January/February 1996
Like it or not, 1995 is over and 1996 is here. So what does that mean for scrap recyclers? What trends has the industry said goodbye to? And which will emerge in the new year? The forecasts here offer some answers—or at least some guesses at the answers.
HOT OSHA, Good Guy
Not OSHA, Bad Guy
Regulatory reform is one of the biggest catchphrases in Congress these days, and as part of this trend, congressional Republicans are pushing for legislation that would legally shift OSHA’s role from its current status as safety enforcer to that of safety adviser. Though many Washington insiders are calling the legislation a long shot, most figure a cut in OSHA’s enforcement budget is a sure thing. So even if no bill is passed to permanently alter the agency’s image (as if anything is permanent when it comes to legislation!), chances are good that enforcement efforts in 1996 will be no rival to those seen in recent years.
HOT Forklift Operator Training
Not Ergonomics Standard
For years we heard that OSHA would soon be releasing an ergonomics compliance standard to address the issue of repetitive motion injuries on the job, covering more than 120 million workers in all but the smallest companies. But thanks to Congress’s efforts to modify the agency’s character as mentioned above, the ergonomics standard is said to be on the back burner. What OSHA is expected to issue soon are training requirements for forklift operators in an effort to prevent the hundreds of deaths and serious injuries each year that result from accidents involving forklifts.
HOT Recycling Reporting Requirements
Not Maintaining Completely Private Records
All but a few states now have goals to recycle some percentage of their “waste” stream. And in order to gauge their progress in meeting those goals, many states and localities have instituted reporting requirements on recyclers, mandating that they provide records of types and quantities of materials recovered. Some even ask for more confidential details, such as the name of the scrap generator and that of the eventual consumer.
HOT Formal Quality Standards
Not Scrap Companies With No Quality Control
There’s been a lot of talk about the ISO 9000 international quality standards for years, and while many may have doubted the scrap industry would join the trend, it’s now happening. Manufacturers who have had their quality control processes certified are requiring their suppliers to do the same, and these suppliers—many of them consumers of scrap—are passing the requirement down to their suppliers too. Someday soon, in fact, it may be that in order to do business in this industry, firms will have to follow some formal quality control process, whether through ISO or some other program.
HOT Conversion Coverage
Not Getting Stuck for Hundreds of Thousands of Dollars
Say you purchase a load of scrap that later turns out to be stolen property. The material is recovered and you’re out nearly half a million dollars. It used to be that those were the breaks, but recyclers can now add “conversion coverage” to their ISRI/CNA general liability insurance policies, which offers protection from such losses.
HOT Superfund Reform
Not Retroactive Liability for Scrap Recyclers
The Superfund Recycling Equity Act—legislation that would remove from Superfund liability transactions related to the collection, processing, and sale of paper, metals, glass, plastics, textiles, and rubber for reuse by manufacturers—has now garnered more than 130 cosponsors in the House and more than 20 in the Senate, thus demonstrating clear congressional support across party lines for Superfund relief for recyclers. What’s more, on the House side, the act has been rolled into the overall Superfund reauthorization bill, HR 2500, which at press time had been approved by the Subcommittee on Commerce, Trade, and Hazardous Materials and had moved on for markup in the Commerce Committee. That all bodes well for recyclers in 1996, say ReMA lobbyists, who are hopeful that Congress will exempt recyclers from liability in whatever Superfund reauthorization legislation eventually becomes law.
HOT Mickey Mouse
Not Siegfried and Roy
After two consecutive years at the Mirage in Las Vegas, ISRI’s convention and exposition heads to Orlando in 1996, offering recyclers and their families an easy opportunity to visit Mickey and the rest of Walt Disney World’s attractions in between convention sessions. But fans of Siegfried and Roy needn’t get too upset about missing the illusionists and their white tigers; ReMA will be back at the Mirage in 1997.
HOT ‘Outsiders’ Running Scrap Businesses
Not Automatic Management Positions for Family Members
There are actually two intertwined trends here. In one, scrap firms are expected to increasingly look to executives who have proved themselves in other industries to fill top management positions in the recycling business, which is exactly what’s been happening at some of the industry’s larger companies lately—witness recent key recruits at Proler International Corp. (Houston), Miller Compressing Co. (Milwaukee), and Peltz Group Inc. (Milwaukee), whose backgrounds are, respectively, in architecture and energy, investment strategy, and corporate law. The other trend is based on the growing number of acquisitions of scrap companies by firms with no previous scrap background. General Parametrics, a publicly held company in Berkeley, Calif., for instance, has heretofore specialized in the manufacture of computer printers and printer supplies, but is now in the midst of buying Emco Recycling Corp. (Phoenix) and says it will be acquiring more metal recycling facilities in the future. Another example is Nagelvoort & Co., a New York City investment banking firm that, along with minority partner Recycling Industries Inc. (Englewood, Colo.), purchased Loef Co. Inc. (Athens, Ga.) last year and is rumored to be looking at other scrap acquisitions. As these trends grow, having the “right” last name won’t necessarily get you what it used to.
HOT Investment in Lead
Not Investment in Copper
Lead has long been something of a forgotten commodity, attracting little attention outside the trade. But steadily declining LME inventories of the metal helped to push lead prices way up at the end of 1995, and projections call for strong demand in the first half of this year, causing further drops in lead stocks. With such predictions for a supply deficit, investors may be swayed to take a new look at lead. On the other hand, copper—which has been considered the flagship trade on the LME, with the total number of contracts bought and sold each year clearly dwarfing that of other metals—is expected to see supplies surpass demand sometime this year or next. Combine this outlook on the fundamentals with the backwardation that hit the market in the last quarter of 1995, and the red metal may have less investment appeal in 1996.
HOT Voice Mail
Not Receptionists Writing Messages
Everyone talks about the computers and the World Wide Web as the technology that’s changing the shape of business in the 1990s, but we’d argue that telephone voice mail systems are what’s really revolutionizing the scrap industry today. Just a few months ago, it was almost rare to encounter voice mail at recycling companies, but more and more industry firms—both large and small—are eliminating the message-taking responsibilities of their receptionists (or even eliminating their receptionists altogether) by allowing callers to leave their messages in their own words and enabling callees to retrieve messages night or day, any day. Voice mail will undoubtedly become even more popular in 1996, catching on much as fax machines did just a few years ago. As for the Web and e-mail, don’t think we’ve discounted their potential role in the scrap industry; it’s just that we don’t think they’ll have such widespread appeal before next year.
HOT U.S. Geological Survey
Not U.S. Bureau of Mines
BuMines, which was founded in 1910 to find ways to mitigate mine disasters but later expanded its scope to encompass various mine- and metal-related issues, saw many of its responsibilities shifted to other federal agencies in recent years, leaving it to function primarily as a scientific research group. Nevertheless, it still employed about 1,700 people, making it a fairly easy target for termination when the House Interior Appropriations Subcommittee was looking for an agency to disband as Congress worked up its budget last fall. And so, in 1996, many of the projects the bureau had overseen have been killed. Some BuMines work, however, has been handed off to the Energy Department and the U.S. Geological Survey, with the latter reportedly taking on compilation of statistics on metal market activities.
HOT Fair PCB Disposal Regulations
Not Specialized Landfill Requirements
The EPA has proposed more flexible rules on the disposal of certain large-volume, low-toxicity, non-liquid PCB-contaminated wastes, such as contaminated shredder residue. Under current agency requirements, wastes with a total concentration of PCBs of 50 parts per million or more must be disposed in special PCB landfills or incinerators. The proposed rule, however, would regulate disposal of PCB-containing wastes based on the potential mobility of the PCBs in that waste, allowing residues that leach less than 50 parts per billion of PCBs to be disposed in solid waste landfills. Because ReMA studies have shown that PCBs leach very little from shredder residue that has been contaminated with the chemical, if this proposed rule is finalized as expected, shredder operators will have new fluff disposal options in 1996.
HOT Stronger Shipper Protection
Not Shipper Undercharge Claims
The Negotiated Rates Act of 1993 made charitable organizations, small businesses, and shipments of recyclables exempt from motor carrier undercharge claims—monetary claims seeking to collect the difference between the rate a carrier negotiated with a shipper and the carrier’s official rate filed with the Interstate Commerce Commission. But that law only protects shipments made before Dec. 3 of last year, leaving scrap shippers vulnerable again to potentially millions of dollars of claims if the carriers they negotiate rates with don’t properly file those rates. As 1995 was coming to a close, however, the House and Senate included language within their bills to abolish the ICC (and create a new agency within the Transportation Department) that essentially abolishes the potential for undercharge claims by declaring them unreasonable. That doesn’t mean astute lawyers couldn’t still find loopholes in their quest to collect, but it does offer new protection. •
Like it or not, 1995 is over and 1996 is here. So what does that mean for scrap recyclers? What trends has the industry said goodbye to? And which will emerge in the new year? The forecasts here offer some answers—or at least some guesses at the answers.