November/December 2017
Technology, trade routes, and commodities are a few aspects of the scrap recycling industry that might change over the next 30 years, but young professionals are optimistic that other things—including ISRI—will endure.
By Rachel H. Pollack
If you worked at a scrap recycling facility in 1987, your daily work experience was almost certainly very different than it is today. You commuted to work listening to broadcast radio. You wrote each customer’s ticket by hand, using spark tests and magnets to identify the metals in an incoming load. Price discovery was via fax, mailed newsletter, or phone call.
If you had a shredder, you could separate and sell ferrous scrap with a magnet; some cutting-edge yards had advanced separation equipment such as eddy-current systems. Similarly, you might have a few personal computers in the office for bookkeeping and printing invoices on your dot-matrix or daisy-wheel printer. “Business management systems” run on personal computers were just emerging. South Korea, Taiwan, and Japan were top destinations for North American scrap, not mainland China. Curbside collection of recyclables was starting to proliferate, but only one state mandated the separation of recyclables from waste.
The recyclers of 1987 might never have imagined the world we live in today: the rise of plastic packaging; the ubiquity of small electronic devices; the Internet and cellular communications; X-ray, laser, and optical scrap separation; or the emergence of China as a destination for scrap. Scrap asked members of ISRI’s Young Executives Council and other young recycling professionals to do just that—to look ahead 30 years and give their predictions about what the scrap recycling industry will look like in 2047.
The Corporate Outlook
The North American scrap industry will have fewer, larger companies 30 years from now, these recyclers say. “I think the landscape of the recycling industry will change” as companies get larger through “acquisitions, mergers, or organic growth,” says Sean Daoud, treasurer of PNW Metal Recycling (Longview, Wash.). Larger companies will be better able to contend with higher “operating costs, a rise in asset prices, [greater] capital requirements, and regulation,” says Sammy Holaschutz, nonferrous trader at W Silver Recycling (El Paso, Texas). Daoud agrees. As new laws and regulations “put a heavy burden on corporations … [a] larger and more influential company will carry weight when trying to lobby for or against certain topics,” he says.
European and Asian ownership of U.S. scrap companies will increase, says Ross Stineman, Northern region buyer for PSC Metals (Mayfield Heights, Ohio). And the industry’s geographic reach will expand into “places that are less dense with scrap facilities currently,” says Zachary Mallin, vice president of Mallin Cos. (Kansas City, Mo.). Sean Kelly, managing partner and sustainability lead at Solvus Global (West Boylston, Mass.), sees the North American scrap industry moving in the direction of China in that “centralized recycling hubs will become prevalent and required.”
Some respondents—themselves third-, fourth-, or fifth-generation recyclers—see the number of family-owned scrap companies shrinking. Even so, “family-owned yards will continue to be an important backbone of the industry,” says Jacqueline Lotzkar, trading manager and fourth-generation recycler at Pacific Metals Recycling International (Vancouver, British Columbia), due to the relationships they’ve built in their communities. They also will need “a more global mindset to find new markets and opportunities for their scrap,” she adds. Sam Shine, utility services manager for Manitoba Corp. (Lancaster, N.Y.), adds that even with consolidation, the scrap industry will “still have a high number of family-owned businesses.”
International Trade Will Continue
Despite recent moves toward more trade protectionism, the international trade of scrap will continue, these recyclers say. “As automation takes hold and freight becomes cheaper due to oil-free and driverless transportation, it will be an even more competitive and global landscape,” Shine suggests.
Scrap will head to new countries as their economies and manufacturing bases grow, says Eds Harding, yard manager/buyer for Harding Metals (Northwood, N.H.), and as existing destinations, such as China, tighten their regulations. These new markets will mean that “learning to work across cultures and language barriers is going to be especially important,” Lotzkar says. (Such skills also will be valuable as people continue to migrate to North America from different backgrounds, she notes.) A broader array of scrap destinations will help allay some of the volatility that has come from China’s domination of certain markets, Mallin says, even though he expects China to remain in the market.
Southeast Asia has the potential to emerge as a significant market for scrap, Daoud says, as do Africa and South America. With W Silver Recycling already operating on both sides of the U.S.–Mexico border for 30 years, Holaschutz sees additional potential in Mexico and the rest of Latin America. “The geographic position, lower operating costs, and business-friendly policies in countries like Mexico are … paramount to the success of attracting the industry and manufacturing in those countries,” he says, but political stability remains a concern. “Historically, countries in Latin America move radically from one extreme to the other on the political spectrum, which could cause disruption in future scrap flows.”
India might also become a significant destination for scrap, but not anytime soon, Mallin says. “They will not have a large demand for our scrap until further down the road, once they work on their domestic regulations.”
Whatever the scrap destination, free and fair trade is essential, Lotzkar says. “It is vital we maintain free trade agreements in North America to support recycling companies and manufacturers. Ultimately, the scrap will go to countries that can afford to process it. … If we close borders, scrap will only become more expensive for that country” that bans imports, she says. She points to skyrocketing domestic OCC prices in China this fall as a result of import restrictions. OCC buyers in China need material, and sellers in North America need buyers, she says. “Protectionism affects all of us.”
With the Trump administration’s interest in renegotiating the North American Free Trade Agreement, Lotzkar adds that “my hope is, in 30 years, to see NAFTA as a continued strategic partnership. … As long as NAFTA countries continue to work together, everyone will benefit across state, province, and country borders.”
Kelly agrees that scrap will continue to move to less-industrialized countries from more-industrialized ones, but he expects more domestic scrap use as well. “With developing technologies and some aid from policymakers, an increase in domestic utilization will be realized as sustainable business models adapt to the changing landscape” and optimize their operations, he says.
Individual Companies Will Evolve
These next-generation recyclers are prepared for their companies to “change with the times,” as Daoud puts it. “Smart and organic growth is what has allowed us to be successful, so we will try to continue that trend by following good leads, brainstorming strong ideas for growth, and sustaining strong relationships with all of our business partners,” he says.
He and others envision their companies accepting new materials and producing additional commodities, using new technologies or processes to “maximize the amount of salable items we can produce,” Mallin says. Others plan to grow their customer base either domestically or abroad.
For Harding, changing with the times means staying “ahead of the curve on environmental issues. I think companies that think green will have an advantage.” Future customers might be more concerned with a company’s environmental protection than its prices, he suggests, “so, in a way, [being green] is just as important for marketing as it is for regulation compliance.”
Holaschutz sees the labor pool becoming even more diverse. “It will be increasingly important for organizations to see the differences in cultures and people as amazing opportunities and not as negative challenges in the workforce,” he says. Others say they expect the challenge of attracting quality workers to this industry to continue.
They’ll Handle Today’s Commodities and More
The traditional scrap commodities of ferrous and nonferrous metals, paper, plastics, tires, and electronics will still be processed 30 years from now, according to these respondents. They expect to see growth in volumes of aluminum, aerospace alloys, electronics, and plastics, but not so much growth in copper. They’re ready to use existing equipment on new grades of material or to accept new material streams. Shine expects Manitoba Corp. to remain focused on nonferrous metals, for example, “with more e-scrap and compost opportunities.”
In British Columbia, meanwhile, Lotzkar sees further growth in handling products regulated under extended producer responsibility systems. “Our company is already dealing with regulated products such as light bulbs, paint cans, beverage containers, oil, small appliances, and many others. Suppliers are going to want to recycle at a one-stop shop, and we need to be able to adapt,” she says.
Technology Will Not Replace People
Both office and scrap-processing technology will get “faster, smarter, smaller,” Daoud says. Processing equipment will become “more efficient, [with] better recoveries, less energy, lower costs to operate, and overall [will] continue the improvement trends we’ve seen over the years,” he says.
Considering the significant advances in processing in just the past 30 years, “it is hard to envision how far we will go 30 years from now,” Harding says. “We could have single-stream systems that do all the work for us!” He also expects to see “improvements in recycling low-grade material domestically.”
Stineman predicts that “more resources will become readily available for energy, and ways to make machines run more efficiently and affordably will become more common.” But several respondents are not sure about the affordability part. Mallin thinks extracting more metal “will take extreme technology that is very capital-intensive.” Daoud also worries that costs of equipment, as well as construction, land, and taxes, could put advanced processing “out of reach for smaller companies,” which is why he expects more consolidation in the future. Growth “leads to stronger financial health for sustaining operations within an expensive economic setting,” he says.
With the difficulty many companies have hiring skilled labor, these recyclers look forward to technological advances that allow fewer people to work more efficiently and produce a better product. But they also realize the value of their companies as job creators. “An increase in efficiency would cause a decrease in labor,” Harding says, “however, I would also hope for an increase in volume, perhaps [creating] more job opportunity.” Similarly, Shine believes “automation and artificial intelligence will not replace our people, but help our people—in all roles—make better and safer decisions while maximizing productivity.”
Despite advances in efficiency and automation, “there are timeless tools that we will keep,” Holaschutz says, “such as a crane with a magnet. … The crane might be fully automated in 30 years and even have its own Facebook account, but there will still be a crane and magnet in every [ferrous] scrapyard.”
Within the office, technological changes will improve decisionmaking. Mobility and connectivity will increase as well. While Daoud believes these advances are “an exciting thing to think about,” Holaschutz worries “it will become harder to separate work [from] other aspects of life. Keeping a balance between the two will be a challenge for the next 30 years, as newer technologies will make it more difficult to disconnect.”
Will trading retain the personal touch?
The biggest divide among respondents might be in the role technology will play in buying and selling scrap. On one side are those who believe “trading scrap will continue to be driven solely by humans,” as Holaschutz says. “Traders across the world will continue to e-mail and call to buy and sell. Scrap has too many variables to allow it to be traded in any other way,” he says. “You have to know the metal, scrap generators, and consumers in order to successfully trade.” Stineman agrees that human interaction will always be needed for trading. “Technology cannot take the place of emotions and negotiating,” he says.
Others see technology taking more of a role. Daoud expects “more contracts, more online deals, and less face-to-face interaction,” but he notes that “I personally do not believe in less face-to-face interaction with our suppliers and customers, as [that interaction] is a critical part of why we are successful. However, we are already seeing this today.” Factors such as the proliferation of online and social media and the time and hassle of travel might hasten this change, he says.
Whether aided by technology or not, “it all comes down to building relationships both locally and internationally,” Lotzkar says. “Networking in this industry is the key to success, both on the buy and sell sides.”
Transportation Has to Improve
“I hope there is some change to transportation” in the next 30 years, says Robb Schilberg, a buyer for Prime Materials Recovery (East Hartford, Conn.), calling it his company’s No. 1 problem. “There has to be a better system out there.” Daoud agrees, noting that volatility and seasonality are particular concerns, as is the shortage of drivers with commercial driver’s licenses.
Shine expects transportation to get worse before it gets better, however. “Over the next 10 years, freight will become more expensive, as it will be tougher to find drivers, and oil will have its last stand,” he says. “But within the next 30 years, driverless and electric trucks and rail will significantly cut costs.” Holaschutz also predicts driverless trucks and “cleaner truck technology” will be prevalent.
“Getting from point A to point B with the least amount of cost, safely and quickly, is the name of the game,” Stineman says. “With new equipment being built out of different and lighter materials, you will see trucking costs go down. That goes for all transportation methods,” he adds.
Safety and the Environment will Remain Concerns
Certainly, Harding says, there’s “room for improvement” in the scrap industry “from safety, environmental, and efficiency” perspectives, despite what he calls ”astronomical” improvements over the past 30 years. “I think the industry can always be safer and greener, and hopefully we’ll look back in 30 years and see even more incredible changes,” he says.
Mallin expects “dramatic changes” in the industry’s safety record in the next 30 years. “With the continued development of equipment and regulations, safety will always be on the forefront of our development as an industry,” he says.
Daoud predicts “stronger safety equipment, stronger regulations to keep people safe, and better education to increase knowledge of best practices to help reduce [or] prevent injuries.” Tighter safety oversight, along with new technologies, “will all be costly up-front challenges and investments, but each presents an opportunity to make our organizations stronger, smarter, and safer,” Shine says. Indeed, Holaschutz says, “for the next 30 years, it will be as important as it is today to have every employee home safe with their family every night after work.”
Regulations will Tighten Further
Over the long term, these recyclers expect tighter regulations will be the trend. The federal government eventually will follow states like Oregon and Washington, which are “already robust in regulating businesses in many areas [such as] tax, environmental, employment law, etc.,” Daoud says. “It is only a matter of time.”
Shine predicts “regulations will strengthen and loosen over time depending on who is occupying public office locally and federally, but the general theme over time will be increased regulations—and new challenges which we can’t yet foresee.”
Such developments might have a positive side, Stineman notes. “As the industry becomes more and more involved in Washington, there will be more laws put in place and pushed through to make the industry a better and more fair place to compete,” he says.
ISRI will Evolve with its Members
These recyclers seem certain “the essence of ReMA will not change,” as Holaschutz puts it. But they see some change on the horizon. “The future holds a lot of diversity in all aspects, [which] will only make things better,” Stineman says. “Not only for ISRI, but for the industry as a whole.” Along those lines, Shine expects ReMA to become “a more globalized organization focused on bridging cultural and political gaps across cultures to allow members across the world to do more business together.”
Daoud believes “ISRI will become more active at the state level [and] the current separation of divisions (metals, paper, plastic, rubber) will be removed and all will become one.” He also weighs in on proposed changes to ISRI’s chapter structure. It’s likely, he says, that in the next 30 years, “smaller chapters with low strength (financially, member count, etc.) will merge with bordering chapters … thus creating a stronger and more refined organization.” Mallin also expects some chapter consolidation.
Discussions about chapter structure initiated by the Planning Committee have “sparked controversy—and that is a good thing,” Daoud says. “It is getting people to talk about their concerns more openly and really driving the organization towards improvement in how to reach and satisfy its members and potential members.”
And these respondents sound ready to lead such change. “I really believe it will begin to fall on the next generations to take it upon ourselves to do what we can to protect ReMA and grow with it,” Stineman says. “I think we are more than ready to … take the next steps to leading this industry and making the most of it.”
“A new generation of leaders will take the baton to move the industry forward and deal with the new challenges ahead,” Holaschutz says. “The challenges will change, but not the spirit to face them head-on.” At the Northern Ohio Chapter’s recent “Best Young and Brightest” event in Cleveland, he says, “I was honored to meet and network with 40 young executives and many seasoned professionals that are extremely passionate about this industry. That fondness and enthusiasm will continue to burn bright for many generations to come.”
Rachel H. Pollack is editor-in-chief of Scrap.
This group of young executives sees substantial change on the horizon for the scrap recycling industry and for their companies over the next 30 years. But they’re bullish on ISRI’s continuation as a trade association and a “valuable resource and advocate for our industry,” as Zachary Mallin of Mallin Cos. (Kansas City, Mo.) puts it.
“ISRI will continue to be the voice of the scrap industry and advocate on our behalf domestically and even more globally,” says Sammy Holaschutz of W Silver Recycling (El Paso, Texas). “People will continue to use events to connect, network, and learn. It will continue to create the great environments in which to improve ourselves professionally, as well as to create more opportunities for the companies we represent.”
Further, says Sean Daoud of PNW Metal Recycling (Longview, Wash.), “the need for ReMA will not change, as it has been an influential organization that has helped shape the recycling industry we know today.”
Despite the trend toward larger companies, these recyclers also expect to maintain close relationships between companies. “Generationally passed-down relationships are what make this industry truly unique,” says Jacqueline Lotzkar of Pacific Metals Recycling International (Vancouver, British Columbia). ReMA “continuing to strengthen the bonds in the next generation and facilitating networking opportunities will allow for more generational friendship. I look forward to reflecting back at ISRI’s 60th celebration,” she adds.
Eds Harding of Harding Metals (Northwood, N.H.) agrees that “relationships and the brother/sisterhood of people in the industry” will not change. But he also believes that, 30 years from now, the public still will not understand “the complexity and importance of ‘junkmen.’” That’s OK, he says. “Our industry may be underappreciated, but scrap metal recyclers are the unsung heroes of manufacturing [and] the environment and are giant players in the global economy.”
Indeed, says Sam Shine of Manitoba Corp. (Lancaster, N.Y.), “our industry will continue to be a strong, hardworking, honest, and relationship-driven industry that makes a positive impact on the economy, the environment, our communities, and team members.”
What else won’t change in the next 30 years? “The need for recycling,” Daoud says. And, Mallin adds, “once you’re in the scrap business, you’ll never get out of it.”
Technology, trade routes, and commodities are a few aspects of the scrap recycling industry that might change over the next 30 years, but young professionals are optimistic that other things—including ISRI—will endure.