce up to 30 bales of paper per hour, and the automated sorter separates cardboard from the waste paper stream.

The new equipment quickly boosted efficiency and increased the amount of paper processed at the facility. It also allows the company to upgrade the paper, which equals better prices.

The company works hard to create long-term relationships. For example, a hauler approached the Peltz group about buying the paper recycling facility because the facility wasn't cost efficient for him. "That wasn't his focus," says Fielkow, who spearheaded the agreement. "We had worked with these grades of fiber in other markets, so the waste hauler knew we could run the facility at a lower cost and get better prices for its paper."

The Peltz Group purchased the business, but the hauler still owns the land and the building. As part of the deal, the hauler brings all of its waste paper in the region to the facility and uses the plant as a trucking base for its waste collection services.

"The plant is an excellent example of our strategy and our philosophy at work," Fielkow says. "It's a key market for us, and it was a smart move for both parties. They lowered their costs, and we grew strategically. We're always looking for opportunities like this because they make good sense for us."

A Diverse Customer Base The company has built a long and diverse customer list, serving just about anyone who generates or collects waste paper - even other recycling companies. Waste Management, Superior Services Inc., Allied/BFI and Republic Services are among the Peltz Group's waste-hauler clients.

Printers are another major customer base that generate scrap paper, much of it highly attractive grades, if sorted properly. Clients include Perry Judds, Quad Graphics, World Color, Golden Books and Quebecor/World Color.

The Peltz Group also serves general offices, box shops, grocery store chains, industry, hospitals and smaller paper recyclers. Customers include companies as diverse as The Home Depot, General Motors, Jewel/Osco, Kmart and Target.

While each customer is different, there are a couple of typical ways the relationships work. For example, a waste hauler might truck its waste paper directly to a Peltz plant for processing before the paper is shipped to a mill. Or, if the waste hauler processes its own waste paper, the company's brokerage division may handle the marketing and arrange for the baled paper to be shipped directly to a mill.

The Peltz Group has helped its customers finance and install their own sorting, collection and baling systems. In some cases, the company might keep the customer supplied with empty trailers and ship the paper directly to the mills when the trailers are full. In other cases, the company picks up loose paper from its customers, brings it to a facility for processing and ships it from there.

The common thread is the dedication to customer service. "We structure our contracts around objective pricing," Fielkow says. "We tie it to a measure that can be verified, a publication or a purchase order."

International Paper Brokers Arnie Peltz says he started the brokerage division 25 years ago as a way of delineating what was coming through the plants from what was being brokered and shipped directly to mills. It has really taken off since then.

Since 1997, the company has added regional sales offices in Toronto, Los Angeles and Atlanta to better serve its brokerage customers all over the world. The Los Angeles office serves the western states, and works with mills in North America, Asia and Latin America. The Atlanta office serves waste paper generators in the southeastern states and concentrates on mills in Central and South America. The Toronto office focuses on generators and mills in Canada.

"All of these are key markets for us," Arnie Peltz says. "Each office has been a step in our strategic plan to better serve our existing customers, enter new markets and develop new business."

Maintaining existing relationships with mills such as Ft. James, Georgia Pacific, International Paper and Rock Tenn., and developing new relationships is important to all the divisions. "Our relationships with the paper mills are a key focus of our marketing team," Arnie Peltz says.

Arnie Peltz also talks about alliances the company has formed with a variety of independent haulers across the country. In exchange for additional tonnage, Peltz offers low-cost financing for more efficient equipment; production, operational and financial expertise; and better, national marketing opportunities.

Long-term acquisitions also are a part of The Peltz Group's plan. In 1999, the company acquired two Cleveland paper recyclers - Ohio Waste and Recycling Options Ltd.- and merged them into one facility, The Peltz Group of Ohio.

Fielkow, a former attorney, was instrumental in both Ohio acquisitions. He explains that the Cleveland market is key for its customers, both paper generators and mills in Canada, the eastern United States and the Midwest.

"Our Cleveland facility will help boost our Toronto sales office, for example, simply because it costs less to ship paper to Canada from Cleveland," Fielkow says. "Cleveland is an important market for us overall."

The firm's most recent acquisition took place in January 2000, when it acquired Security Shredding Inc., a Milwaukee-based document destruction company. This acquisition will allow the Peltz Group to offer onsite document destruction services.

"Wisconsin recently passed a law requiring certain companies to dispose of documents with personal information by shredding, modifying or erasing them," Fielkow says. "This acquisition is a key strategic move as we expect this aspect of our business to increase as this law goes into effect."

Fielkow also believes that bigger is not always better. "Growth for growth's sake has no long-term value. For us, growth has to be a means to an end. We need to know how the combined company will benefit before we look at a merger or acquisition. An acquisition strategy is no substitute for sustained internal growth. I am careful to not let deals distract us from our bread and butter account development program," he says.

"We also succeed in our acquisition strategy, in part, because we recognize the local nature of our business," Fielkow explains. "Many companies, small and large, revolve around the relationships of a few key people. The importance of these relationships often has been overlooked, but we know that a smart acquisition strategy can overcome this problem."

Futurescope The ups and downs are what make it interesting for company leaders. "When I joined The Peltz Group five years ago," says Jon Vosburg, the company's chief financial officer, "I asked about markets and the market cycles. At that time, a market cycle took five to seven years to go from top to the bottom back to the top. In the time that I've been here, we've probably gone through three or four market cycles. And for most every commodity in our database, the prices are changing every 30 days. If the markets are moving really fast, those prices change every 15 days. Its an exciting business to be in."

The company always is looking down the road and evaluating the next trend or the next opportunity. Internally, the next generation of Peltzes and Pelzes are working for the company and helping it grow and succeed alongside other non-family managers and employees.

"The short-term health of the industry looks good," Lavin says. "But it's a cyclical business, so the long-term health is unknown. It's also a mature market. Mills have a handle on being profitable and on identifying their end-product revenue. They're doing a better job of managing their business."

And generators, some who were forced into recycling, have recognized that it was catastrophic for their business and are getting out. "We're always watching things closely to see what the effect will be for the industry and us," Lavin says.

Arnie Peltz sees foreign markets creating the best opportunity to market waste paper. "That's where the demand will be."

Despite venturing into foreign markets, the company will continue to look for opportunities at home, Vosburg says. "We're always looking at acquisition candidates. We see strategic growth, like what we did in Cleveland, as a great opportunity. And, we're very focused on our existing account base. Our competitive edge is based on providing great service to our customers, and we're not going to take our eye off the ball."

Harry Pelz, president and partner: Harry is the son of Nathan Pelz, one of the company's founders. Harry handles operations and oversees the plants. He has 30 years of experience in the paper recycling industry and joined his father's company in 1970. Harry is a graduate of the University of Wisconsin-Madison with a degree in history.

Arnie Peltz, vice president and partner: Arnie is Harry's cousin and the son of Joseph Peltz, one of the company's founders. Arnie shares responsibility for the brokerage division with Shawn Lavin. He has 30 years of experience in the paper recycling industry and joined the family company in 1969. Arnie is also a graduate of the University of Wisconsin-Madison with a degree in history.

Shawn Lavin, vice president and partner: Shawn joined The Peltz Group in 1983, after having worked with Bell Fiber and Container Corp. of America. Lavin shares responsibility for the brokerage division with Arnie Peltz and is responsible for new business development. He has 26 years of experience in the industry and is a graduate of Lewis College.

Brian Fielkow, chief operating officer: Brian has been with The Peltz Group since 1995, when he joined the company from Godfrey & Kahn, a Milwaukee-based law firm. There he specialized in mergers and acquisitions, financing, joint ventures and contracts. Brian spends a significant amount of time managing the company's internal business development and acquisition programs. He also shares responsibility for administration and plant operations. He graduated Phi Beta Kappa from the University of Wisconsin-Madison and earned his law degree from Northwestern University of Law in 1989.

Jon Vosburg, chief financial officer: Vosburg joined The Peltz Group in 1994 from Western Publishing Co., Inc. where he served as vice president-corporate controller. He also spent 10 years with Deloitte & Touche, and earned his accounting degree from the University of Wisconsin-Madison. Jon is responsible for finance, accounting, administration and customer service.

The Peltz Group, with corporate headquarters in Milwaukee, succeeds because of its reach. With six paper recycling plants and five sales offices, The Peltz Group serves customers across the country and all over the world.

Sales Offices Milwaukee



Los Angeles



Paper Recycling Plants Milwaukee A-1 Recycling Center 100,000 square feet

Truck and rail services

Confidential document destruction services

12,000+ tons of paper processed per month

Menasha, Wis., Paper Valley Recycling Center 85,000 square feet

Truck and rail services

Confidential document destruction services

7,000+ tons per month

Madison, Wis., Madison Recycling Center 50,000 square feet

Truck and rail services

Confidential document destruction services

5,000+ tons per month

Janesville, Wis., Janesville Recycling Center 40,000 square feet

Truck and rail services

4,000+ tons per month

Superior, Wis., Superior Recycling Center 20,000 square feet

Confidential document destruction services

2,000+ tons per month

Cleveland, The Peltz Group of Ohio 100,000 square feet

Truck and rail services

Confidential document destruction services

5,000+ tons per month

Three brothers, three last names. Brothers Joseph Peltz and Nathan Pelz, who founded The Peltz Group in 1953, and Leo Pelc each arrived from Eastern Europe at different times. Having survived the Holocaust, the brothers took different paths to the United States.

Nathan arrived first. He came over in 1947 with his wife and oldest son, Harry, who now is president of The Peltz Group, and his last name was spelled Pelz. Older brother Joseph arrived in 1949 and the name was spelled Peltz. Leo Pelc, who didn't arrive in the United States until the 1970s, retained the original Polish spelling of the family's surname.

Milwaukee A-1 Recycling Center * Machinex Star Screen corrugated cardboard screen

* Lindemann 1127 Ram II auto-tie paper baler

* American 10-847 horizontal auto-tie paper baler

* Selco HLO 519 AR75 horizontal auto-tie paper baler

* International Baling Press aluminum can baler

* 12-station custom sorting line

* Williams Hammermill shredder. Seven tons per hour

* Cumberland plastics grinder

Menasha, Wis. Paper Valley Recycling Center * Harris HRBA200 2-RAM auto-tie paper baler

* American 5029 HAT 975 horizontal auto-tie paper baler

* Williams Hammermill shredder. Four to five tons per hour

* Three roll cutters

Madison, Wis. Madison Recycling Center * Harris HRB 10-A 22RAM auto-tie paper baler

* American 12-847 horizontal auto-tie paper baler

* Jeffrey shredder. Three tons per hour

* CP Manufacturing aluminum can densifier

Janesville, Wis. Janesville Recycling Center * Harris HRBSWC3 2-RAM auto-tie paper baler

* Eight-station custom sorting line

* Three rapid granulator plastics grinders

* American Plastic-bottle baler

* Mosley aluminum can densifier

* Strip shredder

* Roll cutter

Superior, Wis. Superior Recycling Center * Excel 2 RAM auto-tie paper baler

* Allegheny strip shredder

* Six-station custom sorting line for co-mingled containers

* Six-station custom sorting line for paper

* 72-inch vertical steel can baler

* CP Manufacturing aluminum can densifier

* Excel EX 60 II plastics baler

Cleveland, The Peltz Group of Ohio * Two American 8043 horizontal auto-tie paper balers

* American 12-847 horizontal auto-tie paper baler

* Williams Hammermill shredder. Four to five tons per hour

* Allegheny strip shredder

Trucks Mostly Mack fleet with 55 power units (single axle and tandem axle tractors) and 400 trailers, front and rear load packer units, roll-offs and straight trucks. Also, 10 specialized drop-deck flatbed trailer units mounted with HIAB cranes.

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