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 magazine asked young recycling professionals from the Institute of Scrap Recycling Industries (ISRI) 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 in Longview, Washington. 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 in 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 in 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. in Kansas City, Missouri. Sean Kelly, managing partner and sustainability lead at Solvus Global in West Boylston, Massachusetts, 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 in 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. in 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 in 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 old corrugated containers (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.”
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.
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 in East Hartford, Connecticut, 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.
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.
What 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.”
Rachel H. Pollack is editor-in-chief of Scrap. A longer version of this article originally appeared in the November/December 2017 issue of Scrap magazine, a publication from the Institute of Scrap Recycling Industries. Reprinted with permission.