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Azcon Corporation

 


Address:
224 South Michigan Avenue
Chicago, Illinois 60604
U.S.A.

Telephone: (312) 362-0066
Fax: (312) 362-0094


Statistics:
Wholly Owned Division of Blue Tee Corporation
Incorporated: 1911 as Hyman-Michaels Company
Employees: 235
Sales: $180 million (1997 est.)
SICs: 5093 Scrap & Waste Materials; 5051 Metals Service Centers & Offices; 5088 Transportation Equipment & Supplies


Company History:

Azcon Corporation, one of Chicago's most successful and oldest firms, is widely recognized as part of the top-ten American leaders in the processing and brokering of ferrous scrap metal. In addition, Azcon Corporation purchases, collects, warehouses, and distributes a wide variety of rail and track accessories for the railroad industry throughout North America, including an extensive network of suppliers situated in Canada. Purchasing and selling railroad cars and their component parts is also one of the core activities of the company. Finally, at its facility in Gary, Indiana, the firm warehouses and distributes prime bar steel. With operating plants and facilities in Alton, Pennsylvania; Duluth, Minnesota; Sharpsburg, Pennsylvania; and New York City, the company is the largest of parent Blue Tee Corporation's operating divisions.

Early History

The earliest incarnation of Azcon can be traced back to the year 1863, when an ambitious and enterprising young man named Joseph Block came up with the idea to purchase and sell surplus rail. At the time, the United States was in the midst of civil war that had split the country into North and South. Both sides used the extensive railroad systems to transport troops and materials to strategic locations and battlefields. The northern Union forces benefitted through their control of the major routes of railroad track. The Confederate forces, although controlling less track, were also heavily dependent on the supply of food and war material provided by the railroad system.

Establishing his company in Cincinnati, Ohio, Block began to buy and sell surplus rail that had been manufactured by northern steel companies to replace track that had been destroyed during the course of the war. Cincinnati was the perfect location for such an enterprise since it was one of the rail system's crossroads between the northern and southern sections of the country. As the Union forces drove deeper into southern territory, and as the Confederacy and its troops began to falter, there was even more of a need for the Union to send larger amounts of supplies to its troops engaged in battle. Thus after the Union troops had destroyed railroad track that had been used by the Confederacy, they immediately laid new track for their own transportation needs. Block's business boomed, and by the end of the war in 1865 he saw the need for additional investment to maintain the growth of his company.

Block combined his assets with Emil Pollack and the two men established the Block and Pollack Iron Company, which focused on buying and selling the enormous quantities of surplus rail manufactured for the war effort. Block and Pollack had entered the marketplace at precisely the most opportune time, since the United States government was in the process of settling the expansive regions of the great plains to the Pacific Coast. In order to make this an easier task, the government encouraged railroad companies to lay as much track as possible through the plains and over the Rocky Mountains. Block and Pollack soon became rich selling rail track to the firms laying train routes across the country.

When Block and Pollack decided to relocate their company from Cincinnati to Chicago, they also changed its name to the Block, Pollack Company. The most important reason for the change in location had to do with the city of Chicago and its burgeoning reputation as the fastest growing city in the Midwest, and the center of the railroad system in the middle of the country. As the firm continued to grow two men, Joseph Hyman, who initially worked as rail purchaser, and Joseph Michaels, who started work as a night watchman, joined the Block, Pollack Company. These two individuals, both extremely ambitious and talented, would eventually become the owners of the firm.

By the early 1890s, the company and its revenues were growing so rapidly that Block decided to build a mill to reroll used rail track and make different kinds of steel products. Established and incorporated as Inland Steel Corporation, the firm was to develop into one of the largest and most successful steel mills in the history of the United States. This related venture was the forerunner of the company's involvement in the development of the steel industry, especially in the midwestern part of the nation.

The New Century

As the company continued to grow, Block and Pollack, who were still managing the firm during the early years of the new century, entered their first international business transaction by purchasing all of the scrap metal in Cuba that was a result of the fighting during the Spanish-American War. The collected scrap metal was soon reworked into other products, and before long the company had formed a new venture for itself. By 1911, however, Block and Pollack were no longer managing the company, and the former rail purchaser and night watchman, who had climbed the managerial ladder within the firm, decided to dissolve the Block, Pollack Company and rename it the Hyman-Michaels Company, in honor of themselves. Although members of the Block family retained their association with the company, they finally decided to withdraw their participation and focus on the management and development of Inland Steel.

In 1915, the Hyman-Michaels Company opened a scrap processing yard and facility in St. Louis. The opening of this facility, which involved the decision to expand the company's geographical base, was a major development. Years later, the plant was relocated across the Mississippi River to the city of Madison, Illinois, and still later to the facility's present location in Alton, Illinois. However, this was the first time the company had established a permanent facility or plant outside of its traditional headquarters in Chicago.

With antiquated manufacturing plants from the latter part of the 19th century eclipsed by modern technology, the automobile companies introducing new models each year to take the place of what would soon be relegated to the junk heap, and the railroads starting their long but slow period of decline, the company concentrated more and more on its scrap processing operations, and rapidly developed into one of the most prominent and successful firms within the scrap industry. By the time America entered World War I in 1917, the company was one of the leaders in scrap processing, and it was thought appropriate by many people within the industry that Joseph Michaels was chosen by the United States federal government to head the Scrap Division of America's War Industry Board.

The wartime economy was good to the Hyman-Michaels Company, and its scrap processing operations benefitted significantly by the ever-growing needs of the American Expeditionary Forces. As the war continued, more and more scrap metal was needed for armaments, thus company management decided to enter the rail dismantling business to meet this growing need. Automobiles were becoming a part of everyday life for Americans throughout the country, and roads were built to connect cities and towns that were previously served only by an extensive interurban railroad system. The electrified streetcar-like rail systems, with thousands of miles of track throughout the country, was obsolete almost overnight.

The company negotiated its first rail track dismantling contract in 1918 with the Woodstock and Sycamore Traction Company working out of Genoa, Illinois. Continuing its rail dismantling operations after World War I ended in 1919, and during the entire decade of the 1920s, the company ultimately removed approximately 20,000 miles of obsolete and abandoned rail track across the country. Much of this dismantled rail was, of course, processed in the company's own scrap yards. The Hymen-Michaels Company received a good deal of press when the firm's workmen removed the "golden spike" located at Promontory, Utah, and dismantled the track at the famous site of the first transcontinental railroad connection in the United States.

The Great Depression and World War II

The company's fortunes took a turn for the worse when the stock market crashed in the autumn of 1929. As the economy worsened, management was forced to lay off many of its employees in order to cut costs and maintain financial viability. When Franklin Delano Roosevelt was elected president in 1932, and then closed the nation's banks to reorganize them, the state of affairs for the company seemed to go from bad to worse. But one year later, a stroke of good luck turned the financial condition of the company around. Management had been working hard to organize a syndicate to keep its dismantling business afloat, and the syndicate was able to combine its resources and purchase approximately 16,000 old freight cars from the Southern Railway line for dismantling. This was the single largest transaction of its type ever made in the United States, and coming when it did saved not only the railroad from bankruptcy but also provided the money for the Hyman-Michaels Company to continue operations.

With America's entry into World War II on December 7, 1941, the company was assured of better days since its scrap metal processing business was in high demand. Once again, the company was at the forefront of the war effort and figured prominently in the U.S. government's strategy to turn scrap metal into usable material for the supply of its soldiers overseas. As the company grew, so did its revenues, and consequently more employees were hired to staff plant operations around the clock. By the end of the war, the company was one of the largest scrap metal processing firms within the United States. At the same time, the company's dismantling operations were also growing at a fast pace, and when the federal government looked for help to dismantle railroad or get rid of unused rail track left over from the war, it turned to the Hyman-Michaels Company.

The Postwar Era

With the cessation of hostilities in the European theatre in April 1945, company management was encouraged by the American occupation forces to establish a depot and later a facility in Belgium. Located in Brussels, the depot was used to liquidate the tons of railroad track that had been stockpiled by the United States and their European Allies for the invasion of the continent. This depot was the first company operation established outside the United States and brought an enormous amount of income to the firm. By the time the entire stockpile of unused rail had been relegated to scrap metal, the 1940s were drawing to an end, and the Hyman-Michaels Company had become one of the most financially successful scrap metal operations in the industry.

As Hyman-Michaels continued expanding its scrap metal processing and dismantling operations into the 1950s, a new company dedicated to dismantling steam locomotives was being established in Sharpsburg, Pennsylvania. In a small, former repair plant for trains and boxcars just outside of Pittsburgh, A. Leon Deitch opened the doors of The Deitch Company for business. Soon after its incorporation, The Deitch Company was asked to use its dismantling crews to tear down abandoned or antiquated steel mills throughout New Jersey and Pennsylvania. In 1952, the company garnered a reputation for innovation within the industry when it created an iron breaking operation under crane runways, the first time this kind of hoisting power had been used in scrap processing operations.

The Deitch Company's growing reputation was enhanced when management decided to install a hydraulic machine weighing 2,200 tons that was used as a scrap shear. The largest of its kind in the world, the new machine was located at the company's Sharpsburg plant. Within a few years, management invested more of its capital in two additional shears similar to the first machine in its capacity. Modern balers were also installed at the same facility to augment the large scrap shears. Since these machines were installed during the late 1950s and early 1960s, the company's plant has remained the largest scrap shearing operation in the United States.

Expansion and Consolidation: 1970s-80s

In 1962, as The Deitch Company was making its mark in the scrap metal processing industry, the Hyman-Michaels Company acquired the Duluth Iron and Metal Company located in Duluth, Minnesota. Management at Hyman-Michaels was correct in its strategy to purchase the operation in order to take advantage of a brand new scrap export opportunity, namely, the recently constructed St. Lawrence Seaway which connected the Great Lakes and the surrounding region to the Atlantic Ocean. The first major exporter of scrap metal from the Great Lakes region, Hyman-Michaels bought and operated a fleet of ships to transport the material. Throughout the remainder of the 1960s, the company's revenues steadily increased due to the scrap exports by way of the St. Lawrence Seaway.

Unfortunately, with the arrival of the 1970s, the Hyman-Michaels Company experienced hard times. The price for scrap metal dropped precipitously, and the company was forced to sell all of its ships traversing the Great Lakes and St. Lawrence Seaway. As a result of its financial difficulties, the company was acquired by Consolidated Gold Fields, the forerunner to Blue Tee Corporation, in 1976. To increase its market share, Consolidated Gold also purchased The Deitch Company in 1979. Although the two firms operated as separate businesses for a short while, in 1982 management at the Blue Tee Corporation merged Hyman-Michaels Company and The Deitch Company to create Azcon Corporation. As a division of Blue Tee Corporation, the merged companies streamlined their operations and forged ahead throughout the 1980s as one of the premier scrap metal firms in the country.

The 1990s and Beyond

By the early 1990s, Azcon Corporation had developed into one of the largest scrap metal processing firms in the nation. The company had operations in Alton, Chicago, Sharpsburg, Duluth, and New York, and also acted as a broker of ferrous scrap metal. At the same time, the company continued its history of dismantling operations by purchasing and selling railroad cars and their component parts. Rail and track accessories also became a significant business of the company in the United States and Canada.

By maintaining a strong position within the scrap metal processing industry, Azcon Corporation has been able to weather the price fluctuations of the market rather easily. Its leadership role as one of the nation's most prominent processors and brokers of ferrous scrap metal will not be challenged in the near future, and Blue Tee Corporation, its parent firm, is able to make capital investments for Azcon's improvement when necessary.





Further Reading:


"A Brief History of Azcon," Tee Times (company newsletter), Vol. III, No. 1, Spring 1995.
Burgert, Philip, and Michael Marley, "BIR Scrap Forecasts Upbeat, but Not Carefree," American Metal Market, October 22, 1997, p. 1.
Marley, Michael, "Demand Fuels Scrap," American Metal Market, November 11, 1997, p. 1.
------, "U.S. Ferrous Scrap Exports Slow," American Metal Market, November 25, 1997. p. 1.
Munzer, Michael, "Metal Service Centers Sensitive to Markets," American Metal Market, October 7, 1997, p. 14.
Petry, Corinna C., "Service Centers Set Torrid Shipping Pace; Statistics Indicate Record Year Brewing," American Metal Market, July 25, 1997, p. 1.
------, "Steel Center Shipments Hot," American Metal Market, December 1, 1997, p. 16.

Source: International Directory of Company Histories, Vol. 23. St. James Press, 1998.




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