March/April 1995
Animal hides, crude botanicals, burlap bags, and wood pellets may seem like unusual commodities to most scrap recyclers, but to some they’re business as usual. Here are vignettes of a handful of experts in these off-the-beaten-path niche markets.
By Kent Kiser
Kent Kiser is an associate editor of Scrap Processing and Recycling
It’s a safe bet that few scrap recyclers have a clue what a deer skin is worth on the open market these days. Or a cattle hide. Or a coyote pelt for that matter.
It’s also unlikely that many could define the term crude botanical (no, it doesn’t mean plant matter with no manners) or know how to get their hands on a few pounds of wild ginseng root.
The reason for this is obvious—most scrap recycling firms today are focused on mainstream materials, predominantly metals and paper. Indeed, while animal hides, botanical products, and burlap bags were mainstream themselves in the industry’s early days, they’re now viewed by most as primitive or antique items, ones long since dropped from most scrap companies’ commodity lists.
But to some processors, these unusual materials are still viable commodities on an equal footing with aluminum cans, busheling and old newspapers.
Walking on the Wild Side
One recycling firm that knows the skinny on animal skins is Pacific Steel & Recycling (Great Falls, Mont.). Though primarily a scrap metal processor and new steel distributor, this employee-owned, 35-branch company continues to trade in cattle hides; wild furs, including beaver, coyote, mink, and fox; and game skins, principally deer and elk, which the firm handles in quantities of about 70,000 and 18,000 annually, respectively.
And it’s not alone in this niche. Among the other scrap companies in the fur and hide business are Porter Brothers Inc. (Minot, N.D.), which trades about 6,000 cattle hides and 15,000 to 20,000 deer skins annually; Rapid City Hide & Metal Co. (Rapid City, S.D.), which handles about 8,000 deer skins a year; and Lowe Fur & Herb Inc. (North Wilkesboro, N.C.), which deals in furs such as raccoon, muskrat, mink, and red and gray fox
Most of these companies began as trading post-type businesses specializing in hides, skins, and furs, only accepting other scrap materials—such as metals—as a sideline. “Hides were all we did at one time, “says Robert Biernbaum, vice president of Rapid City . Over the years, however, these firms saw the scrap metal portion of their business expand and their skin and fur trade shrink, prompting most to change their corporate names. Pacific Steel & Recycling, for instance, began life around 1884 as Pacific Hide & Fur Depot, became Pacific Steel Hide & Fur in the mid-1970s, and finally made the change to its current name in late 1993.
Despite their name changes and shifting focus, however, hides, skins, and furs still generally account for 5 to 15 percent of the annual revenues of these recycling companies.
While trading in animal skins is a far cry from recycling, say, corrugated boxes, there are similarities between these disparate markets. For one thing, skins and furs are bought and sold based on type and grade, same as metallic and nonmetallic scrap. Deer and elk skins, for example, must be examined individually and graded 1, 2, or 3, Biernbaum explains, with 1 being the best ranking given to pristine hides such as those “pulled” by meat processing plants, 2 applying to hides with minor cuts or damage, and 3 pertaining to significantly damaged items, such as those with holes or wear spots from being dragged. Game skins must also meet a minimum size requirement of 7 square feet if they are to command top price, with smaller ones such as “capes”—those that have had the head and neck removed for mounting purposes—generally bringing in only about half that of a large skin.
Cattle hides also graded on a three-tiered scale with “packer” hides at the top, “country” hides in the middle, and No. 3 hides at the bottom. Furs, meanwhile, are graded in an entirely different way bases on such attributes as a fur’s type, size, and weight.
Most hides, skins, and furs are purchased in a raw, or “green,” state, which means they are freshly skinned and in need of salting, the all-important step that prevents the hide from spoiling and prepares it for sale and shipment. "If skins aren't handled properly right away, they can deteriorate on you in a hurry," says Richard Hanson, general manager of Porter Brothers. Though there are automated systems that can salt-cure a skin in about 12 to 14 hours, salting is usually a manual process in which a layer of hand stock salt is rubbed into a skin, then the skin is stacked with others and left to cure for about two weeks. According to LeRoy Stevens, executive vice president of Pacific Steel, a properly salted skin is safe from spoiling for up to a year.
While Pacific Steel performs custom-curing "tolling" services for large cattle processing operations and has some deer and elk hides tanned for sale to the domestic craft trade, it and other recyclers in the business generally buy skins as a relatively straight resale item. Thus, after salt-treating the game skins, most processors store them until there's enough to fill a 40-foot trailer, which means amassing in the neighborhood of 4,000 skins. These items are usually transported by truck and can be shipped simply stacked in the trailer and covered with a tarp or baled between layers of corrugated or burlap.
Recyclers sell their hides, skins, and furs to brokers as well as directly to tanneries, both domestically and internationally. Beef hides and game skins are principally used to make leather products, including clothes, gloves, and shoes, while furs--most of which are shipped to Canada or overseas--are used to make fur coats or trim on other garments.
As for how these items get to a scrap company in the first place, the bulk of cattle hides come from meat processing companies, as well as local ranchers and farmers, while game skins and furs are brought in primarily by individual trappers and hunters.
Fur Supply and Demand
In market terms, the hide and fur business is controlled by the same forces of supply and demand as all commodity markets, says Stevens, with buying and selling prices being based on quotes in industry trade publications and market fundamentals, with regional variations. "You basically run it the same as you run your metals business," Hanson remarks. "You talk with your customers and consumers, and you adjust your buying prices based on your selling price." That said, Stevens asserts that the hide and fur trade is even more volatile than the metal and paper scrap markets, pointing out, "We can see beef hides drop $10 apiece in a week," which is significant considering that a single hide generally goes for about $40 to $45.
In addition to being volatile, the skin business is also seasonal, with the exception of beef hides, which are a "year-round deal,” Steven says. The market for game skins and wild furs runs from October through March, which corresponds to the hunting season as well as the months when most wild animals have their lushest winter coats. “There’s no market in the summer for raw skins,” Biernbaum states.
The seasonal nature of the skin trade is a blessing, he remarks, in that it “fits nicely with the fall and winter slowdown in our metals business,” yet it doesn’t carry over into the busier warmer months. An added benefit, he says, is that dealing in skins enhances his firm’s scrap metal inflow in that “people bring in skins and metals at the same time.”
Aside from these pluses, why have these recyclers remained in the curious hide and fur niche? The predominant reason, of course, is that "we can still make a dollar at it," Stevens notes. Hanson agrees, stressing, "As with anything we handle, these materials have to be profitable or we wouldn't be in the market."
Beyond the bottom line, however, tradition is also a reason. "These materials have always been a part of the company, and we view them simply as another segment of our business," says Hanson. "We haven't considered getting out of it at this point." Biernbaum, in contrast, has considered getting out of the deer skin trade--his firm ' s last link to this niche--mainly because he expects the "hunting aspect" of the business to change in the coming years due to the stigma sometimes attached to hunting wild game, which could reduce the flow of skins and put a damper on demand for the material.
Other executives echo Biernbaum's remarks. Stevens notes that Pacific Steel is handling less wild fur every year due to the double-whammy of ranch-raised fur and anti-fur activism on the market. And Porter Brothers has stopped trading in furs altogether because, Hanson says, "the markets were terrible for them and there's a lot of resistance." According to Arthur Lowe Sr., chairman of Lowe Fur & Herb, the fur trade used to be a "great business in the 1970s and early 1980s. The merchandise used to bring big money, but now it doesn’t bring anything.” Raccoon pelts, for instance, used to net $25 apiece but now fetch about $6, while gray fox commanded $65 and now are worth only about $8.
Even the cattle hide business is gradually fading, Stevens notes, as food processing conglomerates gain control of a larger portion of the slaughter business, drawing cattle--and their hides--away from smaller beef processors, local ranchers, and-- hence--scrap processors.
Despite these actual and potential market changes, these recyclers still say they enjoy the hide and fur business and plan, for now, to stay with it. As Biernbaum concludes, speaking for his colleagues, "As long as there's a demand, we'll try to provide the commodity."
Antlers Anyone?
Hides, skins, and furs aren't the only animal-related commodities--or even the most unusual--handled by some processors. Take deer and elk antlers, which hearken back to the bones collected by many "junkmen" of yore.
Pacific Steel & Recycling is one scrap company in this niche, and according to Stevens, the company buys "a lot" of antlers annually, dealing strictly in those brought in by hunters as well as "sheds--antlers that deer and elk lose naturally in early spring, which are gathered by "people who go out and find them in the woods."
The value of deer and elk antlers depends on their freshness, says Bret Ewer, Pacific's operations assistant. "Ideally, you're looking for fresh sheds-which you can tell from the butt of the horn-or antlers freshly cut by hunters," he explains. "Antlers that have sat around for a few years can dry out and crack." Based on their freshness, antlers are given a grade of A, B, C, or D, with an A-quality set of elk antlers fetching up to $7.50 a pound and a similar deer rack bringing $6 a pound. In contrast, D-quality antlers are worth a meager 50 cents a pound, if anything.
To prepare antlers for sale and shipment, Pacific bands several antlers together using polyethylene strapping to ease loading and unloading. The firm exports all of its elk antlers in closed 40-foot containers, primarily to Korea, where they are reportedly cut into wafer-thin chips and used to make tea for treating colds and flu. "I hear it tastes like hell, but it supposedly does the trick," Stevens says.
In contrast, deer antlers are sold in the domestic market to the craft trade for use in such products as knife handles, furniture, buttons, chandeliers, bolo ties, and belt buckles.
While antlers are a minuscule part of Pacific's business--accounting for less than 1 percent of its annual revenues--the firm stays in the niche, in part, because "it's definitely profitable for us," Stevens says, and because, Ewer adds, "it relates very well with some of the other items we deal with, such as the hides, skins, and furs. It's natural for hunters to bring horns in with their skins."
Mining the Botanical Garden
Don Wilson isn't surprised when people look at his business card for Elizabethton Herb & Metal Co. Inc. (Elizabethton, Tenn.) with more than a little curiosity. "What's this herb part of your business, Wilson ? people will ask.
While most may find the mix of herbs and metal a tad odd, it's been business as usual for the Wilson family since around 1890, when Don Wilson's grandfather founded a botanical and fur trading company in southwestern Virginia . And today, botanicals “are still a very great part of our business,” Wilson asserts. Elizabethton’s botanical division, if fact, operates separately from its scrap metal operations, with its own warehouse and seven employees experienced in the subtleties of grading, buying, packing and selling these items, says Wilson, who is also president of Johnson City Iron & Metal Co. (Johnson City, Tenn.), a ferrous, nonferrous, and paper processing operation.
Lowe Fur & Herb has a similar story, having dealt in botanical items since the
1920s. Though both firm’s are now principally scrap metal recyclers, sales of crude, or bulk, botanicals continue to account for 20 to 30 percent of their annual revenues.
The most valuable of all bulk botanicals, by far, is wild ginseng root--and for good reason. Throughout the ages, people have viewed ginseng as a "wonder herb," claiming that this aromatic root can promote long life, stimulate the central nervous system, lower blood cholesterol, prevent heart disease, inhibit blood coagulation, protect cells from radiation damage, and serve as an aphrodisiac.
With PR like that, it's not surprising that ginseng has always been a commodity-in-demand (even in the early 1900s, the root commanded about $7 a pound, Wilson says), and the recent boom in health food, herbal tea, and holistic healing has made ginseng bigger business than ever. Today, in fact, wild ginseng is more valuable, by weight, than the majority of metallic and nonmetallic commodities, commanding around $250 to $300 a pound in 1994--reportedly its highest level ever.
Not bad for a homely root.
There is also something known as cultivated ginseng, which those in the know describe as wild ginseng's lower-quality cousin. According to Wilson, cultivated ginseng-which is larger, heavier, and smoother than the wild variety—has only a fraction of the medicinal qualities of wild ginseng, and, hence, brings in only a fraction of the price—about $20 a pound.
Wild ginseng, Wilson notes, is a shade loving plant that grows in patches primarily in the mountainous Appalachian range extending from Pennsylvania to Georgia . Since the plant is on the national endangered species list, it can only be harvested from mid-August through December. Elizabethton and Lowe & Herb receive most of their wild ginseng from two export sources: "diggers--usually rural individuals who scour the terrain looking for ginseng patches--and other bulk botanical dealers.
Preparing wild ginseng for sale and shipment usually involves air-drying the roots, then packaging them in 50-gallon cardboard barrels in 100-pound lots, which translates to about $25,000 to $30,000 worth of ginseng. Since wild ginseng is an endangered natural resource, traders such as Elizabethton and Lowe Fur & Herb must deal with a lot of paperwork and state controls. For example, Wilson explains, before his company can ship roots, a state official must verify weights and complete required trade documents which are then sealed inside the cardboard drums prior to shipment. On top of this, the firm must submit monthly summaries of its ginseng business activity to the state. Only then can the roots be shipped, with virtually all of them exported to Far East consumers in places such as Hong Kong, Singapore, and Malaysia.
The crude botanical business isn't limited to wild ginseng, of course, and encompasses a spectrum of plant-related items used by the pharmaceutical, spice, and flavor industries. Lowe Fur & Herb, for instance, trades in more than 50 different botanicals, while Elizabethton handles around 100 types, many in quantities exceeding 100,000 pounds annually.
Behind wild ginseng, the second-most valuable bulk botanical--at about $20 a pound--is goldenseal root, recognized for its abilities to treat mouth sores, cleanse the liver and blood, restore digestive functions, and more. Other items include witch hazel leaves, used to make witch hazel lotion; flavoring agents such as wild cherry bark, birch bark, and sassafras leaves; Mayapple (also known as mandrake) root, a component of laxatives; passionflower, which is used as an anti-inflammatory as well as a sedative for nervous conditions; and bloodroot, star grass root, snake root, and others.
Most of these botanicals are gathered during the growing season from April through November by individual pickers as well as bulk botanical dealers, and most of these items are sold domestically, shipped in bales or burlap bags strapped to pallets. When Wilson tries to compare the botanical niche with his scrap metal business, he has to laugh and admit, "You do have to put on a different hat, and you've got to know what you're doing, that's for sure. But it's an enjoyable business."
A Palletable Business
Many a business venture has been born from the phrase, "Hey, I have an idea."
That was certainly the case with East Coast Pallets Inc., a Columbia, Pa.-based wooden pallet recycling company that has the same ownership as Colonial Metals Co., also ofColumbia, and L. Lavetan and Sons Inc. (York, Pa.), a ferrous and nonferrous scrap recycler.
In March 1992, Carl Hosier, then a materials control manager, approached Phillip Serls at one of their sons' soccer games. "I have an idea," Hosier said. “What is it?” replied Serls, who serves as president and chief operating officer of Colonial Metals as well as L. Lavetan.
"Repairing used pallets," Hosier offered.
"Well, let's put our heads together, do our due diligence, and see what things look like," Serls said.
So the two businessmen conducted what Hosier calls "an extremely detailed market study," going so far as to visit and scrutinize a successful pallet recycling company in Grand Rapids, Mich. "The more we looked, the more need we found," Hosier recalls.”
So on Nov. 1,1992 , they decided to go for it--and East Coast Pallets was born.
For all the firm's advance planning, its early days were far from stellar, with the first six months, in particular, being "extremely difficult," recalls Serls, the firm's president. Since then, however, East Coast's fortunes have changed to the point where it is "probably triple the size of any other pallet recycler around, and we're growing every single day," asserts Hosier, executive vice president, who notes that the company expects to process around 1 million pallets in 1995.
What exactly does East Coast do? Serls describes the firm's business in terms of "R&K--and he doesn't mean rest and relaxation. East Coast exclusively repairs and returns (or resells) GMA-spec oak pallets--reportedly the most widely used pallets in commerce--which measure 48 x 40 inches. (GMA is an acronym for Grocery Manufacturers of America.) Working out of a 20,000-square-foot plant on 3 acres, the firm receives used and damaged pallets from a variety of sources and refurbishes them to GMA specs. Hosier and Serls are quick to note that the firm does not build new pallets, and it uses virtually no new wood to rebuild its stock.
In addition to tolling pallets--which involves repairing a customer's pallets for a per-pallet fee--the firm buys pallets for direct resale as well as provides them to firms on a contract basis. As its name implies, the firm serves East Coast customers, primarily within a 150-mile radius of its plant, picking up and delivering pallets via its fleet of four tractors and 40 trailers.
According to Hosier, refurbishing pallets efficiently requires a combination of productive employees and the right equipment, including such contraptions as denailing and nailing machines, saws, steel plate presses, and slightly bowed work tables that allow workers to spin pallets easily while fixing them. The goal, Serls notes, is "to do the least amount of work to the pallet to put it back into GMA spec." One way East Coast boosts its productivity--and thus its success--is to operate two shifts and pay its 32 employees a lower wage plus a piece-rate incentive for every pallet they recycle, Hosier notes.
Of course, some pallets are beyond salvaging, so East Coast is also in the pallet processing business. "We take the good with the bad," Hosier says. "Whatever we can't recycle, we process into secondary wood fiber," which is sold as mulch or sludge extender for sewage treatment plants.
Despite a bumpy takeoff, East Coast has managed to soar in its two short years, securing the accounts of many large trucking, grocery, and manufacturing firms, including Tyson Foods, Hershey Chocolate, and Anheuser-Busch. East Coast has succeeded, in part, Hosier explains, because the firm is "very professional," meaning that it is responsive, efficient, and computerized. "We took the pallet industry and moved it into today's time," he boasts. "We offer services, quality, and price that are unbeatable."
While happy with East Coast's progress so far, Serls and Hosier see even greater potential for the firm in the future, in part because environmental organizations "aren't going to allow us to cut trees down to make pallets someday," Serls says, "so there will be a window of opportunity to continue to recycle pallets." The company is also exploring other opportunities, such as making pallets with replaceable parts out of post-consumer plastics.
Though East Coast isn't the only pallet recycler around, it is probably the only one that shares ownership with a scrap metal recycling company and, in Serls' opinion, the company "has no real competition--if you know what I'm saying." As he explains, "We've tried to make ourselves unique. We've been able to identify our customers better and find ourselves a niche that suits us in the industry."
Animal hides, crude botanicals, burlap bags, and wood pellets may seem like unusual commodities to most scrap recyclers, but to some they’re business as usual. Here are vignettes of a handful of experts in these off-the-beaten-path niche markets.