Edward Kangeter IV is driving his Prius through the industrial section of West Oakland, Calif., en route to Blue Bottle Coffee, a roastery and café that sells coffee one cup at a time in pour-over fashion, along with high-end nibbles such as almond lavender pound cake, olive oil shortbread, and Gruyère pimentón pretzel buns. His purpose behind this excursion—aside from getting a great cup of coffee—is to use Blue Bottle as an analogy for CASS, the recycling company he leads as CEO.
What Blue Bottle is doing for coffee, he explains, is precisely what CASS intends to do in scrap processing and aluminum remelting: take a simple process and approach it from a new perspective. After getting his order, Kangeter even snaps a photo of the beautiful design in the coffee froth. It’s an attention to detail he admires, an elevation of the coffee art.
You could say CASS wants to elevate recycling—to set a new standard for quality, efficiency, customer service, professionalism, sustainable operations, community involvement, and employee care. That’s an ambitious corporate vision, but Kangeter sees it as a necessary survival step for his company and the scrap industry as a whole.
“The industry needs to change and evolve,” he says. “It has been very successful historically, but times are changing. There’s a real need for our industry to evolve, and those of us that do will be successful, and those of us that don’t will be regulated out of business.”
CASS has no intention of letting the latter happen to it.
Scaling the business
CASS began life in 1969, when entrepreneur Chal Sulprizio bought Associated Metals in Oakland and rechristened it Custom Alloy Scrap Sales. The small nonferrous scrap processor and aluminum melter had six employees and 1.5 million pounds of annual production. “Custom Alloy Scrap Sales was a one-man show,” Kangeter says. “Chal designed, operated, and fixed the equipment; he ran production; he was the commercial guy; he did everything.”
That all changed when Kangeter joined the company in 2006. Although he had no metals or recycling experience, he had business management experience and knew how to grow companies, having established more than 400 points of sale in North America for an Italian fashion brand. He wanted a new professional challenge—and more time at home with his family—so it was opportune when Sulprizio, his father-in-law, offered him the CEO post at CASS. He agreed, with the understanding that if the job didn’t work out, Sulprizio should fire him with no hard feelings.
Despite Kangeter’s dearth of industry knowledge, he says he was confident in his ability to “scale the business.” To do so, however, he needed to assemble a dedicated group of employees who could divide the responsibility of running it. “My responsibility was to find talented people who are passionate and committed to excellence to drive the business to the next level,” he says.
And drive it they have. In the past decade, CASS has grown to a 120-employee company, its revenue has more than tripled, and its profitability has more than doubled, Kangeter says. The company’s scrap processing operations have expanded beyond nonferrous to handle a “respectable amount” of ferrous, and its aluminum melting output now exceeds 50 million pounds a year. From the solid foundation Sulprizio established, CASS has “evolved and matured as a business model that became more disciplined and more profitable,” Kangeter says.
“As we became more profitable, we were able to reinvest in the business. That allowed us to develop new ideas and execute them—and that’s what we’re still in the process of doing.”
Focusing on sustainability and quality
One area in which CASS has pursued and executed progressive ideas is its aluminum remelting operation, which Kangeter quickly differentiates from smelting.
“We aren’t a smelter because a smelter uses chlorine and other hazardous chemicals to make its products. We’re a remelter that doesn’t use those chemicals.” Then he adds with a smile, “we’re the weird, organic hippies of the aluminum remelting industry—the farm-to-table operators.”
CASS takes what it calls a “craftsman approach” to its melting process and its many sustainability efforts. At the melting stage, Kangeter notes, CASS does not use chlorine gas or chlorine-containing fluxes to reduce the magnesium content in its metal. Why not? Because chlorine is potentially harmful to its employees and the residents of the surrounding community. “We just feel it’s the right thing to do,” says Shaun Caughell, furnace operations manager.
CASS also does not landfill any of its byproducts, which means its melting operations generate zero waste; instead, every one is applied to a product. The dry hearth, for example, generates a dry ash that—thanks to its lack of chlorides and other chemicals—steel foundries use as a “topping” to help molten metal flow during pouring, Caughell says. In addition to recycling its furnace dross, the company sells its baghouse dust, which is used to make products for the construction industry. The lime it injects into its baghouse to protect the bags from burning also makes the spent filter media more recyclable by neutralizing certain elements in it, Caughell explains.
The company also made several upgrades to its melting operations in 2011 to improve its efficiency and enhance its environmental capabilities. It installed an afterburner of its own design, making its air emissions well below the U.S. Environmental Protection Agency’s national standards for hazardous air pollutants for secondary aluminum operations. In its dry hearth furnace, CASS upgraded the shell, installed a new refractory lining, added remotely operated doors, and invested in a state-of-the-art combustion system. It also reconfigured the furnace to use the waste heat from the holding furnace flue to increase the dry hearth melt rate.
In its holding furnace, CASS installed a thicker refractory lining; replaced two large burners with two smaller, more efficient burners; and added a permanent magnet stirrer, which replaced high-maintenance mechanical/graphite pumps. The magnetic stirrer uses rare-earth magnets to stir the molten bath. The magnet, located outside the furnace, requires no open well for a mechanical pump, a feature that prevents heat loss. This technology increases melt efficiency and evenly disperses elements in the melt, ensuring consistent chemistry from the first ingot cast to the last, Caughell says.
All of these operational changes allowed CASS to meet nitrogen-oxide emission standard requirements, lower its Btu consumption throughout its melting operations, improve fuel efficiency, achieve consistent product quality, and qualify for an energy rebate from the electric utility. Overall, the company more than doubled its melting productivity, Kangeter says.
CASS takes additional steps to enhance the quality of its products and distinguish itself from its competitors. For instance, the company degasses its molten metal with ultra-high-purity argon rather than commercial-grade nitrogen because it produces a higher-quality product, and every pound of its aluminum goes through at least a 30-micron filter. “What’s more,” Caughell adds, “while pouring the molten aluminum into ingot molds, CASS employees remove a casting film from each of the 2,500 ingots in the heat to give them a final smooth, finished appearance.” A small detail, but “that’s what quality is all about—the small details,” Kangeter says.
On the topic of quality, Kangeter points out that CASS is certified to the ISO 9001 quality management system standard as well as the ISO 14001 environmental management standard.
“We spend a tremendous amount of time, energy, and money on this,” Kangeter says, “but if we want to be a best-in-class recycler, we felt it was critical to evaluate our entire methodology of doing business.”
The most difficult parts of the effort have been educating all 120 employees about the certification process and getting buy-in from everyone, in part because the effort “is additional work and is incredibly time-consuming on the front side,” he says. Has all the hard work paid off? “Absolutely,” he asserts. “It has allowed us to better understand and improve our process, eliminate unnecessary steps, speak a universal language on quality in our company and with others, better measure performance metrics, and recognize when we achieve our goals or not.”
Making people a priority
CASS’ certifications are two of many points of pride for Kangeter, but he says he is most proud of the company’s staff.
“We have a diverse, talented, passionate team that we built by implementing a people-focused corporate culture that strives to improve daily,” he says.
CASS pays its production employees more than the Oakland-area minimum wage of $12.55 an hour, and most of the staff earn a “considerable amount of overtime,” he says, due to the company’s six-day workweek in its processing division. “They’d work seven days a week if we’d let them,” he adds. CASS contributes more than double the California average to its 401(k) plan and provides an “above and beyond” health insurance program for which the company pays the majority of the premium for the employees and their families.
Those are the basics. The company also promotes from within whenever possible, offers professional tutors to teach English or Excel to any interested staff, provides full CASS-branded apparel to all employees (from hats to T-shirts to high-end Carhartt work gear), holds a quarterly staff-appreciation event at which it raffles off gifts such as flat-screen TVs, and has an annual holiday dinner at an upscale venue for employees and their significant others.
CASS goes beyond even those perks, sponsoring a trust that helps employees’ children pursue higher education. It also provides interest-free loans to help employees manage personal or family emergencies, with repayment terms based on each person’s circumstances and ability. “We’ve been doing that for 40 years,” Kangeter says, “and we’ve only had two people not repay us.”
Even more unusual is how CASS seeks input from employees every year. The company hires a consulting firm to interview all employees about what they like and don’t like about the company, then the contractor provides an anonymous summary of the answers to senior management. “We go through the don’t-like list and try to react to it as quickly as possible,” Kangeter says.
Taking this process a step further, Kangeter meets personally with every employee at the end of each year to review his or her accomplishments in the previous year, discuss opportunities and challenges in the coming year, and set the employee’s compensation going forward. Those meetings take Kangeter more than two weeks to complete, but he says it’s worth the effort. “When I meet with everyone at the end of the year, I’m blown away by their passion for the company and the industry,” he says. “I just feel fortunate to be associated with such an inspiring group of people.”
Community activists
Just as CASS is committed to supporting its staff, it is equally dedicated to supporting the surrounding community. When Kangeter joined CASS, its Oakland neighbors considered the company a noisy, polluting, black-hat intrusion in their mixed-use neighborhood.
“I realized how few people understood what a recycling company does and what its value is,” he recalls.
To address this image and relationship problem, Kangeter decided to become “intimately involved” in the community. In his first two years with CASS, he attended more than 200 local meetings, he says. “I reached out to a local group that was at our throats,” Kangeter recounts, “and I started to attend their meetings, listen to their concerns, and become friends with them.” He learned that most of the complaints stemmed from misunderstanding the recycling industry—and that CASS could control many of the elements citizens found so offensive. “So we began to control and change them,” he says.
“We started inviting in local politicians and activists, showing what we do and how we do it, and it did wonders,” Kangeter says. “They realized that there was no evil empire behind the gate.” The company launched an advertising campaign on billboards in the Oakland area as well as in local media and national trade magazines (including Scrap). The campaign emphasized the company’s focus on sustainability and the recycling industry’s environmental and economic benefits.
CASS also embarked on a major beautification effort. It spent $250,000 to replace the chain-link fence around its commercial ferrous yard with a new wall made from recycled materials, with landscaping and climbing vines to make the structure more visually appealing. And it hired a locally renowned mural painter, Mark Bode, to create artworks on the walls around its main processing and office facility. Now visitors come from all over the world to take pictures of the murals, which also have served as a backdrop for music videos as well as fashion and automotive photo shoots.
“We turned a negative into a positive,” Kangeter says.
To further improve its community relations, six days a week CASS voluntarily runs an industrial sweeper on the public roads around its operations and collects illegally dumped material within a several-block radius of its facility. It also stopped storing its equipment in public rights of way, moving it onto company-owned property.
What’s more, CASS has become a high-profile corporate sponsor of numerous local groups, including City Slicker Farms, which helps West Oakland residents learn about healthy nutrition and grow their own food, and Save Mount Diablo, which works to protect, preserve, and enhance Mount Diablo—located in neighboring Contra Costa County—and its natural surroundings. (CASS offers an annual nature walk up Mount Diablo for any interested employees.)
Kangeter points with particular pride to CASS’ support of The Crucible, a nonprofit arts education organization in West Oakland that provides training in the fine and industrial arts. The group’s cavernous studio covers an array of art media—from glass to clay to metal—and teaches skills that students can use for artistic expression as well as on the job, such as welding and fabrication. In addition to providing at least $25,000 a year to support The Crucible’s youth intern program, CASS sponsors events throughout the year and Kangeter serves on the group’s board of directors.
Through these and other efforts, CASS has improved its community relations significantly and enhanced its corporate image, Kangeter says.
“We had more than 30 years of being the bad guy in the community, and in the past 10 years we’ve been able to change that. Now our neighbors embrace the company and the industry because they know we go out of our way to be the good guy and support the community.”
The next move
Even as the community’s appreciation of CASS has grown, Kangeter says it can’t remain in its current home forever. West Oakland is becoming gentrified, and industrial operations like CASS are being displaced. He accepts that reality. “The neighborhood’s changing, and we have to change with it,” he says. “If we want to run an industrial business, we have to run it where that makes sense. It doesn’t make sense to run this business long term in this location.”
That’s why CASS plans to move a few miles away to a roughly 10-acre site near the Port of Oakland by 2020. The relocation will allow the company to “develop a state-of-the-art facility that will set a new standard for the industry—and set us apart from the competition,” Kangeter says. Among his ambitious plans for the new facility, he wants to have all of the company’s operations under one roof and “visually design the facility so that when you drive by you’d have no idea it’s a recycling facility.” The company also will try to automate additional functions in its furnace operations and other areas, and it will strive to run its processes off the electrical grid as much as possible. In that regard, Kangeter mentions solar power and the possibility of using methane from the nearby East Bay wastewater treatment facility to power its melting operations. The firm’s plans also call for the new facility to have an “educational component” where visitors can learn about the company and the industry, then see recycling in action. In the longer run, Kangeter hopes the new plant will allow CASS to become “completely vertical” by producing finished goods from the metals it processes and remelts.
Although today the new facility is only an architect’s rendering on Kangeter’s wall, he is confident the drawing will become reality, and he views it as the key to CASS’ future success. “It will establish the foundation of our business model for the next 40 years,” he says. Then, more reflectively, he adds,
“I hope that someday the kids of our current employees will say, ‘I want to work here,’ not just because it’s a paycheck but because it’s a great company that’s interesting and dynamic, and because we have our own approach to doing things.”
Written by Kent Kiser. Kiser is publisher of Scrap and assistant vice president of industry communications for ISRI. This article originally appeared in the July/August 2016 issue of Scrap. under the title ‘Next-Wave Recyclers’. Scrap is a bimonthly publication of the Institute of Scrap Recycling Industries. Reprinted with permission.