May/June 1999 At least they are in Italy, which has built its economy on its manufacturing prowess and, by extension, scrap recycling.
By Joan Leotta
Joan Leotta is a writer based in Burke, VA.
Italia.
The word evokes the grandeur that was Rome and the countless artistic, cultural, culinary, and sartorial splendors the country has given the world.
Most recently, Italy basked in applause at the Academy Awards when bellissima Sophia Loren gave Roberto Benigni his Oscar for Best Foreign Picture for “La Vita È Bella” (“Life Is Beautiful”). In the film, Benigni portrays a father who is interred in a concentration camp with his young son. To help his child survive, he pretends that life in the camp is just a game, creating beauty where only ugliness exists.
Displaying the same resourcefulness, Italy recovered from World War II to build a strong economy. Where others might have seen only the brutta (ugly) and cattiva (bad)—including the country’s vast war damage, limited arable land, and scant natural resources—Italians saw possibilities.
Today, “the Italian economy is the world’s fifth largest, having undergone a dramatic transformation into an industrial power in the last 50 years,” according to the U.S. Department of State. Italy’s gross domestic product ranks fourth among its European counterparts, trailing only Germany, France, and the United Kingdom.
This is the story of how Italy climbed to its present industrial stature—and the role scrap played in its ascent.
The Economic Miracle
Since the end of World War II, Italy has transformed itself into a global manufacturing leader, well-known for its production of iron and steel, heavy machinery, automobiles, chemicals, textiles, machine tools, and more. “Manufacturing is the mainstay of the Italian economy, accounting for about three-quarters of total exports of goods and services,” says the Economist Intelligence Unit Ltd. (London).
Most of Italy’s industry sprang up and remains concentrated in the northern and central regions, which has created a clear (and divisive) distinction between these regions and the poorer agricultural areas in the south, called the Mezzogiorno.
Though many people may not view Italy as an industrial nation, its success in manufacturing and commerce shouldn’t be surprising. Economic pragmatism has existed side-by-side with art and culture since earliest times on the Italian peninsula. While conquering the world, the Romans built roads and aqueducts to foster trade. In Michelangelo’s time, Italians invented banking in Siena.
Italy’s economic transformation is impressive, especially considering that it’s seriously deficient in many basic natural resources such as oil, coal, iron ore, and forests. The nation must therefore import large quantities of these and other raw materials, including scrap, to feed its manufacturing industries.
Italy developed its economy by importing raw materials as needed and basing its economic network on the family, as well as local and regional governments. Most Italian industries—including its scrap recycling industry—are made up of small- and medium-sized family-owned companies. “The large number of Italian firms is due to the typical fragmentation of the Italian industrial productive base,” says the U.S. Department of Commerce, International Trade Administration. Even large Italian corporations such as Fiat and Pirelli are family-owned.
For many years, Italian businesses of all sizes had an imposing competitor in the form of the Italian government. In several sectors, the government participated directly in the economy. In the steel industry, for instance, Finsider—a government-owned producer—accounted for 55 to 60 percent of production until the mid-1980s. European Union agreements, however, subsequently required the Italian government to exit the steel business.
Steel Is King
As an industrial contender, Italy produces and consumes its share of ferrous and nonferrous metals.
The country, in fact, is the second-largest recycler of scrap metal (excluding precious metals) in Europe in terms of revenue and the third largest in terms of shipments, with about a 15-percent share of the market in both cases, according to Frost & Sullivan (London), an international business consulting firm.
If precious metals are included, Italy is the number-one scrap metal recycler in Europe in terms of revenue, with a market share of about 56 percent (see “All That Glitters” on page 38).
When it comes to metals, Italy is perhaps best-known for its steel industry, including stainless steel. The story of its steel success begins in 1950 when Oscar Sinigaglia, then president of Finsider, set out to prove to the world that Italy could become a competitive steel producer.
Today, Italy is the seventh-largest steelmaker in the world, producing 26.1 million mt of crude steel in 1998, says the International Iron & Steel Institute (IISI) (Brussels).
Italy’s steel industry is its largest scrap-consuming sector—not surprising given that an estimated 58 percent of Italy’s steel is made in scrap-fed electric-arc furnaces. In 1997, Italy consumed 17.1 million mt of scrap, IISI reports. Over the past 10 years, Italian steelmakers have melted an average of 16.9 million mt a year, with consumption ranging from an annual low of 15.3 million mt in 1988 to a high of 18.5 million mt in 1994, IISI statistics show.
According to Frost & Sullivan, Italy is the third-largest recycler of ferrous scrap in Europe in terms of revenue and shipments, ranking behind Germany and France with just over a 14-percent market share.
The Italian scrap industry supplies approximately 10 million mt of ferrous scrap to its domestic steelmakers, or about 60 percent of their scrap demand, says Eugenio Turchetti, technical director of ASSOFERMET (Milan), a ferrous and nonferrous scrap association.
The balance of Italy’s ferrous scrap demand is met largely through imports. In 1997, Italy imported 4.3 million mt of ferrous scrap, IISI says. Over the past 10 years, it has imported an annual average of 5.7 million mt, from a high of 6.3 million mt in 1995 to 1997’s low of 4.3 million mt. Italy buys most of its ferrous scrap from European Union countries, followed by other European suppliers.
In comparison, Italy’s exports of ferrous scrap are negligible, totaling 36,000 mt in 1997—the highest amount in the past 10 years, IISI indicates.
Italy is also a force in the stainless steel sector. Its heavy use of the metal in product design makes it one of the largest consumers of stainless in the world, using about 1.15 million mt annually, says Centro Inox (Milan). Italy’s per capita consumption of stainless is, at almost 40 pounds (18 kg), also one of the highest.
Given its high stainless consumption, it’s not surprising that Italy is a major stainless steel producer, with estimated 1998 production of 1.1 million mt, making it the second-largest producer in Europe behind Germany, according to nickel industry sources. Of that total, around 830,000 mt was austenitic, or nickel-bearing, stainless.
As a large producer of stainless, Italy generates a significant amount of internal stainless scrap, though it also imports considerable quantities from Germany, France, and other European countries. In 1997, the country consumed about 410,000 mt of stainless scrap, of which at least 25 percent was imported, Centro Inox data suggests. In 1998, Italy’s consumption of stainless scrap rose about 5 percent to 430,000 mt, the group reports.
No Newcomer to Nonferrous
Beyond steel, Italy also has a significant presence in the nonferrous metal markets.
In 1997, Italy consumed about 1.6 million mt of nonferrous scrap of all types, says Turchetti. Of that total, more than 1 million mt came from Italian scrap suppliers and the remaining 600,000 mt was imported, primarily aluminum and copper, with small quantities of zinc and lead.
By nonferrous market, Italy is the second-largest aluminum scrap recycler in Europe in terms of revenue and shipments, with about a 20-percent share of the market, Frost & Sullivan says.
Italy recovered about 443,000 mt of aluminum scrap in 1997, reports ASSOMET (Milan), a nonferrous trade association. Since 1988, Italy has recovered an average of 375,000 mt of aluminum scrap a year, from a low of 343,000 mt in 1991 to the 443,000 mt in 1997.
Italy also holds a prominent place in the copper scrap market, thanks in part to its status as a leading producer of brass rod. It vies closely with Belgium for second place in the European copper scrap market, both with shares around 14 percent in terms of revenue and shipments, Frost & Sullivan says.
The International Copper Study Group (ICSG) (Lisbon) reports that Italy imported about 260,000 mt of copper and copper alloy scrap in 1997, with copper scrap accounting for around 94,000 mt of that total and copper alloy material accounting for the remaining 166,000 mt. Since 1993, Italy has imported an average of 222,000 mt of copper and copper alloy scrap each year, ICSG notes. Through November 1998, it had imported about 223,000 mt of such scrap, with statistics suggesting its exports for the year would exceed the 1997 level.
Italy exports much smaller quantities of copper and copper alloy scrap, though its exports have been steadily increasing in recent years. From 20,900 mt exported in 1993, for instance, its shipments grew to about 58,000 mt in 1997 and preliminary figures show that it could exceed that total in 1998, ICSG data notes.
Lead is less of a specialty for Italy, which is the fourth-largest lead recycler in Europe, with about a 12-percent market share in terms of revenue and shipments, Frost & Sullivan says. In 1998, Italy recycled an estimated 143,000 mt of lead in its production of 202,000 mt of refined lead, which means that about 71 percent of its lead supply came from secondary material, notes the International Lead and Zinc Study Group (ILZSG) (London).
In the European zinc scrap recycling market, Italy ranks fifth with about a 10-percent share in terms of revenue and shipments, says Frost & Sullivan. According to ILZSG, Italy consumed 31,000 mt of zinc scrap in its production of 235,000 mt of refined zinc in 1998. In addition, it recycled about 20,000 mt of zinc in the form of remelted, or unrefined, scrap and alloys, as well as 144,000 mt by direct use (mainly the zinc contained in secondary brass and chemicals), says ILZSG.
Paper Power
Since the 14th century, artisans in the Tuscan region, especially in the province of Lucca, have been making beautiful paper. Today, Italy’s paper market is more than just an artistic endeavor. It’s big business.
According to the U.S. Department of Commerce, International Trade Administration, Italy’s pulp, paper, and paperboard industry consisted of about 166 firms operating more than 210 plants in 1995.
Those mills produced an estimated 7.5 million mt of paper and paperboard in 1997, up more than 8 percent from 1996’s production, reports Gianpiero
Magnaghi, sales manager for Macpresse International S.r.l. (Milan). That production made Italy the tenth-largest paper producer in the world and fifth largest among European countries.
Because Italy has little in the way of natural forest resources, its paper mills rely heavily on recovered fiber, which fills almost 50 percent of the industry’s raw material needs. In 1997, for instance, Italian mills consumed about 3.7 million mt of scrap paper to produce their 7.5 million mt of paper and paperboard, says Magnaghi. Italy ranked tenth in the world in scrap paper consumption that year and fourth among European countries.
Since Italy’s domestic paper recovery rate has traditionally been the lowest in Europe, it must import a significant amount of secondary fiber. Fortunately, in 1997, the country’s domestic collections of scrap paper increased about 10 percent to more than 2.8 million mt.
As a result, Italy’s imports of recovered fiber decreased about 9 percent to around 930,000 mt, with Germany supplying approximately 492,000 mt of that total, Magnaghi reports. Those imports made Italy the tenth-largest scrap paper importer in the world in 1997 and the fourth largest in Europe.
Italy is stepping up its paper recovery efforts to avoid a shortage of raw materials, reduce Italian mills’ dependence on foreign pulp and scrap, and increase the productive capacity of those domestic mills.
ASSOCARTA (Rome), the Italian paper and paperboard association, and an allied association, ASSOGRAFICI (Milan), have created a consortium named COMIECO to work with municipalities to increase paper collection.
Promising Plastic Potential
The plastic recycling industry in Italy, which has been active since the mid-1960s, consists of about 250 companies with an annual processing capacity of 750,000 mt—relatively large compared with many other European countries, according to Frost & Sullivan. But Italy’s plastic recycling industry is highly fragmented and encompasses mostly small-scale operations.
In 1996, Italy recycled about 161,400 mt of postconsumer plastics, giving it a 12-percent share of the European recycled plastics market by revenue and a 10-percent share by tonnage, Frost & Sullivan says. About 40 percent of the material collected is PE-based plastic, followed by PP with 25 percent, PVC with 15 percent, and PS with about 5 percent.
Italy’s recycled plastics are used in new products for the building and construction, agriculture, and packaging industries. About a third is also used in the “other” category, especially outdoor furniture (of which Italy is a leading producer), plastic lumber, curbside collection bins, toys, and other products.
By 2003, Italy’s plastic recycling industry is expected to recover 439,000 mt, which would give it a 16.9-percent share of the European recycled plastics market by revenue and a 15-percent share by tonnage, Frost & Sullivan predicts. Much of this growth will be driven by plastic packaging recovery laws in Italy and the European Union. The Italian law, for instance, sets the recycling target at 40 percent of postconsumer plastic packaging, with up to half of that goal allowed to be met through energy recovery.
Leading the stepped-up recovery efforts will be groups such as REPLASTIC, a joint venture organization responsible for coordinating the collection and recycling of postconsumer plastic containers in Italy. It reportedly helped collect 76,500 mt of plastic containers in 1996, or about 47 percent of the total collected for the year. Italy reportedly had 3,197 municipal collection programs in 1996, covering 31 million people, or more than half of its population.
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What does the future hold for Italy when it comes to scrap recycling? Will its various scrap industries continue to enjoy la dolce vita (the good life)?
The country is already well-established and prominent in the metal recycling niches, and its strong manufacturing base should ensure that it maintains or expands its position. In the paper recycling sector, it’s taking unprecedented steps to increase collection and, hence, boost its recovery. Similarly, in plastic recycling, Italy is well on its way, and packaging recovery laws will ensure that it continues to improve in this area.
In short, its scrap recycling prospects look rosy. La dolce vita, indeed.
All That Glitters
When it comes to scrap metal recycling, Italy truly has the golden touch. It’s the largest producer of recycled gold in Europe, with about a 59-percent share of the market in terms of revenue, says Frost & Sullivan. Italy’s closest competitors in this niche—Germany and the United Kingdom—lag far behind, each with about a 10-percent share of the market.
Italy’s gold recycling efforts, in fact, give it the distinction of being the largest European scrap metal recycler on a revenue (albeit not tonnage) basis.
Italy in Brief
Geography: A boot-shaped peninsula bordered by the Adriatic, Ionian, and Tyrrhenian seas. Includes the islands of Sicily, Sardinia, Elba, and other small islands. The mainland is divided into 20 regions.
Area: Around 116,000 square miles (about 300,000 square kilometers)
Population: Almost 58 million
Capital and Largest City: Rome
Major Cities: Milan, Turin, Genoa, Naples, Bologna, Palermo, Florence
Monetary Unit: Liran
At least they are in Italy, which has built its economy on its manufacturing prowess and, by extension, scrap recycling.