Dan Sandoval

Features

Positioned among giants

Cover Story

Carolina Fibre Corp. competes with the largest companies in the business by focusing on the basics.

November 10, 2014

Consolidation in the recycling industry has intensified since the recession in late 2008. With profits still hard to come by, independent recycling firms are feeling the pinch acutely. Competing with deep-pocketed firms is difficult in any market; but, when markets are much softer, it is even more challenging for independent recyclers to thrive.

Carolina Fibre Corp. (CFC), an independent recycling firm headquartered in Greensboro, North Carolina, is succeeding in a region where many of the largest paper recycling companies in the country operate. Behemoths such as Sonoco, RockTenn, ReCommunity and Pratt Industries, among others, all are active in the area.

Despite these challenges, Keith Ayscue, vice president of CFC, says his company is suited to succeed in light of its core business philosophy of providing outstanding customer service and paying customers quickly—qualities that may seem anachronistic in today’s business world. These strategies, however, have served the company well since its start.
 

Founded on paper

CFC officially was established in 1989, though the genesis of the firm goes back even further to the early 1970s, when George Jones, an early recycling pioneer, established a recycling plant in Burlington, North Carolina.

Carolina Fibre Corp. at a Glance

Location: Greensboro, North Carolina

Year established: 1989

Principals: President William (“Chuck”) Clodfelter manages suppliers and customers located in the eastern half of North Carolina. He was one of the original partners in the company with the late George Jones and Patrick Jordan. Vice President Keith Ayscue directs sales initiatives and new business for the western half of the state. He has been with the company for 25 years. Secretary/Treasurer Harold Penn manages several key suppliers of specialty material. He also is owner of the High Point, North Carolina, plant known as Triad Paper Recycling & Confidential Shredding.

Affiliated Companies: Confidential Shredding, Triad Paper, Federal Waste Recycling

Services: Sales, marketing and consulting for recycling companies


Photos: Mike Micciche

As the recycling industry started to develop, Jones, along with a business partner, Patrick Jordan, opened a second recycling plant in High Point, North Carolina. The company grew as it serviced printers, converters and large industrial accounts in the state.

In March 1989, Chuck Clodfelter joined the team, and together the partners officially launched CFC to market the material produced at the business partners’ recycling plants. The three partners sought to expand CFC by adding volume through brokerage sales.

Today, CFC, along with its affiliate firms, Triad Paper Recycling and the document destruction firm Confidential Shredding of High Point and Federal Waste Recycling of Burlington, North Carolina, have been able to thrive while dealing with ever-changing domestic and overseas markets.

Ayscue, who joined the firm as a part-time employee 25 years ago while still in college, explains the structure of the company as a kind of Venn diagram. “The two recycling plants (Federal Waste Recycling and Triad Paper Recycling) are separately owned and operated. They collect and process the material. Meanwhile, Carolina Fibre’s marketing and sales team sell the processed material from the two plants. The CFC marketing staff also sources new businesses by contacting other companies that generate large volumes of recyclables.”

Having been with the company for most of its history, Ayscue has seen significant changes at CFC and in the recycling industry overall. “When we started, we just handled paper. However, our customers began looking for a vendor who could be a one-stop shop,” he says.

Now, Ayscue continues, “Everyone wants to be known as a sustainable firm. [Customers] want you to handle everything.”

This means the company has started putting more emphasis on growing its plastics business, though that has proved challenging. The company began “dabbling” in plastics 10 to 12 years ago, but, Ayscue says, it was a controversial decision. “When we started handling plastics, I remember what a hard sell it was,” he continues. “It was very tough trying to show the owners at that time that the industry was changing and we needed to get into that business. They said ‘We don’t want to mess with plastics. You will get stuck with big losses.’”

While, ultimately, expanding into plastics proved to be the right decision, Ayscue acknowledges that it was difficult and required significant education. Additionally, it took much longer for plastics recycling to become a significant part of CFC’s business than he anticipated, he says.

After much debate concerning this matter, the company now sees plastics as a good complement to the paper grades it handles, he says. While CFC handles PET (polyethylene terephthalate), HDPE (high-density polyethylene) and LDPE (low-density polyethylene), it also handles more challenging plastics, such as rigid plastics, nylons and polypropylene (PP).

To ensure it continues to be a one-stop shop for its customers, CFC also handles aluminum and steel cans as well as other specialty aluminum grades, depending on its customers’ needs.

Diversifying into nonfiber materials has been a wise move for the company as paper generation continues to be difficult, especially following the 2008-2010 recession.

Ayscue says of that time, “Usually things are gradual. We learned things can change instantly.”

He continues, “The other thing is what happened to supply at that time. Printers weren’t running. Amounts coming in dropped off significantly, and the printer business dried up.

“What was interesting is that although the economy has come back to a large degree we have never bounced back with paper supply,” Ayscue adds.

In addressing the issue of consolidation, Ayscue says it is not limited to mergers between companies but also applies to fiber grades. The popularity of single-stream collection is lessening the available supply of clean grades of newsprint and creating more mixed loads of fiber. “More news is going to mixed paper,” Ayscue says. “Some sorted white ledger is going into office waste. The number of grades of fiber is shrinking, and volumes of sources are drying up.”
 

Focusing on the achievable

Recognizing that CFC doesn’t have the clout of its larger competitors, the company has opted to focus on what it can control: the quality of the material it processes and providing what it considers to be exemplary customer service. While the company does broker material that may come from single-stream sources, neither CFC nor its affiliated companies processes single-stream material. The result has been a huge positive, Ayscue says. “People are amazed how clean our material is, especially the OCC (old corrugated containers). It is like a double sort. We don’t deal with single stream.”

This focus on quality has allowed the company to receive a premium for its material. However, CFC recognizes that the peaks and valleys of the export market also can influence quality, Ayscue says. When exports come in strongly, many domestic mills have to adjust their quality standards to ensure a steady supply of material.

“When mills need material, they will go out there and even buy the dirty material,” he says of frenzied buying by overseas mills. “They will do what they have to do.”

He adds, “When exports are slow, mills crack down hard.”

To ensure its reputation of being a quality supplier, CFC is vigilant about its shipments, including those it brokers, Ayscue says. If the company gets feedback from a mill that one of the loads it brokered wasn’t of the expected quality, the company addresses the problem with the supplier right away.

He says, “Quality is a huge issue. Right now, you will see companies like ours doing clean packs getting a premium, although that could change.”

Ayscue continues, “Mills without the cleaning systems will pay more. However,” he speculates, “going forward, who knows?”

He notes that more counties and cities are moving toward single-stream collection because it is cheaper and faster. While this may appeal to the general public, Ayscue warns that this will result in higher contaminants, even with the high-tech sorting capabilities of some material recovery facilities (MRFs). Additionally, MRFs are scrambling to keep up with the changing technology, he says.

Along with ensuring it continues to provide quality material to its clients, CFC also bases its success on the level of customer service it provides. This notion of playing “small ball” may sound like a pejorative term to many, but Ayscue says that in many ways CFC’s success over its history can be linked to its focus on meeting its customers’ expectations.

For example, Ayscue points out, “When you call our office, you will not get voicemail; you will get a live voice to help you with your questions.

“A representative handles the request for materials in a courteous, accurate and timely manner,” he adds.

“Our niche is customer service and timely payment,” Asycue continues. “In a big company, turnover may be very high. People get lost in the system. For us, we make sure we provide one-on-one service. Our customers want their places serviced quickly and to get paid fast.”

These steps, while seemingly small, reflect the company’s business philosophy, which Ayscue states succinctly: “purchase high-quality postconsumer and postindustrial materials from reliable suppliers; sell at the best price to customers depending on grades available or in demand; act as a reputable broker between sellers and buyers of recyclables; [and] consult with companies to provide recycling programs and equipment as needed.”

Ayscue mentions other attributes that help CFC to find success, such as ethical business practices, prudent background checks of potential trading partners, strong networking within the industry, community service and volunteerism. These qualities, he says, create a positive work environment and keep CFC moving forward.

These ideals, Ayscue says, easily can be discarded by many firms in tough times but are ultimately great tools for forward-thinking companies. “Relationship management allows us to get the most advantages for our suppliers and customers. When prices plummeted during the 2008-2010 recession, we stockpiled material in warehouses, continuing to service our suppliers without a lot of interruption of service.” He adds that this was “no small feat when many businesses felt the business world was coming to an end.”
 

An export-oriented future

Despite the better domestic economy and the challenging environment overseas, Ayscue says he feels export markets will continue to play an essential role in the future of the company.

“The economy in China is having a huge effect on the recycling industry,” he says. “The poor economic climate and oversupply of raw material has made the China market quite difficult as of late. Adding to that, the Green Fence regulations that were imposed a couple years ago have forced recyclers both large and small to take a harder look at how to improve the material shipped overseas.”

CFC is looking to modify and adjust its business to expand its overseas trading, he says. “We’ve explored more overseas markets, such as India, in order to fill the void we are experiencing with the downturn in China,” Ayscue says. “Also, we have been a lot more diligent with allowing export buyers on site to inspect material before taking orders for overseas shipments.”

Going forward, Ayscue says the company must embrace many of the changes affecting the recycling and paper manufacturing industries, including those derived from the growth in single-stream recycling. “As our industry tries to embrace the changes taking place throughout the recycling sector, with more single-stream sorting technologies being offered, and the ever changing dynamics of international trade, we have to be ready to change as it does,” he says.

Customers also want to become more sustainable and to achieve zero-landfill status, and recyclers must educate them to help them meet these goals, he says.

Accepting that responsibility is one of the biggest challenges facing CFC.

 


The author is a senior editor with the Recycling Today Media Group and can be emailed at dsandoval@gie.net.

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