AMI Trading: Street Smart
Corporate Spotlight
Written by John Zorabedian   
Thursday, 01 May 2008
AMI Trading: Street Smart - American Executive - RedCoat Publishing
Martin Netsky was dealing scrap off a truck 45 years ago. In today’s hot scrap-metal markets, he’s worth his weight in gold.
Premier Business Partners:

Howard S. Reeder
Soco Software Solutions
As an ambitious young man fresh out of the prestigious University of Pennsylvania Wharton School, Martin Netsky discovered an opportunity to make good money in the scrap metal trade in Puerto Rico, where for 13 years he operated a scrap yard. That was 45 years ago. Now Netsky’s company, AMI Trading, generates $500 million in annual revenues as a broker between scrap buyers and sellers on a global scale.

AMI Trading: Street Smart - American Executive - RedCoat Publishing
Martin Netsky, founder
Today’s global metals market is driven by massive demand from China for the steel, copper, and other metals it needs to keep its economy pumping out products at an astonishing clip. And Netsky said Chinese buyers, with the purchasing power to dictate prices, know how to throw their weight around and squeeze out the middlemen by buying direct. To thrive in this middle-space requires some financial wizardry.

“Through the Internet, the bridge from the origin of the scrap and where it ends up has been shortened, and brokers have been eliminated over the years,” Netsky said. “The Chinese will have no problem going into some guy’s yard in Panama and buying direct. Because of that situation we have to offer better deals such as financing, pricing contracts, giving them an option when they can price.”

Through these other vehicles, AMI Trading manages to keep its trading tonnage up around 10,000 tons per month. And by keeping the company’s volume high, and the reliability and name recognition of his company out front, Netsky has won long-standing contracts to supply many buyers over the years.

In the old days, however, Netsky was in the grittier, dirtier side of the business—sorting and packaging scrap by type and grade, cleaning and segregating the materials to meet industry specifications. After a dozen years at this level of the business, Netsky said, he made a conscious decision to move up to the same level as the big dealers.

“When I started, it was almost a half-century ago. I started in a garage on a truck. I had to prove to these people that I had the material and I had the delivery,” Netsky said. “I had a physical yard for the first 13 years of my business, but I would take trips to New York and London and see the big people and how they operated. I realized it’s easier to move paper than it is scrap. I evolved from a dealer to a broker. ”

Metal heavies
Having moved up the chain from dealer to broker decades ago, Netsky commands respect in the industry. He has made friends and partners throughout the world. AMI Trading has offices in Athens, where the company can access the European and Mediterranean markets; and in Monterrey, Mexico for buying scrap from throughout Latin America. Netsky’s base of operations is in Miami, where he lives most of the year.

To keep up with the fluctuating currencies and commodities markets, Netsky no longer needs to travel the globe. His younger business partners do that. Netsky keeps abreast of the markets like most modern traders, through the Internet. But reading between the numbers and news stories takes a sharp mind, and Netsky’s business and financial acumen might only be matched by his toughness.

“You can’t wake up in the morning and think it’s going to happen by attrition. I have to be attuned with politics, the economy, the world,” Netsky said. “I have to really know what’s going on to run the business effectively.” These days, that means knowing how to deal with China.

The Chinese market is two-tiered, with some speculating on the US dollar, which has lost value against the Chinese yuan, while others speculate on the value of the metals. “The exchange between their currency and ours allows people to get in between that wouldn’t normally be in this business,” Netsky said.

Since the normalization of trade with China, its entrance into world markets has created a stir in every aspect of the global economy. The trade in materials such as scrap metal is an area where the Chinese excel—and not by playing nice with suppliers and brokers, Netsky said. “When the Chinese came in they were real rough,” he said. “They had a sense of the business, so they might have been rough but sharp at the same time. After a while they became such a dominant force that they knew they had the power to control markets.”

Whether the metal is copper, nickel, or molybdenum (a crucial metal for making steel), the Chinese buyers seem to know where the price is heading and how to get a good deal. And sometimes, Netsky gets burned. “When you do a half-a-billion-dollar business a year, nobody gets unscathed,” he said. “If you’re out there, you’re going to get screwed once in a while. It’s part of the game. You have to be able to swing with it.”

Netsky keeps his eyes open for opportunities wherever they arise, whether they be other commodities, real estate deals, or whatever business blows his way. The wealth of opportunities for making money in today’s international markets reminds Netsky of his start in the business as a 21-year-old back in 1963.

He described a conversation he had with his father, who helped him found AMI Trading, about a scrap dealer in Puerto Rico named Ishmael. Netsky went to see this man to offer himself up as a business partner. The older man refused. “He pulled out a $50 bill and said, ‘I don’t need any partners,’” Netsky said. “I said, ‘Okay, so would you mind if I went around the island?’ He said, ‘Do what you have to.’ Well that was a bad decision by Ishmael. I found out in a few days he had a monopoly going with another guy in Puerto Rico. I broke the monopoly within a few months and had the whole island within a year. That’s the story.”
 
< Previous Story   Next Story >