September/October 1994
This Scotland-based processing group has grown into a worldwide organization and, in the process, an international leader in the specialized business of recycling high-temperature and corrosion-resistant alloys. And that could be just the beginning.
By Kent Kiser
Kent Kiser is an associate editor of Scrap Processing and Recycling.
“A small multinational.”
That’s how Denis Oliver describes the Ireland Alloys Group, the corporate family of stainless steel, nickel alloy, and superalloy recycling firms he manages as chief executive officer.
The multinational label is certainly appropriate. The Ireland Alloys Group encompasses six processing operations located in four countries on two continents--Europe and North America --making the company “firmly anchored on both sides of the Atlantic,” as Chairman Austin Merrills puts it.
As for size, the group indeed seems small in the universe of multinational corporations. After all, it has only about 150 employees worldwide, its processing plants are small- to mid-sized, and it recycles only about 60,000 tons of scrap a year.
But the Ireland Alloys Group is far from small in its specialized scrap niche. In fact, Austin figures that the company is the largest superalloy recycler in Europe and one of the top three in the world. And the group’s annual revenue--which approaches $100 million--is far from small, belying its modest processing volume. As Denis remarks, “We’re not a tonnage-oriented organization--we’re much more profit-oriented.”
What’s in a Name?
If you’re like most people, you probably assume that the Ireland Alloys Group is an Irish-owned company. Logical--but wrong, as Denis patiently points out (for the millionth time, it seems to him). The group’s name comes from founder Charles Ireland, who opened a scrap processing operation named Charles W. Ireland in Hamilton, Scotland, in 1925.
At the start, the company processed the gamut of ferrous and nonferrous scrap, but in 1964 it launched a couple of specialty operations to capitalize on the emerging stainless market: Ireland Alloys Ltd., a scrap recycling firm, and Stock Alloys Ltd., a stainless service center. In 1971, Austin (who had joined the company in 1953) and other investors acquired Ireland Alloys, marking the start of its independent life. (Today, Austin and a handful of other company officers and employees own 30 percent of the company, with the remaining 70 percent owned by seven financial institutions, primarily in Scotland.) Also in 1971, the company moved to the site that continues to be its home--as well as the current group headquarters--a 15-acre tract in Hamilton with more than 100,000 square feet of office and interior operating space.
Predominantly a superalloy recycler, the new firm found the bulk of this business in the United States. As a result, the company took a big stride--and a big chance--across the Atlantic, forming Ireland Alloys Inc. in Detroit in 1971. “It was logical to be in the United States,” recalls Austin, “so we set about being there.” Not that this step was a cakewalk. “The United States is quite a tough nut to crack for an incoming scrap company,” he observes, “no matter how specialized it is.”
In 1975, encouraged by the success of this first venture, the company launched its second U.S. operation--Astromet Inc. (Schererville, Ind.)--as a collaborative effort with two Americans experienced in the stainless business. This 9-acre operation, currently led by Paul Kessler as president, has traditionally focused on bulk stainless scrap, also handling smaller quantities of foundry stainless, tool steels, corrosion alloys, and ni-chromes.
Come 1981, the group got moving again, first transplanting Ireland Alloys Inc. from Detroit to a 10-acre plant in Houston , where it continues to operate, and then purchasing National Nickel Alloy Corp. from then-owner Sidney Greenberger, who continues to serve as president of that company. Sidney directs National Nickel Alloy from a headquarters office in Pittsburgh , but processing work is done at an 11-acre plant in Greenville, Pa.
For now at least, that completes the group’s U.S. units, which have succeeded to the point that they are now “the major part of our activity,” Austin says, accounting for 60 to 70 percent of the group’s overall processing volume and revenue.
But the Ireland Alloys Group’s family doesn’t stop there. In addition to its original plant in Hamilton, currently led by Managing Director Roy Dingwall, the company has a longstanding processing facility in Sheffield, England. It also has more-recent ventures in Eastern Europe, where it has been doing business for more than 20 years but where it has only had its own operations for the past few years.
The group took its first step across the former Iron Curtain in 1991, founding Poland Alloys, a processing and trading business located in the town of Katowice in southern Poland. And late last year, the group forged a partnership in Russia, about which the group’s executives are rather tight-lipped. All they’ll say is that their Russian partners are young, aggressive, highly educated, and very capitalist-oriented--and they hint that the venture is going well thus far.
Achieving the Right Mix
The Ireland Alloys Group’s business rests principally on two “legs,” according to Austin --stainless recycling and superalloy recycling. In the stainless recycling side of its business, the group is something of a scrap apothecary whose specialty is concocting blended charges--premixed loads of scrap that are guaranteed to meet certain alloy specifications when melted. This means Ireland Alloys draws a ton here, a hundred pounds there, from its scrap supplies and mixes the various ingredients to make alloy recipes for specific mill consumers. “What we’re saying to the melter is, ‘We’ll take you out of the raw material sourcing business and we’ll provide already-blended, preweighed charges that you just have to put into your furnace,” explains Simon Merrills, vice president of National Nickel Alloy and Austin’s son.
To make its blended charges, the group buys a wide range of scrap alloys--several hundred, in fact. Only the Hamilton and Houston facilities handle the whole spectrum of these alloys, while the other units focus on a portion, and only the Hamilton, Houston, and Greenville operations presently produce blended charges.
The group’s units draw about half of their scrap supplies from what Denis calls “generalist” scrap recycling companies, with the remainder coming from industrial generators. While the operations source mainstream scrap such as 18-8 stainless from suppliers within reasonable proximity, they buy higher-value superalloy scrap from all over the world.
On the consuming side, the Ireland Alloys Group sells the vast majority of its material--about 80 percent by volume and 70 percent by value--to the stainless steel industry, a good proportion as blended charges. The remainder is consumed by vacuum melters, which make high-dollar, high-performance products such as aerospace components, and by other specialty melters. Though the group sells to consuming mills worldwide, the majority of its sales are in North America and Europe , with the U.S.operations exporting about 40 percent of their volume and the European units exporting more than 50 percent to consumers in Europe, the United States, and elsewhere.
An Analytical Mindset
Recycling nickel-based alloys and superalloys is a high-tech, sophisticated endeavor--one that requires a good deal of scientific expertise and metallurgical know-how. “You must have strict analytical methods and skills, especially to prepare vacuum alloys and blended charges,” says Denis. “You have to guarantee that the metal will melt out within specified parameters and must also guarantee a yield level to the melter. This is one area in which a little knowledge can be very dangerous.”
The firm guarantees its vacuum alloys and blended charges for the simple reason that, if its material doesn’t melt to the right specifications, the heat can be ruined. “Part of our vendor agreement with aerospace corporation, for instance, is that if we blow a heat, we own it and we pay all the expenses related to it, so we have to be good,” says Peter Mason, executive vice president of Ireland Alloys Inc. and general manager of the Houston plant.
This level of assurance is particularly crucial when it comes to superalloy scrap, which is used in “critical” products such as the moving parts in jet aircraft engines. The reason goes another step further: superalloy scrap is consumed by vacuum melters, which melt metal in a pristine vacuum environment to prevent impurities from entering the molten material. “The problem you’ve got as a supplier to vacuum melters,” Denis says, “is that whatever is in the scrap and in the furnace stays there.” This is so vital, in fact, that the Houston and Hamilton plans are subjected to annual operational and quality audits by the vacuum melters to verify that their quality processes are up to snuff.
The Ireland Alloys Group is able to meet such high quality standards because it has implemented rigorous quality control procedures in all of its operations. The process begins when arriving scrap loads are tagged and given a lot number that follows each load through the plant. Such identification is necessary, in part, because the group must ensure 10-year traceability on some materials.
After material is tagged, it begins its journey through a series of alloy identification stages. “A great deal of analysis work is done when the material is received and also when it’s being processed for shipment,” Peter notes. As Simon explains, “The key to our blended charge business, for one, is the rapid identification of material, the accurate and timely settlement with the supplier, and then the expeditious preparation and sale of the material. We put the maximum amount of alloy identification into the material and minimum amount of product processing to show savings to the melter.”
A portion of the alloy identification work--primarily for solid scrap (as opposed to turnings)--is done on sorting tables equipped with a spectroscope. “Our initial claim to fame was moving the direct-reading spectroscope out of the laboratory and onto the shop floor,” says Austin .
Each sorting table is manned by a highly trained sorter, who must survive a demanding two-year training program to achieve the top Grade 1 status, which signifies an ability to identify approximately 100 alloys without using reference charts. “The training of our sorters on the shop floor is second to none,” Denis boasts.
Alloy identification of other scrap--especially turnings--is done in a laboratory, such as the full lab facilities the group maintains at its Hamilton and Houston plants. Among its analytical equipment, the Houston lab, for instance, features an atomic absorption unit--used to detect trace elements such as lead, bismuth, silver, and tin in scrap samples to parts per million--as well as one arc furnace and two induction furnaces for making sample “buttons,” a grinder/sander, and an optical-emission spectrometer, which produces a full alloy analysis of each sample. The group’s other facilities have partial labs and utilize outside firms for analysis work. “The labs are the major key to our ability to blend correctly,” Peter asserts. Lab results also determine whether superalloy material is good enough to be used in a high-value, high-demand vacuum-melting application, or whether it must be used in a less-valuable, less-demanding air-melting product.
The success of the company’s quality control efforts speaks for itself. The Hamilton and Houston facilities have been approved by the major vacuum melters for more than 20 years and 12 years, respectively, to process and supply superalloy turnings for use in rotating parts in jet aircraft, making Ireland Alloys one of only seven or so companies in the world to win that approval. Equally notable, in 1981 Ireland Alloys Ltd. Was the first scrap recycling company to receive the Queen’s Award for Technological Achievement, which recognized its progressive work in recycling aerospace scrap. This work included development of a process the group calls--appropriately enough--“Irelandizing,” which segregates cross-contaminated complex alloys in turnings form.
And that’s not all. In 1992, Ireland Alloys Ltd. became the first alloy scrap recycler to earn the BS5750 designation, the British equivalent of ISO 9000 certification. As a rather understated comment on all of these accolades, Austin says, “We’ve always placed a lot of emphasis on research and technology.”
Finding the Right People
More than research and technology, however, what has enabled the company to succeed for 30 years, Austin asserts, is its employees. “Our people are better than other people’s people,” he says. What makes his people so special? “That not easy to define,” he responds, “but it has to do with people who are willing to work hard and who have a feeling for what their customers and suppliers want from them.”
The company invests a lot in its employees--figuratively and literally--by paying decent salaries, offering generous profit-based bonuses, giving safety and attendance bonuses to plant workers, providing a good benefits package, and promoting from within. The group also gives the managers at each of its facilities freedom--or as Denis puts it, “reasonable latitude”--to run their own shows, as long as they abide by the group’s trading guidelines and understand the need for continuous group monitoring. “Our people generally have a lot of autonomy,” Austin says. “There’s not a great deal of pressure to stick to a price list or a particular way of doing things. The individual company presidents are allowed to get on with running their businesses.”
In return, the company expects a lot from its personnel in terms of performance. Each unit, in fact, must function as an independent profit center, with bonuses based solely on local performance. What this means, Denis notes, is “there’s no hiding” when the balance sheets come due. As Sidney asserts, “You’re responsible for your own efforts, and that’s a great motivator.”
While independent, the units are still very much a part of the larger Ireland Alloys Group. One of Denis’s tasks, in fact, is to encourage the disparate--and physically distant--units to be “group-minded” and help them capitalize on the advantages of being part of a multinational corporation. “We try to take the best of each company and transplant it in the other companies,” he notes.
This type of synergy has results that can be felt right down to the group’s bottom line. “Because of the different nature of each unit, we’re able to add the most value to our material,” Simon points out. For instance, he notes, one facility can send a lower-value air-melt product to another unit, which can then upgrade it to a more-valuable vacuum-melt product. It’s this type of corporate complementarity that prompts Sidney to say, “We’re strengthened by the differences we have within the group.”
Keeping Communication Lines Open
Communication is key to making the most of these differences, Simon says. “One of the things that we benefit from in being part of an international group is the exchange of information, the knowledge of prices, how quickly you can spot a trend, how quickly you can disseminate information to make sure you’re not getting hung with material in a falling market or missing the boat on a rising market. It’s nice to have our people on the spot when it comes to market information and fluctuations.”
Aside from daily contact as needed via phone and fax, Denis notes that the group distributes weekly market reports listing the major purchases and sales of all units, as well as comments on the local, national, and world markets. “The markets are moving constantly,” Denis observes, “so items that are dogs one month can be prized possessions the next.”
n addition, the Ireland Alloys Group keeps in touch through a religious schedule of in-person meetings. Quarterly, for instance, Austin, Denis, the firm’s U.S.officers, and--once a year--a few executives from the group’s European operations gather at the U.S. facilities in a rotating schedule for in-depth commercial meetings on the stateside units. “We try to determine where the trends are going to be, what we as a group should be doing commercially, and also what opportunities are available to us,” Denis notes. These meetings also allow time for each U.S. unit to hold it own board of directors meeting.
There are quarterly group meetings in Hamilton, too--which Austin and Denis attend--with these focusing primarily on group issues and the European operations. “It sounds like a lot of meetings, but, in fact, we’ve got them fairly well streamlined,” Denis says. “It’s important that every quarter we stand back and look at everything. These meetings ensure that we maximize our successes and minimize our weaknesses.”
Taking Care of Business
Even with the right people and organized communication efforts, running a multinational recycling group isn’t easy. Fortunately, the Ireland Alloys Group has come up with several ways to make it work. For one thing, Denis remarks, “this is a cyclical industry, so we strive to keep fixed costs to a minimum level consistent with efficiency.” The group has made big strides in this area in the past 18 months, reportedly trimming about $2 million from its fixed-cost burden groupwide.
Another critical area for success is inventory turnover, Denis notes, and in the past year the group has managed to double its turnover rate and now maintains “constant monitoring of our slow-moving inventory items.”
Inventory management is so important to the group that it designed its own computer inventory control system. This computer program, masterminded by Simon and a professional programmer, is a “live, real-time system” and is trading-based rather than accounting-based, Simon explains. The system tracks material that has been purchased but not received; material received but not sorted; material sorted and available for sale; and material sold but not yet delivered. “It gives us a profile of every single alloy that we deal in at every single location,” Denis says. “It gives us our group position for every single alloy that we deal in, and not just what we have in-house, but what we’ve committed for either on the incoming or outgoing side.”
A Larger Future?
So, what’s next for Ireland Alloys?
For one thing, further expansion of the group is likely. “We’re not ready to make a move in the next few months,” Austin says, “but we have good ideas as to areas where we might expand.” Perhaps other U.S. locations or more venture in Eastern Europe, a few of the executives hint.
Looking at larger market trends, Peter sees great promise for the group’s blended charge packages. “There’s no question that’s the way of the future for the stainless industry,” he says, adding that “because of our capabilities and experience, and with the laboratory backing us up, we’re going to be in the forefront of that kind of opportunity.”
Overall, the firm’s top managers can’t help but be optimistic about demand prospects for stainless and other specialty alloys, which will see increased use, they say, in consumer durables, food-service products, corrosion-resistant applications, environmental protection products, and more. “Our prime metal--nickel--isn’t going out of style,”Austin says. “It’s not being superseded by anything, and most of its markets are expanding.”
The Ireland Alloys executives also foresee the potential huge per-capita growth in stainless consumption in the Pacific Rim and even the United States , which currently lags Europe and Japan in per-capita stainless usage. “Stainless steel melters are adding capacity on a steady basis,” Denis notes, “and I believe this will almost certainly result in a shortage of stainless steel scrap. Therefore, I believe the price of scrap will constantly approach the price of primary.”
If the group’s optimistic forecasts pan out, its future could be bright indeed. In the long run, perhaps the day will come when Denis will no longer describe the Ireland Alloys Group as a small multinational, but rather as a medium--even a large--multinational. •
This Scotland-based processing group has grown into a worldwide organization and, in the process, an international leader in the specialized business of recycling high-temperature and corrosion-resistant alloys. And that could be just the beginning.