Port of Call: CARI

Halifax harbor in Nova Scotia provided natural beauty and a symbolic setting for CARI’s 57th annual convention.

By Robert L. Reid

Robert L. Reid is managing editor of Scrap.

With Canada’s maritime province of Nova Scotia as background, the 57th annual convention of the Canadian Association of Recycling Industries (CARI) (Don Mills, Ontario) was awash in symbolism.

Meeting in the Sheraton Halifax Hotel and Casino overlooking Halifax harbor, attendees gathered not far from the pier that welcomed many of Canada’s immigrants to their new home—a reminder of the North American scrap industry’s immigrant origins.

Likewise, the recent visit of the NATO fleet to Halifax emphasized scrap’s role as a vital material in two world wars. And, of course, the proximity of a casino was ironically appropriate given the market risks of dealing in scrap commodities. One attendee even likened the recent troubles at one-time scrap consolidator Philip Services Corp. (Hamilton, Ontario) to a “gamble” that didn’t pay off, arguing that if the price of copper had risen rather than fallen Philip might not be selling off its scrap processing operations.

Celebrating recycling “coast to coast”—last year’s convention was held in British Columbia—CARI officials cited a successful year behind them and a bright future ahead. Since the 1997 convention, for instance, the association has launched its first insurance package for members, increased membership, boosted its surplus 40 percent, and attracted 50 percent more exhibitors to this year’s meeting.

In the future, CARI plans to establish a home page on the World Wide Web (hot-linked to ISRI’s Web page) and hold an ISRI-style “consumer’s night” this November in Toronto.

Partners in Scrap

The common ground between CARI and ReMA was also highlighted in a presentation by ReMA Executive Director Robin Wiener, who noted that the two associations share many of the same concerns. These include the need to “foster frequent and effective communication with members,” keep the scrap recycling industry and its associations “strong, viable, and relevant in a rapidly changing business environment,” and deal with the complexity of complying with environmental laws. This is especially true for Canadian companies that do business in the United States and thus are subject to potential Superfund liability, Wiener explained.

Wiener discussed ways by which ReMA is trying to overcome the U.S. government’s lack of a distinction between scrap and waste. 

On the judicial front, she noted, the U.S. 4th Circuit Court of Appeals essentially agreed with ReMA in the recent Pneumo Abex v. Highpoint Railroad ruling that scrap—in this case, worn railcar wheel bearings—is not waste. Thus, the scrap processors and railroads that sold the bearings to a smelter that later produced a contaminated slag can’t be held liable for disposing of a waste.

“This victory represents another very important step for the recycling industry in the United States toward gaining full relief from governmental requirements and penalties that were designed to only apply to waste disposal activities,” Wiener stressed.

Administratively, she recalled last year’s decision by the U.S. EPA that prompt and home scrap metal, as well as processed obsolete scrap metal, aren’t solid waste when the material is being recycled—a ruling that means “most of the scrap metal processed by our members isn’t considered solid waste,” Wiener said.

There are even positive signs on the international front, she added. She pointed to the Basel Convention’s Conference of the Parties decision this past February to create annexes that specifically exclude almost all scrap commodities from the hazardous waste category that’s subject to trade limitations.

Unfortunately, Wiener conceded, there has been less success in the legislative arena to actually reform the Superfund law. Three successive Congresses have failed to enact comprehensive revisions to Superfund, she noted.

So, with little prospect of the current Congress getting much further, ReMA has developed a new strategy named “Operation Breakout.” The plan, Wiener explained, is to separate ISRI’s reform language—which argues that the sale of scrap recyclables isn’t “arranging for the treatment or disposal” of hazardous substances—from comprehensive Superfund reform legislation. Then, ISRI’s less-controversial bill could be passed on its own merits, without being tied up by the more contentious issue of completely overhauling Superfund law.

As of early June, ReMA had enlisted 210 cosponsors for the bill in the House, with the goal being to reach 290, Wiener reported. And three newspapers, one in Virginia and two in Ohio, had written editorials supporting the ReMA position.

Whether the issue is environmental law reform, consolidation, training, or the transition to a new generation of scrap industry leadership, associations such as ReMA and CARI must lead their industries, not simply play catch-up, Wiener stressed. 

She concluded that ReMA and CARI must remain “partners in our efforts to keep scrap recycling viable on this continent well into the next century.”

Nonferrous Consumers Seek No Surprises

In two nonferrous commodity sessions, the focus turned from the state of the markets to scrap quality and how scrap processors and consumers can work together to build a mutually beneficial relationship.

Aluminum. Although the short-term outlook for aluminum is rather dim—some reports show demand falling 15 percent in Korea this year and 33 percent in Indonesia—the metal’s long-term prospects are “exciting and bright,” said Leon Kozierok, president of the Indalloy division of Caradon Ltd. (North York, Ontario). Kozierok’s optimism stems from the increasing use of aluminum, especially recycled aluminum in automotive parts.

In fact, the transportation sector is the largest single market for aluminum in the United States, consuming more than 25 percent of the total supply, Kozierok said. The importance of aluminum in cars and trucks will only increase, he stated, as stricter rules on emissions and fuel consumption drive the demand for lighter vehicles. 

Today, secondary aluminum is used extensively for cylinder heads, manifolds, and pistons, while future growth areas include suspensions, drive trains, exterior shells, and structural products, he said.

Honda’s NSX currently leads the automotive world in aluminum usage, with 1,000 pounds per vehicle, Kozierok noted, while Ford expects to average more than 500 pounds of aluminum per car within the next seven years.

As a secondary smelter, Indalloy wants to work with aluminum scrap suppliers in a mutually beneficial partnership, Kozierok added. 

To that end, scrap processors should understand what his company needs as a consumer: namely, that scrap be provided in large enough quantities to avoid shopping around (preferably on a long-term basis), priced competitively, packaged appropriately, and that it contain no “surprises” (such as hazardous materials).

In return, Kozierok promised to consider the scrap suppliers’ needs. In his view, processors want consumers who are always in the market, who clearly communicate their quality standards, and who provide technical support such as analysis, production trial feedback, and updates on changes in the industry. And, of course, processors want consumers who pay on time at the agreed-upon price.

Copper and Brass. Consistency, not surprises, is also what Colonial Metals Co. (Columbia, Pa.), a brass and bronze ingot maker, wants from its scrap suppliers, explained Tim Swartz, buyer. Consistency must be the hallmark of the ingot business. It’s what Colonial Metals’ customers demand, and it’s why the company undertook ISO 9002 certification, he said.

ISO 9002, an international quality system standard, led Colonial Metals to examine each task affecting its final products, from buying to processing to delivery. As a result, the firm improved many processes, increased productivity, and became much more efficient—reducing energy usage 3 percent, for instance, Swartz noted.

Colonial Metals also became more selective in its scrap purchasing. “Our customers made us become the first ISO-certified brass and bronze ingot manufacturer in North America,” Swartz explained. “We’ll be looking for the same certification from our suppliers that our buyers demand of us.”

By seeking better-packaged, better-sorted, and more consistently reliable scrap, Colonial Metals can reduce its processing costs, Swartz noted. That, in turn, could free up more money to pay for this higher-quality material. “When our suppliers enable us to work more efficiently,” he said, “they also put us in the position of hopefully sharing the wealth.”

Green Dream

The requirements and benefits of the ISO 14000 environmental management standards highlighted the convention’s environmental meeting.

Lonnie Luciw, an environmental engineer with Ford Motor Co. (Dearborn, Mich.), explained that under ISO 14000 certified companies agree to comply with local environmental regulations and work at “prevention of pollution” (as distinguished from “pollution prevention,” a term found in certain laws designed to make companies avoid creating pollution at the source, he said).

While ISO 14000 requires companies to set goals and objectives for environmental management, and establish emergency response procedures, it doesn’t itself mandate specific emission levels to reach or treatments to use, Luciw said.

The idea was sold to Ford’s corporate management on the grounds that fleet customers in Europe were requiring their suppliers to have some sort of environmental management system, Luciw noted. Since Ford had already achieved registration under the ISO 9000 quality system standards, the ISO 14001 standard seemed a “disciplined” way to integrate environmental improvement into its business and financial planning. Facility managers liked the fact that ISO 14001 could build on the existing ISO 9000 processes for recordkeeping, internal audits, and other activities, Luciw added.

Ford hopes to certify all its plants worldwide by the end of the year—a goal that’s “pretty well on schedule,” Luciw said. He stressed that within Ford itself, the word “management” was dropped from the concept of environmental management systems because the approach is meant to be embraced by hourly employees as well as managers.

ISO 14001 doesn’t require similar certification by suppliers, Luciw noted, but Ford does encourage its suppliers to develop their own environmental systems. He noted that certain suppliers currently serve on the cross-functional work teams implementing environmental systems throughout Ford facilities.

The ISO 14001 process isn’t easy, Luciw conceded, because it requires a great cultural change: non-environmental employees must take on environmental responsibilities while the environmental specialists assume coordinating roles. But he said Ford has already seen benefits ranging from cost savings to improved relations with government regulators.

One Consumer’s Ferrous Future

While speakers at the commodity sessions avoided detailed predictions about scrap markets, the ferrous meeting’s presenter at least noted that his company—Sydney Steel Corp. (Sydney, Nova Scotia)—expects to see a mini-boom in its own purchasing.

“We see a big demand for scrap in Sydney for the next 20 years,” predicted Jim MacDonald, director of quality assurance and customer service. “We’ll be looking for all our regular grades, just a lot more of them.”

The reason: Sydney Steel’s planned acquisition by Ahmsa (Altos Hornos de Mexico SA de CV) (Monclova, Mexico). Announced last December, the deal is in the final stages of negotiations, MacDonald noted, and should result in various upgrades at Sydney, a former integrated steelmaker that converted to electric-arc production in 1990. 

Currently operated by the Nova Scotia government, Sydney expects its Mexican owners to install a new caster and make other improvements to increase production from 150 tons per heat to 165 tons, ultimately leading to a capacity of 1 million tons a year—hence the increased demand for scrap, MacDonald explained.

On Guard Against Radiation

The health and safety session featured a panel discussion on guarding against radiation in scrap metals.

According to Michael Vocilka, North American sales manager for Exploranium (Mississauga, Ontario), some 96 percent of radioactive material found in metal shipments is detected by stationary monitors—the kind that trucks or railcars pass through. Hand-held units have detected only about 2 percent of the material found, he noted, with visual inspection accounting for most of the remainder.

Detecting such material at the gate is critical to the life of your business, Vocilka asserted. Otherwise, undetected radioactive material could contaminate your equipment and property, and expose your employees to dangerous levels of radiation. And you won’t even know it has happened until you ship the material to a consumer that does have detectors—hardly the most customer-friendly way of finding the problem.

But Vocilka didn’t sugarcoat the challenges of detection. For instance, he pointed out that a potentially dangerous shielded source of cesium buried in a truckload of scrap could give off the same energy signature as a relatively harmless piece of pipe coated with naturally occurring radioactive material. 

Likewise, the background radiation levels against which your detection equipment must search can fluctuate throughout the day, based on geography, ozone levels, even recent rainfall. Finally, Vocilka warned that trucks or railcars must pass through radiation detectors slowly—anything faster than about 5 kph won’t give the detectors time to read the energy signatures.

One attendee expressed concern over high background radiation caused by radiography equipment used as much as a quarter mile away from the detectors in his scrap plant. 

In response, Bruce Bateman, vice president of sales and marketing for Rad/ Comm Systems Corp. (Brampton, Ontario), warned detector users about a potentially dangerous side effect: namely, if you adjust your detectors too high to compensate for such periodic bursts of increased background radiation, you risk not detecting the actual radioactive material that’s hidden in a load of incoming scrap.

As for what processors should do if they detect radioactive material, Don Connolly, commercial manager for Monserco Ltd. (Brampton, Ontario), recommended calling in outside expert help.

Don’t tear down the load yourself, he warned, unless you’ve got the knowledge, protective clothing, and analysis gear to avoid spreading contamination throughout your plant or among your employees.

Connolly also warned that a “gray area” exists in Canadian law if you simply refuse to accept a shipment of scrap that set off your detection equipment. Should the material return to its originating site without problem, you’re probably fine, he said. But your company might face liability if the rejected shipment causes contamination on its return trip, despite the fact that you never took possession of it. 

Connecting With Creativity

Even geniuses and giant companies can overlook the potential of creativity and innovation, noted Guy St. Jean, president of Quantech R&D Inc. (Longueuil, Quebec). For example, Thomas Edison discounted the commercial prospects of his own invention—the phonograph. And Tom Watson, former IBM chairman, once thought there would be a market for no more than five computers in the world.

Of course, Watson said that when a single computer took up an entire building, St. Jean explained. But his miscalculation underscores a barrier to creativity: assuming that the future will resemble the present.

Instead, St. Jean stressed, creativity requires making a new connection between two concepts, finding a link between two things to create a new possibility. Combine a sailboat with a surfboard, for instance, and you get something new: a wind surfer.

Such new ideas are critical to the survival of businesses today, St. Jean said. But whereas 80 percent of business leaders in a 1993 survey agreed on the importance of such innovation, only 4 percent felt that their own companies were superior at innovating. 

The rewards of innovation are evident in the marketplace, where innovative companies enjoy growth rates twice those of noninnovators, St. Jean noted. The rewards are also clear on a company’s bottom line: Only 14 percent of new product launches create an entirely new product or service, St. Jean explained, but these leaps can account for as much as 60 percent of a company’s profits

Words of Warning

John Crosbie, a former member of the Canadian parliament from St. John’s, Newfoundland, focused on Canada’s problems in preserving national unity, in light of the strong French-speaking separatist movement in Quebec, though many of his points were more universal.

For instance, in the category of “be prepared,” Crosbie pointed to a recent referendum in which Quebec citizens nearly voted to secede. The incident exposed how completely unprepared Canada’s government was to deal with such secession—no contingency plans existed in case the separatists had won, he said.

Likewise, under the category of “be careful what you wish for,” Crosbie stressed that Quebec’s separatists must understand that leaving Canada wouldn’t mean canceling their province’s share of the national debt. Moreover, the borders of Quebec would then be open to readjustment because territory had switched from one province to another over the years, he said.

Finally, Crosbie expressed an attitude almost akin to “all sales are final” in noting that Quebec has already held several votes on secession—all of which failed. He urged resolving the issue once and for all by making the next referendum the last. “Uncertainty can’t go on forever,” he stated.

Cleaning Up Nova Scotia

The thrifty Scots who settled Nova Scotia would probably approve of the provincial government’s efforts to avoid throwing things away. In fact, Nova Scotia was the first province to sign on to Canada’s goal of cutting in half the amount of waste sent to landfills by 2000, noted Gerard MacLellan, chairman of the Solid Waste-Resource Implementation Committee within Nova Scotia’s Department of the
Environment.

When that effort began in 1996, Nova Scotians were diverting less than 8 percent of solid waste from the province’s landfills, MacLellan said. Two years later, the province is past the halfway mark—at 26 percent, currently—and well on its way to meeting that 50-percent goal, he noted.

In addition, the province has shrunk the number of landfills from more than 100 in the 1970s to fewer than 20 today. By 2005, MacLellan said, Nova Scotia will need only 10 landfills for the whole province, and those will last perhaps twice as long as originally designed.

MacLellan also touted the growth in private-sector jobs related to preserving the Nova Scotia environment. One particular enterprise involves converting a year’s worth of used tires—some 600,000 in all—into “mattresses” for cows.

He noted that about 6,600 people throughout the province worked in environment-related positions in 1997, with 1,400 directly employed in solid waste management and recycling. This year, MacLellan predicted, the total environmental employment should top 7,000, with solid waste-related positions exceeding 1,600. •