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3/28/2016 forward.msci.org/backtobasic http://forward.msci.org/backtobasic 1/6 Search Forward HOME MSCI.org SUBCRIPTIONS ADVERTISE FEEDBACK ARCHIVES Home > Features > Back to Basic Back to Basic Todd Fogel, owner of Basic Metals Inc., on building lasting relationships and clear communications Tags: Service Center Best Practices Business Strategy Profile by Kelly Caldwell Illustration by: Morgan Anderson Posted: 11/3/2014 12:00:00 AM There’s more to the first half of Basic Metals Inc.’s name than you might expect. The Germantown, Wisconsin-based aluminum service center derives its appellation from a clever acronym cooked up by owner Todd Fogel’s father. “When my dad came up with the name Basic, it actually was meant to stand for brass, aluminum, stainless, iron and copper,” Fogel says. “He had some dreams of being a full-service distributor and offering all different metals. But all these years we’ve only focused on aluminum. Maybe someday we’ll expand to other metals.” But the aluminum business has been good to Fogel. He joined his father in 1983 as the third employee at Basic Metals, which had been incorporated in 1980. In 1985, he and his father became owners. In 1999, Fogel purchased it from his father to become Basic Metals’ sole owner. Since then, the company has expanded to 27 employees, and from 6,000 square feet of Check out the new digital edition of Forward! Subscribe Now 3 0

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Back to BasicTodd Fogel, owner of Basic Metals Inc., on building lastingrelationships and clear communications

Tags: Service Center Best Practices Business Strategy Profile

by Kelly Caldwell Illustration by: Morgan Anderson Posted: 11/3/2014 12:00:00 AM

There’s more to the first half of Basic Metals Inc.’s name than you mightexpect. The Germantown, Wisconsin-based aluminum service center derivesits appellation from a clever acronym cooked up by owner Todd Fogel’sfather. “When my dad came up with the name Basic, it actually was meant tostand for brass, aluminum, stainless, iron and copper,” Fogel says. “He hadsome dreams of being a full-service distributor and offering all differentmetals. But all these years we’ve only focused on aluminum. Maybesomeday we’ll expand to other metals.”

But the aluminum business has been good to Fogel. He joined his father in1983 as the third employee at Basic Metals, which had been incorporated in1980. In 1985, he and his father became owners. In 1999, Fogel purchased itfrom his father to become Basic Metals’ sole owner. Since then, thecompany has expanded to 27 employees, and from 6,000 square feet of

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    “It’s still about knocking on doors andmeeting people face to face.”

space to 80,000, with warehouses in Phoenix and Memphis.

Yet for Fogel, a reassuring constancy has been one hallmark of his business.Basic Metals has been largely unaffected by the industry’s consolidation.Despite the recession, it hung on to many of its customers. His competitors,Fogel says, are the same familiar faces. Fogel talked with Forward aboutbuilding lasting relationships with customers and employees, and why hefinds the metals industry so rewarding.

How has Basic Metals evolved since 1983?  When I joined, it was my father, a slitter operator and myself. I would say Iwas kind of a jack-of-all-trades. I was the inside salesperson, bookkeeper,fork truck driver, slitter helper, janitor. I would load the trucks and whateverelse needed to be done. My dad was pretty much our salesman.

Today, we’re still a small company. But I remember getting excited the firsttime we got a programmable typewriter back in the mid-’80s. And I thought,“Wow, I don’t have to type in all these addresses every time I fill out an ordernow.” And obviously today the technology is tremendous. I also rememberthe day that—and this will date me a little bit—a friend of mine from highschool came in, tried selling me a fax machine, and I said, “We’ll never usethat in this industry.” [Laughs] And we don’t use faxes anymore, so I guessit’s gone full circle.

So the technology has changed, but the relationships haven’t. A lot of mycustomers I’ve been dealing with my entire career. And I developed a lot ofrelationships with different customers, personal and professional. And Iguess that’s why we’ve been successful and why we’re still in business todayand doing pretty well.

Has the competitive landscape changed a lot? Not really. It’s the same faces. It’s different names, with the mergers andacquisitions, but we see the same players all the time. The ownership of thecompanies has changed, but for the most part, it’s kind of a fraternalorganization, this whole industry.

But do you feel pressure in light of all the mergers and acquisitions? The thing about a company like Reliance is that when they do buy mycompetitors—and they bought a couple of companies nearby, and a lot ofmy competition—they leave them alone. So really, we don’t see any morepressure. Here in the Midwest at least, like I said, it’s just different

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ownership. Probably one of the only new competitors we’ve had in the lastfive years is Main Steel, an Elk Grove, Illinois-based steel service center thatdeals in stainless, aluminum and carbon steel, when it went from just doingtoll processing to becoming a distributor and selling metal. We don’t run intothem too often in aluminum.

What about technological changes? There’s more electronic interchange in processing orders, getting paid, andreceiving orders and releases from customers. But the programs we use forthat are specific to each customer in most cases—we use whatever platformthey need. I’ve always considered Basic Metals sort of a job shop. Whetherwe’re processing aluminum, selling aluminum or processing steel forsomebody, we don’t want to have any one particular way of doing anything.I’ve always said we rely on our customers to tell us what they want, and wetry to respond to their needs.

Your website boasts quality and timeliness. What factors go intoensuring both? It’s our ability to communicate as a smaller company. Internally, we have agreat system worked out. We have a production meeting every morning,and that includes everybody—our plant manager, our production controller,our sales team, myself, my CFO. It’s easy for us to get together in a group ofsix or eight people, and we go through all the orders we have and gothrough our trucking schedule to make sure we’re getting everything out ontime. Our business is small enough and flexible enough that we can makechanges on the fly. It gets a little frustrating sometimes for my plantmanager and the guys out in my shop, because things will change, eventhroughout the day. But I guess that’s my sales pitch to new customers: Wehave the flexibility to make almost instantaneous changes.           

It’s the same with the quality issue. We don’t have any pre-existing qualitystandards here. We rely on getting that information from our customers andmaking sure that when we take an order from a new customer, we get allthe specs and ask a lot of questions. And then we try to just live up toexpectations.

I’ve always lived by the motto: Tell people what we can do, and make surewe do what we tell them we can do. And I think that’s why we’ve beensuccessful in business. We know we can’t do everything for everybody, butwhat we do do, I think we’re good at.

What do you see as the future of the company? Do you see growth?

Right now we have a lot of opportunity for growth. Our customer base isextremely broad. We sell to industries such as housewares, construction,appliance, electrical, stamping houses and fabricators. Our growth strategyhas always been to reinvest our profits into equipment and inventory. After2008, we decided to hold off on any capital expenditures. But we’re probably

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getting ready now to look atexpanding. Our circle andsheet business is currentlygrowing the fastest, and nowwe’re looking at newequipment to improve bothour capacity and quality ofboth, as well as our slit coil.We’re very much a nicheplayer—we know our corebusiness is flat-rolled

aluminum. But in the future, we might have opportunities to get into maybeheavier gauge aluminum, maybe extrusions.

What role do you think your son will play? Will he eventually take over? He just started with us in April of this year. I told him when he graduatedfrom college that he was welcome to come aboard when he was ready, butnot until he did something else for two years. So when he got out of schooltwo years ago, he found another job and worked selling insurance. Ishouldn’t say sell insurance—he always yells at me when I say that. [Laughs]He was a financial adviser.

A lot of people I’ve talked to in old, family-run businesses all recommendmaking your children go out and make a name for themselves. So I wantedto make sure he could bring something to the company as well, somethingthat gives it new energy.

But right now, I haven’t put a lot of thought into my exit strategy. I did a littlehomework this morning to prepare for this interview, and found out that theaverage age of employees in my office right now is 43. [Nationally, theaverage age of a high-skilled manufacturing worker is 56.] And that includesmy son, our youngest employee, who’s 23. I’m our second-oldest employeeat 54. Other than my CFO, I’m the old man around here. I also found that theaverage tenure in my office is 16 years. If I take my son out of the equation,the average is 19 years.

Why do you think that people stick around so long? I’d like to think it’s because of me, but…[laughs] I don’t know. I think we havesome great compensation plans here. We’ve had a very lucrative profit-sharing program in place since day one. Since 1985, we have alwayscontributed 15% of each employee’s income into a profit-sharing plan. I liketo think they stay because they’re happy and enjoy working here.

I would think that after so many years, people become more like familythan anything else. Yeah. I’ve been to almost every one of their weddings. I’ve been aroundwhen most of their kids were born. There’s a cohesive culture, I guess.Interestingly, I’ve found we’re more successful bringing in people who don’thave industry experience.

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“There are so many good people in this industry,on all sides—vendors, customers, even

competitors.”

 “That’s my sales pitch tonew customers: We  have the flexibility to

make almost instantaneous changes.”

Why do you think that is? Our culture here is unique. If people come in used to doing things the waythey were doing them at their former metal service center, it doesn’t alwaysmatch how we do things here. And it’s hard to get them into our mindset.

More and more metals and manufacturing companies are using socialmedia to form relationships with potential buyers. (See “ServiceCenters Get Social.”) Is there a reason you don’t have a Facebook pagefor Basic Metals? I think we’re an old industry. It’s still about knocking on doors and meetingpeople face to face. I come from the old school that way, and have mysalespeople out there and talking to people in person, or even on the phoneversus Facebook. Even though we do a lot of electronic communication now,I still think we want that personal contact. I’m more concerned about thecompany’s website. I think people are going to Google us more than they’regoing to look on Facebook for us. We actually just hired somebody to redoour website. Right now, we don’t spend any money on search engineoptimization to get our site to rank first in Google search, though it does.

We’re talking about taking orders through the new website. But when we getnew orders, we ask a lot of questions, so I would not be comfortable takingorders off the Internet without actually talking to a customer. In our industrythere are so many specifications. Obviously the aluminum itself, and the sizeand the tolerances. But then there’s the skid, how they want it packaged.

New aluminum alloys are emerging that could remake the industry.(See “Aluminum Steps Up.”) How are these affecting your business? Doyou change your processes to accommodate increasing demand forthem? It won’t affect our processes at all. We just do aluminum, so we don’t have toworry about contaminations or anything in our lines. And we’re not a first-tier supplier at all to the automotive industry. Maybe some of our fab shopsare doing a little bit of work for automotive, but we don’t deal directly with it.If this F-150 Ford pickup truck takes off, I think automotive is going to affectthe demand for aluminum a lot.

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make almost instantaneous changes.”

In something of a departure from metals, you own a bar in Milwaukee.How is that similar to running a metals business? There are no similarities. [Laughs] It’s probably more work and lessgratifying than the metals business. A lot more headaches. You know, themetals industry has been a good industry. It’s not sexy like the bar industry,but I’ve found it very rewarding over the years. I’ve met a lot of people, met alot of friends. There are so many good people in this industry, on all sides—vendors, customers, even competitors.

I enjoy the metals business and I enjoy our size. We really cater to ourcustomer—I always tell my customers, the buck stops with me. There’s nostockholders to report to, nobody up the ladder. If there’s an issue, if there’sa problem, it comes to my desk, and that’s it. I’ve been doing it a long time,and I’ve enjoyed it. It’s one of those things: Once it gets in your blood, itsticks with you.

Kelly Caldwell, a Chicago-based writer and editor, is managing editor ofForward.

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