The socialist market economy of China's 3 billion population has a
voracious appetite for scrap iron. But backhoes can fill only three
shipping containers a day.
Nathan Frankel, 31, president of Advanced Steel Recovery in Fontana came
up with a better way.
Frankel developed a conveyor-driven loading machine that has enabled
Advanced Steel Recovery to ship about 15,000 metric tons of scrap since
it began using the device in April.
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CariñO Casas / the Business Press
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Nathan Frankel, president of Advance Steel
Recovery in Fontana, with his FASTek system.
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To put that figure in perspective, Frankel's invention -- FASTek, or the
Frankel Advanced Shipping Technologies machine - can load a 21-ton
container every eight minutes. The traditional method, using a backhoe
to lift and drop the material, packed no more than three containers a
day.
FASTek can also load and ship the material without damaging the
containers.
Frankel won't explain how his $600,000 invention works, but he says his
patent attorneys have assured him FASTek is like no other loading
device. Frankel has a patent pending, and he expects a final ruling from
the U.S. Patent and Trademark Office this fall.
By taking advantage of low U.S.-to-China container rates, Frankel said
he could ship scrap to China for half the cost of traditional methods:
$10 to $25 a metric ton, versus about $40 at the break-bulk rate.
Several dealers in Hong Kong pay him roughly 30% more than he would make
either exporting his commercial scrap to any other country or selling it
to a domestic client.
Frankel could have chosen a radically different career path from the one
that might have him on the verge of revolutionizing the export business.
Frankel majored in music and business at Brandeis University in Waltham,
Mass., where he graduated in 1995.
"I really thought seriously about pursuing a career in music," he said
"Music is still a big part of my life, maybe as important as my
business. But I'm glad it's not something I do to put food on the table."
On July 18, Frankel spoke with The Business Press about FASTek and how
he got it started and what impact he believes his invention might have
on shipping goods overseas.
The Business Press: How sure are you that you will
get a patent for FASTek?
Nathan Frankel: We've been working on this for 18
months and my attorneys tell me there is nothing else like this anywhere
on the market. When they tell you that, in writing, they're putting
their own reputations on the line. There's a lot at stake for them, so
I'm pretty confident. But there are no guarantees.
BP: Where did you get the idea for FASTek?
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CariñO Casas / the Business Press
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Nathan Frankel invented a new way to load
scrap into containers.
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Nathan Frankel: Right after I started the business. We
were loading two or three containers a day. It was taking three to four
hours to fill a container, using a backhoe. I kept thinking 'this is
insane.' So I started thinking of other ways to load scrap iron, and I
sketched an idea on a napkin and took it to an engineering firm,
Metronic Solutions Inc. in New Mexico. They said it could be done and my
attorneys said they could get a patent for it. So we took it from there.
If we get the patent, we'll lease a machine to anyone who wants to use
it. But I can't say for how much.
BP: Most of your export business is to China. Why
were they able to offer you such an attractive deal?
Frankel: They have much cheaper labor costs. The market
varies all of the time, but the Chinese pay me anywhere from $170 to
$220 a ton, which is 20% to 30% more than most domestic buyers will pay
me. And everything I read says the market is expected to stay like it is
for the next seven to 10 years. There is also such a huge trade deficit
between the two countries - practically everything in your house says
"Made in China" on it - that we've created a pretty efficient system. We
ship things in containers that would be shipped back to China empty.
BP: How do you see your future? Are you going to
sell or lease FASTek?
Frankel: I want to empower all of the other independent
scrap iron dealers out there. We're able to bypass the ports and sell
directly to Chinese. So we're going to lease [FASTek] to anyone who
wants to use it.
BP: Will FASTek load products besides scrap iron?
Frankel: Absolutely. It will work with anything that is
bulk-loaded.
BP: How did you get into the scrap iron business?
Frankel: My dad Leo, who died two years ago, owned an
auto salvage business in Fontana, and a scrap iron business like I have
now. They were about two miles from where we are now. I worked in his
business for about three years.
BP: Do you still play the violin?
Frankel: All the time. I play mostly charity shows, to
raise money for scholarships and things like that. My dad played the
violin and he signed me up for lessons when I was six. I didn't like it,
and at one point I smashed the violin against the wall. Fortunately it
wasn't an expensive model. He signed me up again when I was eight and I
got into it.
BP: Where do you believe your business will be in
five years?
Frankel: Maybe we'll be bought out.
I'm not for sale, but the fact is we're one of the few independent
scrap-iron dealers left in California.
