March/April 1996
Operating a public recycling center may ultimately prove little different than buying and processing traditional scrap materials, but it’s likely to put a different face on your company.
By Jeff Borsecnik
Jeff Borsecnik, a former associate editor of Scrap, is now a writer based in Seattle.
For some recycling companies, buying scrap directly from the folks who ate, drank, or read from it, or perhaps generated and sequestered it in the garage out back, is a practice as old as the firm itself. Then again, there are plenty of companies that have never even thought about opening their industrial scrap-based operations to the public.
No matter where your scrap recycling firm falls in this spectrum, chances seem good that you’ll take on public recycling at one point or another. And when that time comes, the experiences of the operations detailed here should help you be better prepared.
Mixed Motivations
Buying even small amounts of all sorts of scrap from drop-in customers has always been a vital part of operations for Texas Recycling/Surplus Inc. (Dallas). “We look at it like a retail store,” says co-owner Joel Litman. “The customer is doing the work for you. You don’t have to have trucks pick it up, you don’t need to have containers out.” Though the company primarily handles paper, it accepts cans and other scrap metal on a retail basis so it can offer the customer a “one-stop shop.”
Household scrap buying is also expanding the traditional focus at Hummelstein Iron & Metal Inc. (Jonesboro, Ark.), which is opening a new retail buyback facility in a building adjacent to its metal operations as a way to get into paper and glass. For years the company purchased aluminum beverage cans retail, but that operation outgrew itself. “We’re bringing it all back together,” says President Sam Hummelstein, explaining that the new facility combines can buying with the nonmetallics while also making more room for the company’s nonferrous and ferrous operations and reintegrating the whole setup. “We’re having a great ride,” says Hummelstein of the project, which should be in full operation by early summer. “We’re going to have a lot of fun.”
Temple Iron & Metal Co. (Temple, Texas), in contrast, was somewhat unenthusiastic about getting into the household scrap business. Because of competitive reasons, however, the firm felt it was necessary to take the plunge. For one thing, the local town had set up recycling drop-off centers. “We didn’t want to see the municipality get into it,” says David Neman, a partner in the company. “Philosophically, we’re against this. If the private sector can do it, [the town] shouldn’t be.”
Furthermore, he says, the company figured that opening its doors to public buyback would help to close a window that might draw competitors into town to handle paper and, perhaps eventually, the other materials the firm was already handling. “In order to protect our metal interests, we got into paper,” says Neman, whose company started by buying cardboard, then eventually other grades of paper and plastics, from individuals and businesses. “It’s not as fun as scrap metal,” grumbles Neman, pointing out that in the new line of business, no usables or curiosities show up—just the occasional Victoria’s Secret catalog.
Fulton Scrap Processors Inc. (Fulton, N.Y.), for its part, has bought scrap metal and paper—up to a quarter of its scrap inflow—retail for generations. And in recent years, “as the traditional peddler has kind of become few and far between,” a growing percentage of the company’s retail suppliers have been household recyclers, says Gary B. Kamp, president. While dealing with the relatively unschooled householders is typically more of a hassle than working with peddlers, Kamp says the benefits outweigh the occasional headaches. “Our company is located within the city limits of Fulton, and having a good relationship with the residents reflects on our relationship with the Chamber of Commerce and government officials,” he explains. “We do have good relations, and we attribute that partly to doing our best to keep our public informed about recycling and making ourselves available to them.”
Metro Alloys Inc. (Atlanta) likewise sees household scrap buying as a community service. When the company opened its doors in 1982, “limited capital and limited time” directed its business at a very few specific alloys, all in wholesale volume, says Neil H. Berman, president. At the time, buying the inevitable mix generated by a retail operation would have resulted in dragging down the grades of the specific, high-end materials the company sold, he explains.
But last year, Metro started purchasing “any nonhazardous metal” from all comers and is considering accepting plastics, corrugated, and paper. “There was a tremendous need in the area for a recycling center” for householders and small shop owners who had sequestered a great deal of scrap, Berman notes. And, because the company has grown to own a large share of the regional scrap market in a wide range of alloys, it can now buy material retail at prices few others might match. “Now, we can make packages and blend in the lower grades to make higher ones, and increase the value” of retail scrap, he adds.
To Run Retail: Space is Paramount
Regardless of what drives a scrap firm to expand to accept household recyclables from John Q. Public, handling these materials is a bit different from your typical commercial/industrial operations.
For instance, buying household scrap demands separate, and substantial, space—at least several thousand square feet for parking, unloading, and probably some initial storage and sorting, say those who’ve taken the step. Berman suggests “at least a 5,000-to-7,000-square-foot warehouse.”
Within this space, you’ll need to “carefully plan traffic flow, both pedestrian and truck,” counsels Steve Nedelman, vice president of nonferrous at Steiner-Liff Iron & Metal Co. (Nashville), which built and briefly operated a public buyback facility several years ago. (Declining markets and competition from haulers pulled the rug out from under it in less than a year.) “It’s got to be customer-friendly,” he says, suggesting you keep retail traffic separate from commercial for the sake of efficiency and safety, using a separate entrance to your facility if possible.
While keeping traffic separate is important, it’s also essential for a household scrap operation to be fairly close to your other operations in order to limit handling and equipment redundancy, according to the practitioners. “The less you’ve got to handle the material and the closer you are from drop-off to production to shipment, the better off you are,” says Nedelman. Thus, some scrap firms in the public recycling business have created a separate “front end” for retail—either by purchasing adjacent facilities or carving a chunk out of existing space—while ensuring it dovetails with their industrial processing facilities. Says Hummelstein: Retail and industrial operations “have got to be designed in from the front end to complement one another without getting in each other’s way—and doing it all in one facility is kind of tricky.”
Storage can be a major space concern for household grades, especially plastics and paper. Most of these materials need to be stored inside, out of the reach of rain, wind, sun, and perhaps—cautions one processor—the arsonist’s match. Another consideration is that you may have to store grades accepted in low volume for quite a while before you can come up with a truckload. Furthermore, because of the volatility in some grades, such as corrugated, Neman adds, “you have to be able to stomach holding loads because prices can go down to nothing.”
While common household grades may pose few environmental problems, health concerns could pop up if you accept unclean materials, says Arnold Gachman, president of Gachman Metals & Recycling Co. (Fort Worth, Texas), which purchased household recyclables retail for several years beginning in 1988. (Insufficient volume and slow market development killed the operation.) Neman points out another possible housekeeping concern: For those only used to processing metals, baling corrugated generates a surprising amount of dust.
Equipment and Labor
Space demands may be significant, but new equipment needs shouldn’t be. The exception may be a good baler, if you’re not already so equipped. “A baler would be essential for handling retail household scrap,” says Berman, echoing others. “We’re fortunate to have a very large Harris baler that can handle anything. It’s part of our industrial operation, and the [retail scrap] is conveyed over to it and folded into our other material.”
Neman says his unenthusiastic perspective on handling corrugated—his first venture into nonmetallics—changed once he got an efficient horizontal baler. He warns against relying on upstroke or downstroke machines: “You need a more efficient baler, since the scrap may be worth 2 cents a pound instead of 50. Volume processing is the key since you handle it like copper, but it’s worth less than tin.”
Beyond the baler, you may need only material handling equipment, such as wheeled carts or bins, conveyors or forklifts, and, possibly, magnetic separators or sorting equipment and scales.
There is one big difference, however, between processing commercial/industrial loads and household recyclables: Handling the latter tends to be even more labor-intensive, given the small loads of often low-value and perhaps poorly sorted material. Then again, the steps to processing household recyclables are fundamentally identical to industrial scrap handling, says Nedelman: “It’s nothing more than material segregation, upgrading, packaging, and shipping—basic material handling.”
A Fuzzy Factor: Appearance
Prices paid may be what draws—or doesn’t—commercial and industrial customers to one scrap company over another, and some believe this holds true for public recycling customers as well. Many of those experienced in this end of the business, however, say a good chunk of the public interested in recycling may not primarily be dollar-driven. Neman, for example, offers this sketch of the “typical” householders who haul in newspaper and cardboard: “They’re women who are in the Junior League who drop off their 50 cents worth of paper, then go get their nails done for 25 bucks.” He adds: “The incentive is not money, the incentive is to recycle. You’re selling them a religion.”
Thus, some retail operators stress that your buyback center must be visually appealing to draw in such customers.
Even if you think the Junior Leaguers aren’t as important to your company as that other stereotype—the inveterate peddler in a rusty pickup—in reality, your retail customers might not be so easily pegged. For example, Berman describes his company’s retail customers as “everyone from householders to small shops to people who consider themselves nouveau recyclers—those who see a market for something traditionally hauled off to the dump and go pick it up and sell it.” And with all these potential customers, attention to the aesthetics of your operation can’t hurt.
“The bottom line,” says Hummelstein, is your operation ought to “be very user-friendly and even more cognizant of housekeeping and appearance. You really have to look more like a retail establishment.” His firm’s upcoming center “looks more like a hardware store than a recycling operation—except for the 12-foot overhead doors. It’s an aluminum frame building, with nice glass, awnings—very approachable.” The company even hired an architect to ensure the facility would be attractive and easy to clean and maintain.
With Kid Gloves: Please Say Please
If appearance welcomes new customers in, service is likely to be what brings them back—especially if price isn’t everything in their minds. “My brother and I will get out there and help unload, or we’ll unload for them while they sit in the car,” says Litman, who takes his customer service leads from retail stores. “The key thing is, you’ve got to treat the customer just like you want to be treated when you go buy groceries or a shirt or a car, whether they’ve got just a pound or a thousand. We give them a handshake and treat them like a human being,” he says. “It’s worked well for us.”
To staff the operation, then, the experts advise you to use workers with a neat appearance and a certain instinct for public relations—and in the case of Texas Recycling/Surplus, bilingualism helps, notes Litman. Furthermore, says Kamp, it’s critical that your buyback staff be patient—that they have “the ability to explain to customers why they only got paid for insulated, when they expected a price for No. 1 copper.”
To deal with these issues, Berman suggests assigning one individual to concentrate on the operation in order to field all queries and provide more targeted support for retail customers. Even with one person on top of the operation, because the demands of public recycling and the new materials it may encompass can be quite different from those of a traditional scrap operation, Hummelstein notes that “employee education can be a key issue” in retail expansion.
Reaching the Public: Education and Marketing
Customer education is the other side of the coin and a potentially important service both for your customers and your operation. While a peddler stands to know how to grade scrap and may even be able to accurately sort a red brass from a yellow one, the average householder, by comparison, is “not familiar with the value of recyclables,” says Kamp. “It takes longer to explain purchasing procedures to them. Occasionally, we get a refrigerator that hasn’t been properly evacuated of CFCs, and we have to explain that. It takes up more of our time. There’s an education curve with new people.”
Gachman offers a similar take. “You have to have a pretty good educational program,” he says, noting this begins with tolerant and helpful employees and might include distributing publications as well as placing advertising that educates.
Metro Alloys, meanwhile, takes its educating a step beyond materials and procedures, teaching customers about markets. The company sends regular market updates, even to the smallest customers—part of its effort to treat them all as if they were large industrial accounts. “Now they feel like they have a commodity,” says Berman. “We thought it best to educate them to what the material is worth, and what it could be worth. We let them know when markets go up so they can take advantage of it [like big scrap generators]. They appreciate it and they bring in more metal.”
Besides, he adds, “You never know when the homeowner has a friend or relative who has a large factory.” •
Operating a public recycling center may ultimately prove little different than buying and processing traditional scrap materials, but it’s likely to put a different face on your company.