November/December 1993
This Los Angeles-area company has been an innovator in several specialized markets in the industry, building its reputation on its unique—and diverse—scrap recycling services.
BY KENT KISER
Kent Kiser is associate editor of Scrap Processing and Recycling.
When Ian MacLeod says his company, the MacLeod Group, is one of a kind, he's not just talking turkey. What other scrap company is a wire chopper, plastic recycler, detinner, buyback center, and international trader all rolled into one?
The story of how this eclectic South Gate, Calif. corporate mix was created traces back to 1961, when Ian first entered the scrap business as a 22-year-old truck driver and part owner at a sheet aluminum recycling business in the Los Angeles area. Eight years later, he left that business to found the original firm in the group—MacLeod Metals in Gardena—aided by his wife Marilyn, who continues to serve as vice president and 50-percent owner of the MacLeod Group. It was a modest beginning, recalls Ian, president of the group: "We started off with one very used rolloff truck, a good flatbed truck, and a couple dozen boxes and containers. That was it."
The firm initially focused on sheet aluminum, but in 1971 Ian saw an opportunity to detin steel can scrap and decided to take it. The catch to building his detinning operation, however, was that he had to take out a second trust deed on his home. "The mortgages were more on the home than the house was worth!" he laughs. "Those were crucial times, but we were fortunate to be in a specialized business. We were more than just another scrap company with trucks and containers."
By the mid-1970s, MacLeod Metals was doing well in its new detinning venture, but its sheet aluminum business was drying up, so Ian began looking around for a new undertaking that ended up being California Metals Recycling Inc., a buyback center he founded in 1978 to purchase ferrous and nonferrous scrap from the public. The operation has since grown from its start as a single center in Gardena to include three others in the Los Angeles suburbs of Wilmington, Harbor City, and South Gate, and can boast that in 1987 it became one of the first companies to become a state certified container redemption center under the California Beverage Container Recycling and Litter Reduction Act.
Terra Firma
In 1981, after MacLeod Metals relocated to its current 8-acre site in South Gate , Ian once again sought a new venture and considered going into either paper recycling or wire chopping. He chose wire chopping for three reasons: His firm already knew nonferrous metals, he felt there was too much competition in the paper recycling field, and wire chopping—like detinning—is a specialized processing field, and therefore offered potential as a niche business.
Thus was born Firma Inc., the MacLeod Group's wire processing division, which started its first line in 1983 and added a second line, dubbed Firma II, in 1988. "In the beginning, we figured that if we did a good job, we could be very successful," MacLeod says—and, boy, was he right. Today, Firma is among the top three wire choppers in theUnited States based on annual processing volume, and it has been the leading U.S. exporter of No. 1 copper chops to Japan in three of the past six years, Ian reports.
Unlike the vast majority of its wire chopping competitors, Firma is a tolling operation exclusively, with about 60 percent of its business devoted to processing copper and aluminum wire for other West Coast scrap recyclers, and the remaining 40 percent for Trojan Trading Inc. (named after the University of Southern California Trojans), the 2-year-old trading arm of the MacLeod Group. The firm has succeeded as a toller, in large part, because it has what it considers to be two of the highest production chopping lines in the world, machines that Ian affectionately calls "monsters." "Our plants are state-of-the-art and beyond the typical off-the-shelf chopping lines," says Ellis White, general manager of Firma, Firma Plastics Inc., and Trojan Trading. "Our technology gives us much greater production capacity and more efficiency in our recoveries." Each line has two specially engineered 500-horsepower granulators (200 horsepower is typical), which enable each line to process between 2.5 million and 6 million pounds per month depending on the type of wire. In addition, Firma's lines use pneumatic blowers rather than the conventional bucket elevators to move material through the system and feature vibrating water tables that extract metal still stuck in the tailings at the end of the process.
Why go to the trouble and expense of specially designing these lines? "We have a serious commitment in our tolling processes to give customers the best possible service," Ellis says, "which means recovering the maximum amount of material with the highest quality out of what they give us." To achieve its recovery and quality goals, Firma adheres to a diligent maintenance schedule to make sure its chopping lines are always in peak operating order. For instance, the firm devotes an eight-hour shift every day to cleaning the lines and turning or replacing the granulation blades. "That's what it takes," says Norm Fluegeman, maintenance supervisor. "This type of equipment is very self-destructive."
Thanks to this commitment to quality, Ellis claims, Firma has established itself in just 10 years as the standard-setter for copper and aluminum chops, especially in thePacific Rim region, where it ships 70 percent of its chops. Some overseas consumers, in fact, require other recyclers to provide material that meets Firma quality standards, which often means the company has Firma toll the material for it.
The Byproduct Niche
If you really want Ian's eyes to light up, ask him about Firma Plastics—the plastic recycling arm of Firma formed in 1990—and its byproduct processing operation, which he can only describe as "beautiful."
The idea for Firma Plastics goes back 10 years and was rooted in Ian's desire to recycle not only the metals from scrap wire, but also the plastic and rubber insulation, material that most wire choppers discard. "We wanted to go a step further," he explains, "and instead of sending this material to the landfill, we wanted to divert it into a recycled product."
In pursuit of this ideal, Firma began brainstorming with a plastic company named Productivity of California (ProCal) and built a unique processing operation to recover as much metals and plastics as possible from tailings and other plastic/rubber wire-chopping byproducts. In the three-part system, the material—residues from Firma's wire chopping lines as well as residues purchased by Trojan Trading and those generated by other wire choppers that pay Firma Plastics to toll the byproducts—is first run through a 200-horsepower Triple/S Dynamics 48 granulator, which extracts all steel particles and prepares the remaining aluminum, copper, and plastic/rubber segment for transfer to a Carpco electrostatic separator. This machine magnetizes the plastic/rubber particles and pulls them from the aluminum and copper chops. The final process involves a 200-horsepower Cumberland 43 granulator, which uses gravity to separate aluminum and copper based on their different weights.
The result? Firma Plastics recovers four sellable products—aluminum, copper, steel, and plastic/rubber—and, in the process, recycles more than 70 percent of a material that would normally have gone to the dump in toto. "Firma Plastics is a one-of-a-kind operation because it spends a lot of its time recycling what most choppers discard," Ellis explains. "To my knowledge, there's not another company in the country that makes a business of doing that six days a week, 12 months a year."
As with any other scrap commodity, the chopped plastic/rubber Firma processes falls into different grades, including pure black rubber, polyethylene, and polyvinyl chloride. The company sends these products a hundred yards down the street to ProCal—which the MacLeod Group paid to relocate from Huntington Park , Calif. , to be closer to the Firma Plastics operations—and ProCal then recycles the polyethylene into flower pots, seedling trays, and other products for the nursery industry. As for the environmentally taboo polyvinyl chloride insulation, Firma Plastics and ProCal have found a way to recycle the material into truck mudflaps, thus eliminating the potential hazards of its lead content while providing a much-needed market for its generators. "In our specialized areas, there's no doubt that we've been innovative and creative," MacLeod says. "We've been ahead of the industry in a lot of the areas we've participated in."
The Compliance Goal
Besides great weather and movie stars, California is known for its environmentalism—and, thus, regulations—which can mean extra burdens for scrap recyclers in the state. While MacLeod Group executives acknowledge this drawback, they accept the environmental restrictions as not just a duty, but also a goal. "We want to do our part to protect the environment," says Bill Lambert, general manager of MacLeod Metals and California Metals Recycling. And as far as Ian is concerned, compliance is his firm's number-one priority. After all, he notes, "If you aren't in compliance, you won't be around for long, especially in California ."
The most obvious example of the company's environmental focus is right under your feet—all of its operations are completely hard-surfaced. "Not one quarter of an inch of our ground was used for recycling before it was covered with concrete," says Ellis. You also can't miss the two large, bright yellow baghouses over the Firma chopping lines that loom behind Ian's second-floor office window, serving as a constant reinforcement of the firm's motto: "Committed to a Clean Environment Through Recycling."
Meanwhile, a ground-level inspection of the chopping lines shows that they are hemmed in by concrete berms that catch all process and storm water, directing it into holding tanks for use at the final separation stage of the chopping lines. The MacLeod Group has such confidence in its storm water system, in fact, that it volunteered to be a test site for the state storm water permit application submitted by California members of the Institute of Scrap Recycling Industries ( Washington , D.C. ). "We've always tried to get into compliance early, as soon as we've heard about a regulation that might go into effect," says Melanie MacLean, project coordinator and one of MacLeod's three daughters, all of whom have assisted with the business over the years. "We try to comply ahead of time so we don't end up having to catch up."
The company's commitment to environmental compliance is also evident in how it runs its lead processing operation, a Firma Plastics division that strips lead-insulated wire. Among the operation's "green" features: Wire is cut in machines that use powerful suction to draw off any airborne lead particles and dust, the processing area is hosed down every three hours to prevent lead dust from dispersing, and all water is collected and processed through the operation's own water treatment system. In addition, all employees must wear gloves, rubber aprons, and face respirators at all times, and they must take showers after working. "This is probably the most state-of-the-art lead cable processing plant in the country," Norm claims.
As part of its compliance efforts, the MacLeod Group hires environmental consultants regularly to offer advice and keep its executives updated. "We're dedicated to running an environmentally responsible business," Ellis sums up. "We attempt to meet or exceed all regulatory requirements as they relate to environmental processing. That's why we've spent nearly $2 million over the years in environmental equipment in this plant." The main benefit of being an environmentally focused company—besides being able to stay in business—is that "the more we're in compliance," MacLeod comments, "the more our customers develop a comfort zone with us."
Hand in hand with its compliance efforts, the MacLeod Group makes a point of keeping its operations clean and user friendly, scrubbing the floors at its redemption centers weekly and painting them white for aesthetic appeal. "We have many visitors and get a lot of customers at our redemption centers," Ian says, "and they go away saying they appreciate the cleanliness."
Managing for Success
Diversity and innovation have carried the MacLeod Group a long way, but its success also seems to be based on its executives' smart management practices, many of which have helped the firm keep its costs low. Every summer, for instance—from June to October—Firma saves megabucks on its electricity bills by changing its operating schedule from peak daytime demand hours to evening and night hours. The firm also participates in the local utility's "interruptable service" program in which it agrees to shut down operations within one minute if the utility asks it to do so during times of intense electricity demand. In return, the utility charges Firma less for its electrical usage during its operating shifts.
Firma also designed its own octagonal corrugated shipping containers for its copper chops because it wanted a container that offered several advantages over conventional gaylord boxes, including better product identity, improved strength, and an exact fit on pallets. Most important, the containers enable Firma to fill sea containers to within 50 pounds of the maximum shipping weight, whereas shippers using normal gaylords often fall short 2,000 to 3,000 pounds.
Another money-saving idea deals with the MacLeod Group's truck fleet. Several years ago, the firm used to operate 10 trucks, but it found this to be both time- and money-intensive. So the company pared its fleet to five vehicles—the bare minimum—and opted to work with independent contractors for its remaining trucking needs.
There have also been improvements in the detinning operation. For instance, in the past, MacLeod Metals extracted tin from solution onto thick steel plates, which added weight to its shipments and which needed to be returned. Now, the firm plates tin onto thin metal sheets that add virtually nothing to its tin loads and don't need to be returned, thus saving on backhauls, Bill notes.
One of the company's biggest cost burdens in recent years has been its workers' compensation premiums, but it has made an attempt to tackle this management obstacle too: The firm started a "safety bingo" program in March, whereby a number is drawn daily, and the first employee or employees to get bingo win cash awards of an amount based on the amount of time since the company's last injury. If the employees have had no injuries, the prize increases $25 every game (to reach a maximum level of $500). "The program has been very effective," says Melanie. "It has encouraged peer pressure as far as watching out for each other. It just takes one person to blow it for the others."
The company adds drama to the bingo games by conducting unannounced safety inspections. If all workers in a shift are wearing their safety apparel, each person gets a bonus bingo card, which improves his chance of winning. Employees can also earn bonus cards by offering a suggestion that helps improve operations. "We try to get them more involved and make sure they feel important," Melanie explains. "Sometimes you can get so busy with day-to-day things that you forget to reward them or get feedback from them. That's the biggest thing—keeping the communication lines open."
Of course, key to the success of any company is the productivity of its employees, and the MacLeod Group has 85 of the most productive around, Ian says. "We do a hell of a volume for the number of employees we have," he boasts. Beyond competitive wages and a health plan, the firm rewards its employees by giving bonuses twice a year and $50 gift certificates to local grocery stores five times a year on major holidays. And there are other small but appreciated touches such as selling soft drinks to employees for a quarter—"We subsidize their sodas," Melanie laughs—and ordering lunch every day for office personnel and plant supervisors. In addition, Ian makes it a point to visit every redemption center on his way to work each morning, a gesture that helps the two or three employees at each center feel more connected and appreciated. (It also gives him a chance to make sure everything is up to snuff.) "With a clear conscience, I can honestly say we've been very fair to our people," Ian says.
This enticing work environment has compelled many employees to stay with the company 10 to 20 years. "This is a closely held family business," Ellis notes, "so you're dealing with people you know. I count Ian as a friend as well as an employer. That makes working a lot easier. And all of us enjoy a positive esprit de corps type relationship."
Still Learning
Though Ian has no desire to grow the MacLeod Group into a sprawling conglomerate, he does have other plans for the firm. The detinning operation, for instance, will soon begin supplying a special ferrous nugget or briquetted product to minimills for the first time, a move that is expected to give the operation freedom from relying exclusively on its mine consumers.
On the redemption center front, the MacLeod Group always has its corporate feelers out for a new location. "We'd like to have more of them," Bill says, "but every area is pretty covered." In the meantime, the firm plans to upgrade the computer system in its existing centers to improve their inventory tracking and streamline their reporting duties.
As for Firma Plastics, the near-term goal is to find a way to recycle the 30 percent of the byproduct stream that must still be disposed. "Ever since we recycled the first pound of plastic," Ian says, "our ultimate goal has been to recycle 100 percent of the byproduct." To this end, the company has hired an engineer to design a system that can separate unsegregated plastics based on flotation principles. "We're still learning," Ian says, "but if we keep working at it, it's just a matter of time before we hit the 100-percent recycling mark." •
This Los Angeles-area company has been an innovator in several specialized markets in the industry, building its reputation on its unique—and diverse—scrap recycling services.