No. 3 in NW100 | Schnitzer Steel benefits from global economy

Four years ago, Schnitzer Steel had less than $1 billion in sales, operated entirely in the Northwest and focused mainly on exporting processed scrap metal to just three countries: China, Japan and Thailand. Now the Portland company is four times as large, has three integrated businesses and operates coast to coast.

Today's Schnitzer is the product of a deliberate strategy to reposition the 103-year-old company for a new global economy. It buys junk cars and other scrap metal, pulls out the usable auto parts for resale, sorts and shreds the remainder and sells it around the world, as well as to its own steel minimill incongruously located in Oregon's wine country.

"What we saw coming was increased steel production in the developing world," said Tamara Lundgren, who helped devise and execute the strategic shift as Schnitzer's chief operating officer and ascended to the CEO's office last December.

Until mid-2008, near the end of its fiscal year, Schnitzer felt little impact from the global slowdown. "The whole world was demanding scrap," Lundgren said.

But steel demand plunged after the global financial system's near-meltdown. In the first half of fiscal 2009, Schnitzer's sales fell by nearly a third; the company posted a $41 million loss, versus a $60.6 million profit in the first half of fiscal 2008.

In response, the company has cut back production and laid off nearly 500 workers, or 13 percent of the full-time payroll (as well as 350 contract employees). However, Schnitzer also has used its relatively strong cash position -- its first-half operating cash flow was $161 million -- to make several acquisitions, including expanding the scrap-metal business into Puerto Rico.

"We are a growth company," Lundgren said. "While we've had to adjust our cost structure to meet demand, now is the time to get the offense back on the field, because we believe the fundamentals that support this business will continue."

Prime among those fundamental trends: Developing economies in Asia and the Middle East still want and have the money to pay for modern roads, bridges, homes and commercial buildings. As Lundgren said, "Infrastructure projects may get delayed or put on hold, but sooner or later they always get finished."