Expanding Your Horizons—ISRI Convention & Exposition Coverage

May/June 1993 

"No matter what the economic times, it has become harder to manage in the scrap recycling industry," stated ReMA President Arnold Gachman at the Institute of Scrap Recycling Industries 's (ISRI) (Washington, D.C.) sixth annual convention, held mid-March in Orlando , Fla. The event's mission was clear, therefore: help association members address current and future business challenges. And the convention delivered, presenting a menu of more than 20 sessions on regulatory compliance, business and financial management, commodity markets, and other programs keeping with the convention theme—"Expanding Your Horizons."

Among the offerings was Gachman's candid, yet upbeat, annual report presentation that reviewed the economic, regulatory, and legislative problems confronting scrap recyclers. In particular, the threat of being named as potentially responsible parties under Superfund and the burden of meeting stringent compliance standards under local, states, and federal rules have been "a constant frustration and drain on each of us," said Gachman, also president of Gachman Metals & Recycling Co. (Fort Worth, Texas).

To receive fair treatment under these laws and others, scrap recyclers must have "ample resources available to nurture a plan of action for the benefit of the industry," he asserted. To that end, Gachman asked all recyclers to protect their "strength in numbers" by ensuring a strong ISRI. "No matter your firm's size," he remarked, "no one is able to achieve the results we seek alone."

Though the past 12 months were difficult for the scrap industry, ReMA made progress on several fronts, the association leader reported. For starters, ReMA began its strategic reorganization and held its first "town meetings." As a result, Gachman said, "there have been more representatives of this association involved in leadership positions, including committees, than at any time in the past. ReMA is now truly a governed body `of the people, by the people, and for the people.'" The association also published its landmark Environmental Operating Guidelines manual and made progress with its group storm water permit application, he noted.

In the legislative arena, Gachman continued, ReMA's government relations staff and many members worked to protect the industry's interests at all levels of government. "How many times did we have to say `Scrap is not waste, recycling is not disposal'?" he asked. "At first, few listened, but now we are far better positioned to address the legislative and regulatory hurdles that remain to make these statements change the unfair burden of definition."

The association's work is never finished, however, Gachman pointed out. After all, he said, the industry will continue to face imposing obstacles in the coming years, so ReMA and its members must remain flexible and "change with the times."

Business  Management  Takes  Center Stage

To protect their businesses from potential liabilities, today's recycling executives have had to become experts on a range of business and financial topics. Thus, the convention program featured sessions on environmental regulations, risk management, labor laws, and other management issues.

Achieving storm water compliance. On the environmental management front, storm water control is one of the most critical issues for scrap recyclers," said Daniel M. Steinway, a partner with Anderson, Kill, Olick & Oshinsky (Washington, D.C.). Under the Environmental Protection Agency's (EPA) National Pollutant Discharge Elimination System (NPDES), he explained, "facilities that engage in industrial activity" must receive one of three main types of NPDES permits: individual, general, or group. Steinway urged recyclers to avoid applying for individual permits because they require providing "a ton of data" to the EPA. General permits are less burdensome, he said, as are group permits, which allow companies in the same industry to apply for a permit together, as 1,100 ReMA members have done.

ISRI has been working with the EPA to negotiate best management practices (BMPs) for this group, basing its recommendations on the results of storm water samples taken at about 100 ReMA member facilities, noted David B. Kendziorski, a consultant with Woodward-Clyde Consultants (Milwaukee). This information has also been used to formulate ReMA's proposed model permit, which would require group members to prepare a storm water pollution prevention plan (SWPPP) within 180 days of receipt of the permit. An SWPPP would include forming an on-site pollution prevention team; outlining potential pollutant sources, such as drainage areas, exposed materials, and previous spills and leaks; and implementing pollution prevention practices encompassing the following.

• operational controls, such as drafting a corporate environmental policy, implementing an inbound material inspection program, and containing the hydraulic systems of stationery equipment;

• good housekeeping activities, such as sweeping paved areas and labeling drums containing chemicals and hazardous materials;

• preventive maintenance efforts, including conducting regular equipment inspections and cleanups, as well as keeping service checklists and maintenance logs for each piece of equipment;

• spill prevention and response procedures, such as storing drums containing liquids inside, installing overfill prevention devices on fuel pumps and tanks, and using dry absorbent material to clean spills; and

• employee training and education.

• In addition, an SWPPP team member would be required to conduct an annual site compliance evaluation, Kendziorski said.

Controlling workers' comp costs. Lower back pain—it's the problem behind about 25 percent of all workers' compensation costs in the United States . So what can employers do to prevent on-the-job back injuries? Unfortunately, very little, because lower back pain is a common cumulative ailment that frequently has no known cause, said Wendel E. Reece, southern region casualty specialist for CNA Insurance Cos. ( Casselberry , Fla. ). And even though lower back pain that makes itself known during work hours may have nothing to do with an employee's work duties, "the law says if it happens on your time, it's work-related," Reece noted.

Nevertheless, he said, following occupational injury management procedures such as those detailed here can help minimize the costs of workers' compensation claims arising from lower back pain and other injuries.

• Provide first aid treatment immediately following an injury and send the employee to a medical provider as required. Depending on state law, you may be able to choose the medical provider—and should choose one who will work with you to get the employee back to work in some capacity as soon as possible—but even if employer selection is not allowed, Reece said, you can still suggest an appropriate medical provider.

• Document all details related to the injury, including the date, time, and treatment, and notify the insurance carrier's claims office within 24 hours.

• Give the treating physician a description of the employee's job and its physical demands, a description of alternative job duties, and a copy of the injury report.

• Contact the injured employee within 24 hours to reassure the employee about his or her job status, assess the employee's understanding of the treatment he or she received, and answer any questions.

• Follow up with the physician within 24 hours of the initial treatment to review recommendations on additional treatment and specific job restrictions, if any. Discuss a specific timetable for the employee's return to work.

• Establish an injury management record separate from your company's personnel files. This record should contain a copy of the injury report, information on the initial treatment, the employee's job description, copies of medical bills, a log of all phone conversations, and copies of progress reports from the physician.

Another cost-related concern in workers' comp deals with fraudulent claims—the "blue-collar lotto"—which drain up to $20 billion a year from the insurance system, said Jay S. Williams, manager of the special investigations unit of CNA Insurance Cos. (Chicago). Despite this imposing figure, Williams emphasized that fraudulent claims represent a "very small percentage" of all claims filed annually.

Employees may file fraudulent claims for many reasons, Williams said, including their desire to get even with employers they dislike and their belief that "there's nothing wrong with it—it's no worse than cheating on your income tax." Though employers cannot know which employees might be apt to file fraudulent claims, they can educate all employees in a positive way about such claims. If the insurance carrier identifies a fraudulent claim, for instance, the employer can publicize the incident—without naming names—and discuss the problems and effects the claim has had on the company.

When an injury occurs, Williams advised, employers can reduce the likelihood of a fraudulent claim by asking employees who witnessed the incident to provide their accounts and showing concern for the employee's condition, volunteering to drive him or her to the doctor or grocery store. "People are less likely to lie if they know you're in their face," he said.

Labor on the rise. In the 1950s, more than half of the private-sector work force was unionized, but that figure has dropped to less than 13 percent today, and even where unions hold sway, they have little power to strike, said Gary S. Marx, a senior partner with Marx & Krame ( Washington , D.C. ). The Clinton administration, however, will seek to restore a "level playing field" for organized labor in keeping with the president's belief that strong unions are good for the economy because they increase productivity and wages, Marx said.

Tools Clinton may use to alter the management/labor power balance include filling two open seats on the National Labor Relations Board—as well as hundreds of judiciary posts—and promoting legislation to ease unionization elections, prevent hiring of permanent strike-replacement workers, and extend civil rights protection to homosexuals and those infected with HIV. The administration might even try to eliminate the ability of states to pass "right-to-work" laws, which guarantee open shops, said Marx.

With the balance of power certain to shift away from management, what can employers do? Marx suggested establishing arbitration agreements with employees for settling disputes out of court. This technique, he said, can limit damages and legal fees, cut "disruptive" discovery procedures, and quicken resolution of conflicts that can divide the workplace.

Employers can also discourage unionization in several ways. For starters, he advised, they can provide job security, promising not to fire without cause—while defining "cause" broadly to include such factors as a poor economy and insubordination. Why offer job security? For starters, Marx said, society no longer accepts "employment at will" and employers seldom fire employees without cause anyway. In addition, job security improves morale and removes a powerful tool of union organizers. Other techniques for reducing the potential for unionization include establishing a written employee grievance procedure and guidelines to prevent intimidation by supervisors, holding all-workplace meetings, and surveying employees about working conditions. Employers can also establish cash award programs, eliminate management/plant employee status distinctions, provide positive reinforcement, sponsor training, promote from within, and establish an employee stock ownership plan.

Touching on other major labor issues, Marx noted that the Family and Medical Leave Act of 1993 takes effect Aug. 5, requiring employers with 50 or more employees to allow employees to take up to 12 weeks of medical leave each year for the birth or adoption of a child or a serious illness contracted by the employee or a family member. TheClinton administration will also likely revise the Occupational Safety and Health Act and try to tie the minimum wage to inflation, Marx noted.

Seeking competitive insurance bids. Through a spirited multi-act play, ReMA's insurance trustees offered suggestions on how to negotiate in a competitive bid process to get the best deal on business insurance. The skit revolved around several executives of "Mickey Mouse Recycling Co." and three agents bidding to supply coverage to the firm. Between acts representing various stages in the bidding process, moderator William Foran, secretary of T.E. Brennan Co. ( Milwaukee ), a risk-management consulting firm, provided tips on what should be happening at each stage of the process.

• Setting up the bidding process. Don't go out for quotes every year or bidders will have little incentive to provide the best prices; instead do so every second or third year. Start the process early—a minimum of 90 days before your policy is set to expire—reserving ample time to negotiate and review proposals. The bidding document should be prepared by a qualified person and be complete and accurate, describing all coverage needed, as well as any unique needs. Always have current loss runs available and provide all bidders with the same, complete information. Make sure that those bidding are familiar with your specific operations, including problem areas.

• Selecting brokers/agents. To make sure those bidding have experience with the scrap industry, ask for and check references from scrap firms covered by the insurer. Limit the number of bidders—few insurers handle scrap clients anyway—and let the bidders know the process is competitive.

• Selecting carriers. Assign specific markets to each agent participating in the bidding process to avoid crossover among agents. Also consider using direct writers, who may be able to provide strong bids on some or all coverage.

• Negotiating the price. Remember that each carrier has two sets of numbers—one with and one without competition. Few underwriters will offer their best price first, so negotiate and ask for better numbers.

The program also noted that companies seeking objective insurance expertise can work with a consultant in choosing coverage and that some carriers will price some coverages better than others.

Making a smooth transition. For scrap executives who think it isn't important to have a plan to facilitate transitions in company leadership or ownership, think again. Such plans can prevent untold headaches and make corporate transitions smooth experiences rather than divisive, difficult events. Take the advice of two scrap presidents who had to navigate such transitions without the benefit of a plan: Barry Shapiro, president of National Metals Co. (Phoenix), and Tom Salome, president of M. Lipsitz & Co. Inc. (Waco, Texas).

Though Shapiro worked at his father's scrap plant throughout his youth, he never planned on taking over the firm, opting instead to pursue a law career. When his father died, however, Shapiro found himself 50-percent owner of the family scrap business with his brother, a doctor. After several futile attempts to find a non-family professional to run the company, Shapiro decided to close his law office and take the helm.

Looking back, Shapiro said he wishes the transition had been easier, and he is taking steps to make sure his son—who recently joined the firm—won't experience the same transition problems. Most important, he said, a good transition takes planning. "We spend a lot of time talking about where we want to go and how we're going to get there," he noted. In cooperation with his brother—who still owns half of the company—Shapiro has also established an insurance agreement that will allow the surviving brother to buy out the deceased brother's share.

Transition problems also exist when company ownership passes, in whole or in part, to a non-family member, as Tom Salome can attest. Salome began working for M. Lipsitz in 1957, learning the scrap business from the ground up. When Melvin Lipsitz Sr. died in 1969, ownership passed to his wife, but the firm's lenders expected Salome to run the company. At the time, the firm was in a "growth mode," Salome said, and some lenders wanted him to add his name to notes earmarked for expansion projects, but there was one problem—Salome didn't own any part of the business. As a result, he negotiated an agreement with the Lipsitz family in which he purchased a 50-percent share of the company, which the Lipsitzes can buy back upon Salome's death.

Metallic Spotlights

Optimistic predictions aside, 1992 was not the longed-for year of recovery for scrap metal markets. Yet, while economic and market problems persist in 1993, some metal executives that spoke at the convention's "commodity spotlights" said they continue to see encouraging signs for the long term.

Aluminum hurts. While aluminum's overall near-term prospects are bearish, "things are moving in the scrap industry," thanks to the growing worldwide popularity of aluminum beverage cans and recycling, said Kenneth D. Peterson Jr., chief executive officer and principal owner of Columbia Aluminum Corp. (Vancouver, Wash.), who asserted that "the scrap industry is a growth industry over the long term." He predicted a rise in transportation-related consumption, boosted by political change and the role aluminum plays in improving automobile fuel efficiency. In addition, though the packaging market "is saturated in the United States," Peterson said, "the rest of the world is on a track to mimic it," promising great potential. "If we could just get the Chinese to drink one can of Pepsi a week," he speculated, "the aluminum industry's problems would be over!"

On a more sober note, Peterson pointed to the continuing flood of aluminum being shipped West from the former Soviet republics, and noted that relief in the form of production cuts is unlikely.

Looking ahead to other potential market factors, Peterson criticized the "Btu tax" proposed by the Clinton administration, predicting it would add 2 to 2-½ cents per pound to the cost of producing aluminum—a cost not easily passed to consumers.

Craig E. Young, senior vice president of MG Futures Inc. (New York City), also criticized the president's energy and other tax proposals, calling them a futile attempt to recapture money that flowed abroad in the 1980s. Parts of the tax package, however, could eventually encourage investors to sell bonds and invest in aluminum—as well as other commodities—once a perceived recessionary impact is overcome, he said.

On the economy, Young explained that the world has been suffering from a "supply recession"—caused by excess production capacity—for the first time since before World War II. Unlike the more-common "demand recessions," simply jump-starting the economy is not a solution in this case, he said.

Both speakers addressed the impact of the end of the Cold War on the economy, with Peterson calling it a mixed blessing for aluminum in that cuts in military production have been set against a backdrop of increased "consumerization." Young, meanwhile, likened today's "postwar" adjustment to the world economy to that following World War II, observing that it usually takes six years to readjust from a military- to a consumer-oriented economy.

Reviewing the LME contract. Amidst the turmoil in the 1992 aluminum market, the London Metal Exchange (LME) (London) introduced its secondary aluminum alloy ingot contract, which many U.S. secondary smelters oppose, said Stuart Cohn, president of Behr Nonferrous Metals Inc. (Rockford, Ill.). "It has fulfilled our worst expectations," he asserted. "The contract is priced below market levels and has no relationship to our day-to-day costs. It is dysfunctional."

One major problem, he said, is that there are three sets of acceptable specifications for the fledgling contract: European, Japanese, and American. In addition, he noted, the LME has chosen U.S. warehouses close to suppliers rather than consumers.

The LME contract does have its supporters, however, such as Bud Salome, marketing manager for M. Lipsitz & Co. Inc., who offered examples of how recyclers can use the contract. Unlike Cohn, Salome had no problem with the LME contract's three sets of specifications. Years ago, he pointed out, there were three main grades of aluminum scrap—sheet, cast, and clips—whereas today, processors make about 10 secondary grades "and almost any segregated alloy can be sold to a mill or specialty market."

Despite the fact that 90 percent of recyclers are not using the contract, Salome stressed that it could be positive for the industry "because it could mean a more regular pricing of scrap by the secondary smelters, hopefully on a daily basis, similar to the way other scrap commodities, such as copper and brass, are priced." Because of the complexity of today's scrap market, he argued, recyclers "can use any tool that will help maximize profits and eliminate risks." On a more cautious note, however, he said, "Whether or not the LME alloy contract will be an efficient tool remains to be seen."

Copper's stable prospects. If Kalidas V. Madhavpeddi, vice president of Phelps Dodge Sales Corp. ( Phoenix ), is right, the world can expect "a relatively stable copper market in the decade ahead." World copper consumption will grow at an annual rate of about 2.1 percent, reaching 11 million metric tons (mt) by 2002, he predicted, while copper production will grow at an annual rate of 2.5 percent to 9.6 million mt. In the same period, he forecast that copper prices will range between 90 cents and $1.10 a pound.

In the near term, Madhavpeddi expects "a modest worldwide recovery" in 1993, with Western World copper consumption showing a slight increase of 1 percent. Under this scenario, U.S. consumption will rise but European demand will slip, while Chinese demand will match its 1992 offtake of 250,000 mt, he said. Meanwhile, Japan 's industrial output will decline about 0.4 percent in 1993—"well below 1991 levels"—and its high inventory may inhibit recovery, Madhavpeddi stated. Market-wise, the building wire and magnet wire markets will be down in 1993, while power cable and high performance wire and cable will trend upward, he said.

Also this year, Madhavpeddi forecasts "a modest increase in world production," which could balance inventories at the six-week level. While the so-called smelter bottleneck will be "effectively eliminated," he said, there may be some disruptions caused by the expiration of labor contracts.

Much of copper's future demand could lie in continued strong infrastructure requirements from developing countries, especially in the Pacific Rim. "There is potential for increased usage in former Eastern Bloc countries and China," Madhavpeddi noted. In particular, copper could see increased demand in housing, automotive, architectural, electronics, and communications applications.

The red metal will continue to face challenges in some of its major applications, however, potentially losing market share due to fiber optics, plastic tubing, aluminum radiators, and multiplexing, a technology that enables multiple messages to be sent simultaneously on one wire.

Hard times for high-temp alloys. The high-temperature aerospace alloy scrap industry—which handles diverse metals such as cobalt, nickel, titanium-based alloys, and alloying elements such as tungsten, columbium, chrome, vanadium, and molybdenum—will face difficult times in the coming years, warned Joseph R. Jiampietro, president of Aeromet Inc. (Utica, N.Y.).

One look at the annual jet engine building schedule tells the story, he noted: From 1991 to 1992, there was a 10-percent decline, followed by an 11-percent drop from 1992 to 1993. This year, projections point to an even larger decrease of 16 percent. As a result, Jiampietro reasoned, "the supply of scrap is going to exceed demand, causing the melters to pay less for their dismal needs." There will still be buyers for this material, he noted, pointing out that much of the aerospace-generated scrap will find its way to stainless steel or refining applications "as the demand for stainless scrap continues to exceed supply and the price of nickel improves."

The ascent of blended charges. Norman Cohn, president of Norco Alloys Corp. (Berkley, Mich.), discussed refinery operations and how markets developed for "blended charges." In its early stages, refinery material was "a hodgepodge that had nickel, chrome, a little bit of copper, molybdenum, cobalt, tungsten, and small amounts of tantalum and aluminum—whatever was not usable," Cohn said. At the time, U.S. melters refused to use this material because better scrap was plentiful and they "didn't have to use anything that had problems associated with it in a charge." In Europe and Asia , however, scrap was scarce, so mills began using large blends of scrap to make stainless steel.

U.S. mills have since come around to using blended charges, as Norco 's eight years of shipping such material can attest. It is a precise business, and firms that make blended charges must provide analyses to let the consumer know exactly what it is buying and to ensure that the material is trouble-free. "These prepackaged heats are designed to save time for the consumer," Cohn said. "But all time saved will disappear if the consumer has a problem with the heat."

Forming ferrous alliances. While U.S. steelmakers have made great strides in the past decade in terms of efficiency and product quality, the industry has been stuck in an era of "profitless excellence," said Joseph F. Toot Jr., president of both Timken Co. (Canton, Ohio) and the American Iron and Steel Institute (Washington, D.C.). To bring about a new era of "excellent profits," Toot called on steelmakers and ferrous scrap processors to improve their communications and form a new cooperative alliance. To forge this new partnership, steelmakers and processors "cannot be museums where old thinking and old achievements are preserved and where change is unwelcome," he said.

The key to improving the future will be for both groups to better understand each other's needs. Scrap processors, he suggested, would like steel consumers to change their habit of buying heavily at the beginning of each month, instead buying consistently throughout the month. Scrap processors would also like more flexibility in shipment terms, as well as more guidance and support in addressing environmental issues, Toot said. Steelmakers, meanwhile, would like their scrap suppliers to guarantee fewer surprises as to the content and timing of shipments, offer greater consistency of supply, open up communication lines, and provide higher quality scrap, he noted.

Looking for world-class suppliers. Steelmakers of all product types are indeed serious about scrap quality, as is evident in the numerous quality-supplier programs that many have implemented. One such company is Carpenter Technology Corp. (Reading, Pa.), a Fortune 500 specialty steel manufacturer. According to Ned E. Diefenderfer, director of purchasing, Carpenter looks for scrap suppliers who are dedicated to reducing costs on all fronts. "This may include the way they manage their processes, how they eliminate waste, and how they deal with matters that affect Carpenter's internal costs, such as packaging, handling, and paperwork," he explained.

When considering suppliers, Carpenter asks each company the following questions, Diefenderfer said: How will you help Carpenter manage its scrap inventory? What is your track record on meeting your commitments? How do you measure quality? What are your processes and are they under control? What is the accountability level of involvement of your employees? "We have a supplier development program that sets the standard for the product, informs the supplier of that standard, and then measures how well the supplier meets the standard," he said.

Nonmetallic Opportunities

In recent years, processors have been finding new or renewed opportunities in recycling nonmetallic scrap materials, such as glass, plastics, and rubber. Despite some hefty market and economic challenges, convention speakers noted the future prospects of some of these items remains promising.

Assessing automotive plastic recycling. About 20 years ago, cars contained less than 60 pounds of plastics, whereas today they hold as much as 365 pounds, noted Al Maten, director of automotive programs for the American Plastics Council (Walled Lake, Mich.). For scrap recyclers, these plastics have reduced the amount of recoverable metal per car and increased their shredder fluff stream, adding to their disposal costs.

Efforts are under way to remove and recycle plastic car parts, but several obstacles exist. In older cars, for instance, plastic parts weren't designed for disassembly and weren't marked by resin type to facilitate separation and recycling, Maten said. The cost of removing plastic parts—even from newer cars—can also be significant, with one recent study finding that such costs ranged from 11 to 55 cents a pound. This cost is important because, as Kendig K. Kneen, president of Al-jon Inc. (Ottumwa, Iowa), asserted, "Economic dismantling is the foundation for downstream recycling." To this end, Al-jon—a manufacturer of recycling equipment—is developing a system that could enable recyclers to disassemble 150 cars per day, using both manual tools and automated "manipulators."

To address these and other problems, interested parties formed the Vehicle Recycling Partnership (VRP), which has developed "preferred manufacturing practices" to make plastic car parts more recyclable. In terms of material selection, for instance, carmakers should use recyclable or recycled materials whenever possible, limit the variety of materials used, and reduce or eliminate the use of problem materials, said Richard L. Klimisch, executive director of environmental activities for General Motors Corp. (Warren, Mich.) and VRP chairman. In addition, carmakers should use fasteners that will facilitate disassembly, mark plastic parts by resin type for easy identification, and design new cars with disassembly and recycling in mind. "The VRP's goals," Klimisch said, "are to minimize the amount of car material that goes to the landfill and find markets for the recovered materials."

Ah, but there's the rub: "It is possible to remove and separate plastic car parts, but there's no significant demand for the material," said Donald J. Rouse, director of field services for the Automotive Dismantlers and Recyclers Association (Jenison, Mich.). Kneen agreed, stating, "Without clearly defined markets, nothing will happen." To improve markets, carmakers must "broaden their reuse and recycling philosophy," while original equipment manufacturers must "begin buying back these materials," Rouse asserted.

On the bright side, automakers are making progress in that they "have or will have technology to recover automotive plastics," Maten said. "Still, we must continue to advance technology as well as markets. We have a long way to go, but we are confident of success."

Rolling into rubber recycling. Of the 250 million to 300 million scrap tires generated annually, only about 7 percent are recycled into new products. This recycling rate is sure to grow, however, thanks to favorable legislation and expanding opportunities in such areas as the ground rubber market.

Currently, approximately 160 million pounds of ground rubber is used annually, primarily in the rubber-modified asphalt and new pneumatic tire markets, each of which consumes 40 million pounds per year, said Brian Jacobson, director of sales and marketing for Baker Rubber Inc. (South Bend, Ind.). Athletic and recreational surfaces and bound rubber products such as mats and flooring tiles are the next-largest markets, absorbing 32 million and 24 million pounds per year, respectively, he said. Three other markets—friction brake material, rubber/plastic products, and molded/extruded products—each reportedly use 8 million pounds of ground rubber annually.

Several of these markets could expand significantly, stimulated by legislation such as the Intermodal Surface Transportation Efficiency Act, which requires that all federally funded roads contain 5-percent rubber-modified asphalt by 1994 and 20 percent by 1997—creating potential demand for 800 million pounds of ground rubber per year. The Resource Conservation and Recovery Act could also include some provisions related to tire recovery and could help make state regulations more consistent, said Les Eldridge, vice president of environmental affairs for EnviroTire Inc. (Seattle). There is even talk of establishing a federal tire fee or "offtake tax," he noted, to provide funds for tire cleanup and recycling efforts.

As markets develop, the quality of ground rubber will become more and more critical, requiring the refinement of tire-processing technology. In the future, in fact, tire recyclers will have to produce a product containing virtually no steel or fiber, and one that is uniform in particle size and chemical composition, said David Forrester, president of Tires Into Recycled Energy & Supplies Inc. ( Winston-Salem, N.C.). Reviewing the abilities of both "old" tire processing machines—such as shredders, maulers, hammermills, and cracker mills—and "new" equipment—such as granulators, cryogenic systems, and wet grinding—he noted that recyclers interested in processing scrap tires to ground rubber should expect to invest $2 for every tire they aim to process.

—Jeff Borsecnik, Elise R. Browne, Kent Kiser, and Si Wakesberg

The Importance of Courage

"The fundamental challenge of leadership is to show courage," said convention keynote speaker Jan Scruggs—and he should know. Scruggs, an infantryman in Vietnam and author of To Heal a Nation, had to have courage in his quest to build the Vietnam Veterans Memorial in Washington , D.C.

Courage, he noted, is based on three foundations: confidence, commitment, and can-do spirit. These three traits, as well as persistence, enabled him to raise more than $8 million to finance the memorial, which honors the 58,000 U.S. military personnel who died in Vietnam . To realize his goal, Scruggs had to overcome opposition from some government officials, military leaders, and the public, but thanks to his work, the memorial was completed in two short years. "Anybody could have done it," Scruggs said humbly. "Courage doesn't mean you're not afraid, it simply enables you to look fear in the face and do the thing that you must do."

Investing Wisely

In a rapid-fire general session presentation, author and financial adviser Jane Bryant Quinn reviewed economic trends and policy before turning to investment advice.

On the demographic dimensions of economics, Quinn reported that nearly all growth in government programs since 1960 has been for the elderly, and she suggested that the United States has a 15-year window to rationalize its health care and budget before the baby boomers retire. "If we can't control our budgets and deficit now, it will be a nightmare then," she said. Still, she predicted the post-baby boomers will be better off than their predecessors—small generations typically fare better than big ones—and that the 1990s will be like the 1950s, with flat economic growth and deficit problems, but with incomes and investment up. The numbers may not look so good, she said, but quality of life will be up.

Turning from analysis to advice, Quinn encouraged aggressiveness on growth-directed investments such as stocks, but caution on assets that simply guarantee your standard of living. The more leveraged you are in your business, she added, the more conservative you should be on your personal finances.

To prosper in the 1990s, Quinn advised:

• get rid of consumer debts, such as high-interest credit card balances;

• accelerate your mortgage—the cheapest way to live in retirement is in a paid-off home;

• make sure your life insurance won't lapse before you do;

• keep money you'll need for the next four years in secure investments;

• for stocks, stick with quality mutual funds and invest regularly;

• for bonds—the secure side of your investments—buy and hold until maturity individual bonds and reinvest the interest in mutual funds.

In closing, Quinn advised older investors against turning exclusively to bonds, suggesting that someone who has just turned 60 may live another 30 years and, therefore, should plan some investment for growth. She also weighed-in against tying the hands of heirs by putting their inheritance into trusts controlled by banks, pointing out that the heirs often discover what she called the "little secret of financial management: It's not hard."

Scoring a Corporate Touchdown

What's Fran Tarkenton, the former Minnesota Vikings quarterback, doing in a place like Orlando ? Talking business, that's what, with a few football anecdotes thrown in for good measure.

Tarkenton, now president and chief executive officer of KnowledgeWare, an Atlanta-based computer software company, called on scrap executives to "knock down walls and make quantum leaps forward" in their corporate practices. To be successful, companies must understand and keep ahead of change, motivate their employees, and continually review consumer needs. Today's consumers demand better quality, better value, and better service, which means that "you must be market-responsive or you will go out of business," Tarkenton said. "Your products must make your consumers more profitable and more competitive."

One final ingredient is also needed for long-term corporate success: passion. "If we can't do our work with passion," Tarkenton asserted, "we can't do it successfully."

Opportunity Knocks

How do you spell sales success? According to Jeff Blackman, it's OpPoRTuNiTY , a six-step method for winning deals in a competitive marketplace.

In an interactive general session, the lawyer, author, broadcaster, and professional speaker outlined his selling process, emphasizing the importance of following the steps in this order:

• Opening. About 80 percent of your effort should be devoted to listening during this initial stage, Blackman said.

• Probe. Spend the most amount of time in this step—another mostly listening phase—he advised. The probe should answer two questions: Is there a problem you can help solve, and is there a need you can help fill? If the answer to both is no, Blackman said, there's no need to go on. But, if it's yes to either question ...

• Reveal... your ability to solve the problem or meet the need.

• Translate. This, one of only two steps in the process that involves more talking than listening, is a chance to explain how you can help. It's also an opportunity to demonstrate what Blackman called your "unique selling proposition"—the special benefits you can offer because of how your business is operated; how your products are developed, manufactured, or marketed; or elements that go into your product/service that are of significantly higher quality, value, or durability than your competitors. "Your unique selling proposition can even be something your competitors have but have failed to articulate, explain, or make known to customers," he noted. "Therefore, the first company to define it and educate the customer takes a unique, powerful, and profitable preemptive advantage."

• Negotiate. This doesn't mean manipulate, Blackman emphasized, pointing out how important integrity is in dealings in the scrap industry, where personal relationships are so critical.

• The Yes.

Back to Business Basics

Forget all the sophisticated management theories you learned in business school and concentrate on the common-sense basics of entrepreneurship. That was the advice imparted by Larry C. Farrell, author of Searching for the Spirit of Enterprise, at a general session program. As validation of his simple management philosophy, he pointed out that there are no business schools in Japan and Germany , where many firms are outperforming their American competitors.

Using anecdotes detailing how various business leaders from around the world have achieved successes and failures, Farrell—who actually admits to being a graduate of theHarvard  Business School—outlined four key elements to successful entrepreneurship:

• a sense of mission. Simply put, this means being smart at what you do and great at how you do it.

• a customer/product vision. You can't simply invent wonderful products, you also have to understand and meet customers' needs.

• high-speed innovation. To keep innovation and fast action going, you must have a constant sense of urgency, even if you have to create that feeling.

• self-inspired behavior. "Love what you do and try to be damn good at it," Farrell advised, noting that you must also inspire others to feel the same way.

Although most of today's biggest companies were founded on these principles, too many of them have since lost their entrepreneurial spirit, he said, and the result has been major losses at firms that had seemed immune to failure. And the same thing could happen to scrap firms, he said. "If you've been in business 20 years or so, you're going to plateau unless you start over with the basics."

"No matter what the economic times, it has become harder to manage in the scrap recycling industry," stated ReMA President Arnold Gachman at the Institute of Scrap Recycling Industries 's (ReMA) (Washington, D.C.) sixth annual convention, held mid-March in Orlando , Fla. The event's mission was clear, therefore: help association members address current and future business challenges. And the convention delivered, presenting a menu of more than 20 sessions on regulatory compliance, business and financial management, commodity markets, and other programs keeping with the convention theme—"Expanding Your Horizons."