September/October 1988
What do consumers want? A group of professionals on the lookout for lead, steel, aluminum, zinc, waste paper, and copper discuss their purchasing objectives and wish lists.
By Madelyn R. Callahan
Madelyn R. Callahan is a Washington, D.C., writer who specializes in business issues.
Some grew up in the recycling business. Most have more than 20 years experience. They work for companies established as much as seven decades ago. The 12 company spokesmen interviewed for this article were schooled by experience, and they know exactly what they want from their suppliers--a good working relationship, quality material, and a commitment to consistent supply.
In the paper recycling industry, quality and consistency rank highest on the priorities list. At the Salem, Massachusetts-based North Shore Recycled Fibers (a division of the Newark Group), Vice-President and General Manager John Gold says, "We want to buy clean material, as free as possible of contamination, and to build relationships with different waste paper companies. So we look for consistency and for valued customers who'll ship to us 52 weeks a year, customers who have an understanding of what waste paper recycling involves. It's a give-and-take kind of relationship."
North Shore, which buys all grades of waste paper amounting to roughly 350,000 tons a year, sells to domestic paper mills and also serves as the purchasing department for all of the Newark Group's mills in the Northeast. Newark owns nine mills throughout the U.S., 12 converting plants, and four waste paper plants.
Quality and consistency are also important at White Pigeon, a recycled-coated-boxboard mill in White Pigeon, Michigan. The company, which purchases 50,000 tons of 100-percent recycled furnish, or feedstock, each year, uses computer printout (CPO), kraft clippings, and old corrugated used box cut to produce coated box board.
Mill Manager William G. Schmidt values suppliers who "do what they say they're going to do when they say they're going to do it" and looks for quality and honesty. "We want what we're paying for. If we're buying kraft clippings, we want it to be kraft clippings, not some high grade of old corrugated."
The president of Chicago-based aluminum recycler Allied Metal Company, Marvin Fink, says getting what he pays for is crucial. Allied Metal operates three facilities that use all grades of aluminum scrap--100 million pounds each year--to produce aluminum alloy. Fink looks for a supplier who will provide the grade and type of material agreed on. Since the company plans how to use material based on purchase orders, he says, "it's imperative to get what we think we bought."
Continuity also leads Fink's "wish list," he says. "We like to have steady shippers who ship within a specified time period. There must be a certain rapport that means we'll always be there for him to ship to and that he'll be a consistent shipper."
Consumer of can scraps Kaiser Aluminum & Chemical Corporation in Pleasanton, California, looks for competitive pricing, says Manager of Metal Planning Lee Benbenek. The company, a wholly owned subsidiary of KaiserTech Ltd., one of the world's leading aluminum producers, operates plants in nine states and seven foreign countries.
Top quality is another must. Benbenek says, "We're interested in all forms of scrap that meet our [raw material needs] as long as the scrap is good and clean and it meets our strict specifications, which comply with the industry's."
Scrap-based steel maker Chaparral Steel Company in Midlothian, Texas, shares these concerns for adherence to specifications as well as for consistent quality and supply. According to Dick Jaffre, vice-president, raw materials, the market mill buys annually just over 1.3 million tons of steel scrap in the form of Nos. 1 and 2 heavy melt grades, bundles, turnings, and shredded auto scrap to produce structural steel, concrete reinforcing bar, and special bar-quality steel.
Jaffre says he looks for material with acceptable chemical purity and predictability, acceptable furnace yield, good magnet-handling characteristics, and good bulk density. He also says the material must be free of contents that would present environmental or safety hazards and of pieces weighing more than 800 pounds. Says Jaffre, "We value suppliers who meet these requirements consistently."
Next on his list is "continuity of supply. ...We're a low-cost producer, in the market 12 months a year, 10 years a decade. And we value vendors who supply us in good times and bad-whether the price is up or down."
The emphasis on consistent quality and supply is firm in the copper recycling industry as well. In addition, a history of long-standing business relationships and a positive reputation within the recycling community are desirable characteristics in suppliers, says Henry L. Schweich, president of Cerro Copper Products Company in Sauget, Illinois. The producer of copper cathode and tubing for plumbing, heating, and air conditioning buys several hundred million pounds of refinery and mill grades a year for its electrolytic copper refinery and tube mill in Sauget.
"We're looking for suppliers with reputation, integrity, and reliability, as well as quality of product and packaging," Schweich says. The company uses a combination of visual grading based on 70 years of experience and lab analysis on those items capable of being handled that way.
Philadelphia-based Franklin Smelting & Refining Corporation consumes high and low grades of copper-, brass-, and precious-bearing metals. According to Trading Manager Daniel Schwab, each year Franklin buys 100,000 tons of heterogeneous copper-bearing scrap, on an analysis basis, to produce 3,000- to 4,000-pound slabs of blister copper containing precious metals. Schwab expects customers to know the general composition of each scrap load before it is analyzed, and to prepare it correctly by either cutting, drying, segregating, or untangling it to make it easier to handle once it arrives. He also looks for suppliers who have material constantly available and are willing to sell it on an ongoing basis.
Schwab encourages suppliers to ask questions. "We want them to call us for advice and information on what to do with the scrap and how to handle it even before it's shipped. We're always open to that and feel it's a good way to do business. It prevents problems down the road."
Supplier reputation is seriously considered at Warrenton Refining Company, Inc., says a representative in the purchasing department. The secondary copper refinery, located in Warrenton, Missouri, buys 70 million pounds a year of Nos. 1 or 2 copper or silver-bearing scrap to produce refined copper ingot or copper wire bar.
The company representative also mentions visits to the supplier's facility to check for orderliness, to see that the equipment is in fair condition, and to go over some of the packages to make sure they're problem-free.
The zinc recycling industry, too, values suppliers with high standards of integrity and dependability, according to Thomas Johnston, vice-president of materials for Zinc Corporation of America in Monaca, Pennsylvania. The company, the largest U.S. producer of slab zinc from ores and concentrate, also buys zinc residues or skimmings to produce oxide, dust, and powder.
Says Johnston, "We look for a long-term relationship with suppliers looking for the same thing, who want to establish a trust to the benefit of both companies." He says that a lot of Zinc Corporation of America's business is built around a joint program between the companies to which they supply finished goods. "We take back some of their materials, so in a small sense we're mutually dependent on each other."
At Huron Valley Steel Corporation in Belleville, Michigan, Executive Vice-President Mel Wallace looks for suppliers who will accurately represent the quality of the material and deliver it in a timely manner. His company buys a variety of nonferrous metals on a recovered basis. They include zinc, copper, aluminum, and brass residues from automobile shredders. Like Schwab, he wants the supplier to have an idea of what the material contains before it is analyzed. Wallace says, "We look for the person who will represent this material honestly, who knows approximately what his recovered metallics will be."
According to recyclers of lead batteries, a supplier's ability to follow packing specifications is by far most important. General Manager, Raw Material Supply Martin Goldstein of Dallas, Texas-based RSR Corporation says he insists on correct preparation of batteries for shipment according to specific Department of Transportation (DOT) requirements.
"This is a competitive industry. We fight tooth and nail to get these batteries and sometimes it's difficult to say, 'I'm sorry. We don't want your batteries.' But it's got to be done." He says if the supplier doesn't prepare the material correctly, "the consumer may not be around at all."
The 50-year-old RSR, a secondary lead smelter, buys roughly 220,000 tons of scrap batteries each year to produce pure lead and antimonial lead in its three smelting refineries: Revere Smelting & Refining Corporation in Middletown, New York, and Quemetco, Inc., located in Indianapolis, Indiana, and City of Industry, California.
Exide Corporation, a vertically integrated manufacturer of lead-acid batteries, headquartered in Reading, Pennsylvania, also emphasizes DOT packaging requirements. "With our three secondary lead smelters located in Dallas, Texas, Reading, Pennsylvania, and Muncie, Indiana, in conjunction with a large retail collection network, we receive enough lead-acid batteries to be one of the largest collectors and recyclers of batteries in the country," says Louis Magdits, manager, raw materials. He says suppliers must conform to all applicable DOT regulations "or we don't buy from them."
Overall, integrity, reliability, and commitment appear to be the general virtues consumers seek in suppliers-whether these characteristics apply to conscientious packing according to standards, representation of materials, or promises of regular shipment. The ideal that consumers seek is universal among all business professionals.
As Marvin Fink says, "There's nothing earth-shaking about our expectations. It's common sense. We want our suppliers to do what they gay they're going to do, to be consistent; and we'll be consistent on our end. We'll try to supply a steady market for their material."
What do consumers want? A group of professionals on the lookout for lead, steel, aluminum, zinc, waste paper, and copper discuss their purchasing objectives and wish lists.