Starting in late October, I’ll be reporting, researching and writing from Hong Kong—a place that is some 8,000 miles away from my lifelong home of northern Ohio.
An entire series of columns might be needed to spell out the differences between Hong Kong and Cleveland and it still may barely scratch the surface when addressing the contrasting histories, climates and day-to-day routines of these two places.
Many readers of this publication are familiar with Hong Kong as a gateway for scrap materials making the long journey from North America to South China. More than two million shipping containers (20-foot equivalent units, or TEUs) move through the port of Hong Kong each month, and scrap materials are present in a fair share of those.
Working from Hong Kong, it will be my privilege to report on some of the destinations in South China and beyond to which those scrap materials are headed.
Hong Kong also will serve as a base from which to report on both the wider economic circumstances shaping the demand for scrap in East Asia and South Asia as well as the growing generation and processing of scrap in those regions—the other factor that will ultimately dictate for how long nations such as China and India are in a scrap deficit.
As I’m striving to gather information from and to report all I can about these important scrap trading partners, I’ll also be keeping “one foot in North America,” thanks to the 21st century’s telecommunications and Internet infrastructure and a schedule of regular trips back to the U.S. for recycling industry conventions and conferences.
Having just one foot in North America, however, means that there is a significantly long list of tasks and obligations that I won’t be taking with me to Hong Kong.
With a lot of gratitude and with no reservations, I know these tasks will be in the good hands of my five colleagues on the Recycling Today Media Group editorial staff.
Because I’m paid to write and put words together coherently, I probably shouldn’t use the clichéd phrase “words cannot express” when referring to the level of appreciation I have for the talent and work ethic of my colleagues, but it is an appropriate phrase in this case.
Many of you already know Senior Editor Dan Sandoval and Managing Editor DeAnne Toto, each of whom has significant tenure with Recycling Today. DeAnne and Dan, along with Kristin Smith, Lisa McKenna and Kelley Stoklosa, will continue to put in all the important work it takes to produce the magazines, e-newsletters and conferences that we create to serve the recycling industry.
Thanks to the hard work of my colleagues and the leadership of Recycling Today Media Group Publisher Jim Keefe, I can look forward to serving the recycling industry with a different point of view some 8,000 miles away.
Dennis Denton is no “Johnny Come Lately” to the plastics recycling industry. Denton, the founder of Denton Plastics, Portland, Ore., has been involved in the plastics recycling industry for nearly 30 years, making him a seasoned veteran in an industry that still seems to be in its early stages of development.
Denton Plastics has been in operation since 1983. The company handles commodity- and engineering-grade plastics. Of the material the company processes, Denton estimates that 90 percent is sold domestically, which makes the company somewhat unique compared with many other West Coast recyclers who use their proximity to the Pacific Coast to ship material offshore.
“We designed the company in terms of our markets,” Denton says. “We were forced to be able to recycle different types of plastics. We fortunately learned to deal with the different types of plastics, which helped our business model. As we expanded our reach, we started to take in different types of plastics.”
Of the plastic scrap his company handles, Denton says, “Our stuff is compounded into pellets and sold to agriculture, construction [and] packaging—any nonfood-grade, nonmedical-grade product.”
The 60,000-square-foot facility sits on seven acres and employees approximately 42 people full time.
An indirect path
Denton Plastics is unlike many other plastics recycling companies that were spun off of chemical or plastics firms or that include management steeped in the chemical composition of various polymers.
AT A GLANCE
“Out of college, I bartended,” Denton says. “I then bought a small tavern. I ran that for several years and then got into the wood products business. Eventually I became a partner in that business.”
The wood products company closed in 1980 in part because of the effect of rising interest rates on the housing market and consumer purchases, Denton says.
“I was reading an article in the Wall Street Journal on recycling and on plastics being a new commodity that was starting to take over a lot of operations,” he says. “I bought into a struggling company that was getting started in 1980.”
Denton says he took an interest in the company’s operations and eventually became president. However, because of a falling out between Denton and the company’s other owners, he left. But his interest in the plastics recycling industry remained. “I then started Denton Plastics in 1983. And the rest is history.”
Denton Plastics started humbly as a plastics brokerage firm, Denton says. “As the business grew, I got investors to help me buy equipment,” he says, adding that few processors were available at the time. “I eventually bought [the investors] out in the early 1990s.”
In the early days, the company also tried several methods to capture material for processing, including collecting HDPE (high-density polyethylene), LDPE (low-density polyethylene) and polystyrene from grocery stores. “We had milk jug contests at grade schools,” Denton adds. “We helped start recycling polystyrene foam at McDonald’s restaurants before larger companies came in and took over and found out it wasn’t the easiest thing in the world to recycle.”
Fast forward to today, and Denton says public and manufacturer demand for recycled-content plastics is growing.
“What happened in the beginning was that virgin manufacturers didn’t want to displace their product,” Denton says of the early days of the plastics recycling industry. “They wanted to use [recycled plastics as] window dressing for their products.”
Now, he says manufacturers are embracing recycled plastics. “They are now blending virgin and recycled plastics because you can lower your price point when you are making products. It is very important.”
He adds that rising virgin resin prices helped manufacturers embrace recycled plastics. “They see a monetary gain. They can limit the amount of virgin material.”
Denton says the success of the plastics recycling industry often hinges on the price differential between recycled and virgin material. “The economics have always been a key driver,” he says. “In today’s market, recycled PET (polyethylene terephthalate) pellet prices are slightly higher than virgin, which isn’t good. They have to be as good as virgin and less expensive.”
While competition for material is tough in today’s market, Denton says his company’s willingness to expand the type of plastics it can process is an advantage. “We are digging deeper into the waste stream,” he says.
In addition to retailers, Denton says, “We also are doing work with hospitals to identify certain products that are highly recyclable. With just a little tweak, we can collect them [for recycling] instead of throwing them in the garbage. We are doing it with two things in mind: to get things identified and to create a stream we can process.”
He says Denton Plastics differentiates itself in another important way. “We don’t recycle straight; we have recipes for different types of plastics.”
He adds that like major plastics producers, Denton Plastics has quality control measures in place to ensure consistency in the recycled plastics the company produces.
While expanding the range of plastics Denton Plastics handles has been important, a fundamental goal has been to remain on solid financial footing, especially with the company’s suppliers. “One of the most important things we deal with is timely payment,” Denton says. “You need a good working relationship. There are ebbs and flows with everything. You have to get with partners that you can work with on a long-term relationship.”
More recently, Denton, along with several other investors, opened a PET recycling plant to capitalize on the expansion of Oregon’s beverage container deposit program. The new facility, ORPET Plastics, opened in St. Helens, Ore., in late April 2012.
Pacific PET Recycling LLC, the newly formed joint venture among Denton; Tom Leaptrott, owner of Quantum Leap LLC, a Vancouver, Wash., supplier of packing materials and plastic bags used in the recycling industry; RGN Investments; and the Oregon Beverage Recycling Cooperative (OBRC), is the holding company behind ORPET Plastics.
John Andersen, president of Portland, Ore.-based OBRC, says the facility had been in the planning stages since 2007. “It began when Oregon passed a bill in 2007 to include water and flavored water bottles in the state’s bottle collection program,” he says.
While OBRC has not contributed money to the ORPET plant, its role is to guarantee the supply of PET plastics. That supply will come from Oregon’s bottle recovery program.
Denton says OBRC is an ideal partner on the project because the cooperative includes 99 percent of all the beverage distributors in Oregon. They have the responsibility of collecting all the UBCs, glass and plastic bottles in the state. “They are the only game in town. If they aren’t on your team, you don’t have any game,” Denton says of ORBC.
Key executives at ORPET Plastics are Bruce Sohn, who heads up sales and marketing, General Manager John Samuels and Senior Vice President Teresa Galin.
While ORPET Plastics has been well-received so far, Denton says he was somewhat frustrated by the plant’s slow start. “The biggest problem,” he says, “was that it took so long to go from the planning stage to construction to operation.” This was in part because of the recession and the problems related to the financing industry, Denton adds.
After obtaining financing, the company needed to select a location for the ORPET Plastics plant.
“We found an old building—an old plywood plant that was defunct,” Denton says. “We went to the Port of St. Helens and said we wanted to build. They welcomed us and gave us financial help.”
He says that because of the economic activity that grew out of the construction project, “Every government agency wanted to oversee it. We had a lot of permitting and community meetings where we told them what we were doing. They had to be comfortable with that.”
As if building a new facility in the midst of the recession wasn’t challenging enough, Denton also ran into health problems. “I had a heart pump for 10 months and then a heart transplant. I had attorneys coming to the hospital having me sign papers [related to the new company],” he says.
At full capacity the ORPET Plastics facility will be able to process from 20 million to 30 million pounds of PET plastics per year, which is enough capacity to handle all of the bottles recycled in Oregon, OBRC’s Andersen says.
“That plant is doing very well,” Denton says of ORPET Plastics. As of May, its second month of operation, the plant had already exceeded 1 million pounds of output and made a profit, he adds. “I see nothing but upside potential for that plant because the pull-through demand for recycled PET is enormous.”
The partners have set aside room for expansion at the ORPET Plastics plant. While the first phase, which opened in early April 2012, can convert recovered plastic bottles into flake, a second phase may be added, depending on market conditions, that would include equipment to produce recycled plastics pellets. A proposed third stage would produce film, Denton says.
Despite the potential divergence of business strategies between Denton Plastics and ORPET Plastics, Denton says his role with new the plant is limited to providing market expertise. Denton Plastics will process any extra plastic scrap not used by ORPET, he adds.
Denton says he continues to look forward to the next opportunity in plastics recycling. This has led him to rigid plastics. Denton Plastics is in the process of installing a rigid plastics recycling plant.
Denton Plastics is planning to build a 40,000-square-foot building next to the company’s existing 60,000-square-foot plant in Portland. The new plant will have both grinding and washing equipment to process rigid plastics. If everything goes according to plan, the facility should be operational by the middle of 2013.
Throughout the last several years, the plastics recycling industry has become much more competitive, Denton says. He sees competition not only from domestic buyers but from overseas buyers as well.
“I used to export 35 percent of our material,” Denton says, adding that there was not enough domestic demand in the United States. Now, domestic and overseas buyers are competing aggressively for recycled material.
“Keeping jobs and keeping raw materials in the United States are important,” Denton says. “That is why we are going to put a rigid plastics plant here right next to our Denton Plastics plant.”
He says he sees good times ahead for the plastics recycling industry in general. “The recycling industry has a strong position in the commodity market because out of necessity comes growth. There is more and more plastic displacing other material as a commodity of choice,” Denton says. “That creates opportunities.”
The author is senior editor of Recycling Today and can be contacted at firstname.lastname@example.org.
The global steel industry appears to be in correction mode, which means the same can be said for the ferrous scrap industry. Most steel and ferrous scrap industry observers say they don’t expect to see a significant turnaround until the first quarter of 2013, and many are unsure of whether prices have bottomed out yet.
The second half of 2012 has proven to be challenging for the ferrous scrap industry as well as for steel producers. After enjoying modest improvements in price and demand during the first half of 2012, price and demand for ferrous scrap and finished steel have slumped significantly as the year draws to a close.
Compounding concerns for ferrous scrap recyclers is the decline in generation of new material, sources say.
Recent figures from the American Iron and Steel Institute (AISI), Washington, D.C., confirm what many scrap metal recyclers have been saying in recent weeks: Capacity utilization rates at U.S. steel mills have declined.
Nancy Gravatt, vice president of communications for the AISI, says, “Capacity utilization has improved from 2011, but it has been a slow process.” While steel mills reached an operating rate of 75 percent as of mid-2012, she says, “the most recent week (that of Oct. 1, 2012) showed steel mills with an operating rate of 72 percent.”
The biggest reason for the decline is a sluggish global economy, which is reducing demand for steel.
Looking at the past 12 months, Gravatt says the first quarter of 2012 started out strong. Capacity utilization started softening in the second quarter, she says, and the third quarter was even softer.
A recent report by the World Steel Association (WorldSteel), Brussels, forecasts a 3.6 percent increase in global steel use in 2012 compared to 5.6 percent growth in 2011. WorldSteel forecasts steel use in China to grow by 4 percent to 648.8 million metric tons in 2012 compared with 2011’s steel usage growth rate of 6.2 percent. WorldSteel notes that the Chinese economy is entering a less steel-intensive growth phase as a result of the government’s efforts to rebalance the economy and restrain the country’s real estate bubble.
John Packard, founder of Steel Market Update, Dawsonville, Ga., says a survey his firm conducted during the first week of Oct. 1 shows that demand for flat rolled steel has weakened. “Customers are radically reducing the steel that they are producing and reducing order books,” he says.
“Flat roll steel prices are going down,
and expectations are that they will continue to go down,” Packard adds.
Regarding the ferrous scrap sector, Packard says buyers know that prices are declining and are holding off on new purchases as a result.
Problems with the ferrous scrap market are not isolated to one region of the world. Rather, economic challenges in North America, Western Europe and China have all played a role in the slowdown in steel production and, therefore, in demand for ferrous scrap.
Packard says he believes the scrap market may reach bottom in November, though he notes a number of caveats. “If mills adjust their capacity or get orders for the late fourth quarter or reduce capacity in late October or November, we could see some stability.”
John Harris, a steel industry consultant with Aaristic Services Inc., based in Innisfil, Ontario, Canada, says China is the biggest hurdle to a full-blown improvement in the ferrous scrap market and points to the sharp decline in China’s iron ore purchases as indicative of the country’s attempt to curb steel production, which plays into the softening of the ferrous scrap market.
Harris adds that Turkish steel mills currently are able to buy steel slabs from China at the $410 level instead of purchasing ferrous scrap from the U.S. at the $400-per-ton level. “There is no reason for Turkey to buy any scrap,” he adds.
Several scrap metal recyclers report that prices for ferrous scrap have declined from $60 to $65 per ton as of mid-October. The declines seen in September and October have erased modest gains in ferrous scrap pricing that occurred through the summer.
According to a survey by The Steel Index (TSI), with U.S. offices in Pittsburgh, the bearish sentiment seen in the steel and ferrous scrap industries may last for a while. A majority of respondents foresee declining prices for steel in all regions of the world. About 65 percent of those polled say the price of steel will decrease globally, versus 25 percent who predict no change. Also, 80 percent of those polled say the price of steel in the United States will decrease, while 10 percent predict it will remain unchanged. When it comes to the European market, 57 percent of those polled say the price of steel will decrease compared with 33 percent who say it will not change. Roughly 50 percent of those polled say the price of steel in Asia will decrease, while 37 percent say the price will increase.
Turmoil in Europe
Many European ferrous scrap recyclers say they are worried about ferrous scrap markets on that continent. During a recent meeting of the European Ferrous Recovery and Recycling Federation (EFR), Brussels, a number of attendees discussed the slumping European steel industry and the impact it was having on ferrous scrap markets.
The association’s members are national federations from EU member states representing the interests of private companies that are primarily involved in the collection, sorting, trade, processing and recycling of iron and steel scrap.
Crude steel production in Europe dropped by 4.5 percent during the first six months of the year, bringing total steel production to 89 million metric tons. During the first six months, the consumption of ferrous scrap by steel mills in the European Union dropped by 3.4 percent to reach 51.4 million metric tons. The EFR also says the ratio of steel scrap to crude steel increased to 57.8 percent.
Over the first six months of 2012, EU steel producers showed a surplus of 8.51 million metric tons because of a 12.7 percent increase of steel scrap exports to third countries to reach 10.3 million metric tons and a simultaneous 5.4 percent decline of steel scrap imports (1.8 million metric tons) from developing countries.
Turkey was the main steel scrap importer with 5.6 million metric tons, an 11.6 percent increase from the first six months of 2011. The intra-European steel scrap trade reached 15.2 million metric tons (a 9.2 percent decline compared with the first half of 2011).
Despite the decline, the intra-European steel scrap trade was clearly higher than the volume of steel scrap exports to third countries. The intra-European steel scrap trade figures confirm their active role in the raw materials supply chain of EU steel production. However, the general situation of the EU steel industry remains worrying. Steel demand is 25 percent below its 2007 level with a current 25 to 30 percent overcapacity.
“Closures of some steelworks, mergers and environmental issues represent a serious threat to the steel sector, which has to compete on a global level with respect to CO2 (carbon dioxide) emissions and energy costs,” the EFR states in a press release issued Oct. 3, 2012. As a result, the European scrap collection and processing sector reported a significant decrease in order volumes. This has led to a decline in scrap prices in Europe, ultimately discouraging scrap collection and processing because of little to no margin at all, according to the EFR. In addition, scrap operators witnessed a considerable reduction of scrap availability.
The drop in steel production also resulted in less prompt scrap being produced, creating an even smaller pool of ferrous scrap for recyclers in Europe, according to the EFR.
With all these headwinds, the EFR says the short-term market outlook is certainly not very positive for EU steel producers and recyclers.
The EFR also notes that increasing volumes of rebar are flooding the Turkish market at prices well below Turkish production cost. “As Turkey, the main scrap purchaser, is being squeezed out of its traditional market, the EU markets for steel and steel scrap will undoubtedly be affected,” EFR President Tom Bird said during the meeting.
In a report submitted to Steel Markets Update, Damon Sun with Daido International, El Segundo, Calif., says the effect of declining steel production in China is spreading further into the Far East and South East Asian local markets. “Despite publicized reports of higher local finish[ed] prices in most parts of China, the Chinese mills and traders/stockists have been aggressively making export deals,” Sun writes. “The effect is lower priced billets exported into larger reroller markets,” he adds.
Sun notes that in Thailand and in Vietnam it is cheaper to import Chinese billets for rerolling than to melt scrap and reroll it at domestic mills. “Consequently, some mills have reduced melt shifts and are contemplating import[ing] billets to compete with the local rerollers.”
Sun adds, “At this point, it is all about playing defense until the end of the year,” noting the excess capacity on the market.
“There may be a cargo here and there showing prices turning upwards,” Sun continues, “but likely it’s all games by mills to jump-start sales (showing scrap prices bottomed and coming up). I don’t expect price trends to reverse until early December. By then, scrap inventories and collections should be rather scarce, causing the Q1 2013 jump in prices.”
Longer-term, the outlook for ferrous scrap markets is more optimistic.
Cause for Optimism
Chinese steel mills are expected to consume more ferrous scrap at the expense of iron ore in the future. In a Bloomberg report, Chun Chi Wai, chairman of Hong Kong-based China Metal Recycling Holding Ltd., among the largest metals recycling companies in China, says ferrous scrap may be the raw material of choice for more than 20 percent of the steel produced in the country by 2015, compared with 14 percent at the present.
Looking into the future, Michelle Applebaum, a steel market analyst with Steel Market Intelligence, based in Chicago, says U.S. domestic steel production continues to decline on a week-by-week basis while global steel production is showing a similar downward trend on a month-to-month basis. Applebaum notes that the fall in ferrous markets has been driven by a near-two-year low in domestic steel production as well as by weakening global steel production.
“We suspect the prime to shredded ratio—which is now near parity and [at] the lowest level since November 2008—put a floor under prime grades, although we are surprised there has not been more substitution of the higher-yielding prime grades earlier,” Applebaum writes in a recent report.
“Between weaker obsolete generation and strengthening prime generation, we are seeing shredded and busheling within $1 of each other,” she says.
Applebaum continues, “We expect to see continued pressure on scrap prices as weakening global steel production, tepid iron ore prices and continued global economic jitters offset normal seasonal strength, which we do not expect to see until year-end.”
Regarding export markets for ferrous scrap, Turkey, a key buyer of material from the U.S., also has cut ferrous purchases in the face of a slackening in demand, says Applebaum, because of political instability in key export markets in the Middle East, as well as increasing power costs.
Also playing a role in the decline in shipments to Turkey has been the herd mentality, with some Turkish buyers holding off on new purchases in anticipation of U.S. scrap metal prices falling even further. However, she notes, a recent purchase may have broken the drought in buys from Turkish mills.
Despite the decline in steel production, Applebaum says her consulting firm is seeing signs of stabilization in China. “While this hasn’t begun to hit in the West, we suspect that lower exports from China, due to production cuts, will eventually translate into improved pricing in the United States, but we do not see production picking up meaningfully until the first quarter of next year,” she writes.
TSI adds that U.S. steel sheet price weakness, a factor that has been weighing on scrap prices, may be on the wane, with the auto industry seeing its best month for sales in years as of September. TSI adds that optimists are expecting sheet prices to remain at current levels, though strong auto production is unlikely to provide much support for busheling prices.
As for scrap generation, a growing concern for many scrap metal processors, Applebaum says obsolete generation continues to be challenged and shredder overcapacity is a worsening problem.
“We are bearish on iron ore, and that motivates an overall bearish view on ferrous scrap markets. There is significant [iron ore] capacity coming online in the mining side in the next few years and this should continue to pressure scrap markets,” Applebaum says.
The author is senior editor of Recycling Today and can be contacted at email@example.com.
It was almost, but not quite, a case of love at first sight. When the German manufacturer of purpose-built material handling equipment, Sennebogen, brought its green line of material handlers to America in 2000, Danville, Ill.-based Mervis Industries was the first customer to take a chance on the new equipment. Jim Picillo, now vice president and COO at Mervis, remembers the event well: He was part of the team that originally met with Sennebogen and approved the purchase of the green machine for the firm’s recycling yard in Danville. He also remembers that first machine, because it’s still operating outside his Danville office.
“I had bought machines from everyone by that time,” he recalls. “We sat down with Erich Sennebogen, and he explained the company’s concept. It was a purpose-built machine backed with sound engineering; it was obvious to us that they had thought things out and had talked to their customers.”
What's not to love?
On first inspection, Picillo and his colleagues recognized a number of small things, he says, that make the Sennebogen machines smart, durable, reliable and efficient. They could see that the green machine was a true scrap handler, in contrast to the traditional cranes or converted lumber and dirt machines that were commonly retrofitted into scrap yard applications.
However, he notes that there were a number of issues that still had to be addressed to Mervis’ satisfaction. “The magnet controller was an early solid-state model and not really reliable,” Picillo says. “We felt that the swing gear would be inadequate for our loads and duty cycles, too. The fuel economy was pretty favorable, but we had concerns about getting parts and service for the originally installed engines.”
Ha adds, “We recommended to [Sennebogen] at the time that they consider switching [to] engines that U.S. customers might be more comfortable with.”
Sennebogen’s reaction to his comments sealed the deal for Picillo, he says. “They stood behind it and made everything right,” he says. “So we knew this was a company that we wanted to partner with to resolve the issues and bring a better product to the market.”
Since then, Sennebogen has moved to engines that are better known to the American market. “We’re very happy they have moved to Cummins because our truck fleet is all Cummins,” Picillo says. “It’s a world-class engine that’s fuel efficient and reliable.”
Mervis Chief of Equipment Maintenance John McClatchey also is pleased with the equipment.
According to Picillo, McClatchey came to him when he heard the company was going to purchase a new scrap handler. “It’s going to be a Sennebogen, right?” he asked. “Make it Sennebogen, or I’m gonna quit! I’ve never seen a machine with so few problems.”
Picillo agrees that the green machines he helped to bring into the U.S. market have lived up to his hopes. Mervis, one of the largest recycling operations in the Midwest, now runs a fleet of Sennebogen scrap handlers in its various yards in Illinois and Indiana.
The differences between Sennebogen machines and older machines that were adapted from cranes or excavators are many, Picillo says. “The boom was developed with the stresses of our industry in mind. The outriggers and wheels create a better platform to work from on a wider footprint with 12 points of contact.” Picillo continues, “The slightly slower rpm on the swing function helps the operator stay under control—We prefer a smooth operator to a fast but out of control one.”
Easy to own
Picillo also says he appreciates the maintenance features in Sennebogen machines. He points to the control system, saying it is not complicated for machinery technicians who don’t have extensive training in electronics.
Echoing the sentiments of McClatchey, he adds that none of the machines in his fleet have ever given him a serious oil problem.
He is even impressed by the wrapping applied to hoses that are hidden out of sight in the machines. “While touring the assembly plant, I noticed them wrapping the hoses to protect them from friction wear and vibration,” he adds.
“Servicing is not an issue with Sennebogen,” Picillo says, “and it never has been. We can get anything we need, when we need it. Their dealer network is top notch—we work with both Brandeis and Howell Tractor. With people like Tom Ellis, general manager at Howell Tractor & Equipment and Gary Hirsch, vice president and general manager of Bramco MPS, Sennebogen has been represented by dealers who really understand their customers’ needs in this industry.” Picillo adds, “And we have always had a very good relationship with Jim Westlake.”
Westlake, the senior service manager for Sennebogen LLC, headquartered in Stanley, N.C., also has been part of the organization since its very beginning.
With better than 10 years of experience operating Sennebogen scrap handlers, Picillo reports that Mervis strongly prefers the machines “so we don’t have to be experts on all different types of equipment. We continue to use other manufacturers’ equipment in our fleet, but we are definitely trending greener all the time,” he says.
“It began when Erich Sennebogen took the time to visit with us, explaining his ideas and his approach,” Picillo continues. “We were impressed by his understanding and passion and we liked how we were treated from the outset.”
This case study was provided on behalf of Sennebogen LLC, Stanley, N.C. Information about the company is available at www.sennebogen-na.com.
|Top, a magnet is used to fill an Acculoader at a Calgary, Alberta, Canada, scrap operation. A grapple, bottom, loads an Acculoader at General Recycling, Edmonton, Alberta, Canada.|
As export markets for scrap continue to thrive, recyclers are looking for ways to load and ship material in the most efficient ways possible. The same is true for local shipments—the more one can fit in a single container, the better. But loading big boxes is time consuming. One way to reduce the time it takes to prepare a shipment is to move from using front-end loaders or material handlers to automated container loading equipment.
James Knick, manager at Pacific Steel & Recycling, was sold with the first container-loading unit the company installed at its Tacoma, Wash., yard a little more than a year ago. “The machine allows us to load more quickly, safely and easily,” he says. “It saved so much time, it isn’t funny. That thing is a lifesaver.”
Previously, Pacific Steel & Recycling loaded containers using a forklift and loader, while a conveyor was used to load shredded material.
With a loader, Nos. 1 and 2 heavy melting steel (HMS) can be transferred into an intermodal container, which can be put on a single- or double-level rail car. From there, it can go by rail to the consumer or to the port, reducing a recycler’s need for line-haul trucks.
“Loading was really hard on the equipment,” Knick says. More concerning than the wear-and-tear on equipment were the safety issues. “If you are running cast pieces with a forklift on a ramp, it is very close quarters. There is a lot of room for error,” he says.
Now, one person using the company’s Acculoader unit from X-Body Equipment, Loomis, Calif., can handle the operation safely instead of involving two people. It is far faster, too, he says.
“It depends on the material you are loading, but it cut our time in half,” Knick says of the automated container loader. He says it took from one to two hours to fill a container with cast or engines using a wheel loader. “With the [Acculoader], it is about 30 minutes.”
Knick and the team at Pacific Steel & Recycling say they are so happy with their first unit that they are looking to add a second unit to replace a conveyor the company currently is using.
Pacific Steel is considering purchasing a diesel-powered unit in the future. The company currently has an electric-powered model.
“It will be easier to move around,” Knick says of a diesel unit, “although we haven’t moved the first one yet.”
Dave Meyer also says he cut the labor and time required to load containers in half by using an automated container loader at his scrap yard. Meyer, who is in charge of operations for Calbag Metals, Portland, Ore., says, “I was trying to do 10 containers in two shifts.” Using a container loader, he says, “Now I do 10 in one shift.”
Meyer says Calbag Metals used to load containers using a ramp and a forklift. “We had a guy running the container, one loading them and two on forklifts,” he says. “Now I just need a truck driver and a crane operator.”
Nathan Frankel, president of Advanced Steel Recovery (ASR) and FasTek, Rancho Cucamonga, Calif., is both a buyer of scrap metal and an equipment vendor. The company’s FasTek loader has been on the market for more than six years.
“Using a [container] loader can save $5 to $7 a ton,” Frankel says. “It depends on how the individual yard is working.”
Long ago, Frankel says, he was sold on using sea containers for shipping ferrous scrap—abroad or at home—if only those containers could be loaded efficiently. He began to puzzle out how to make things work more smoothly and came up with the FasTek system.
Frankel hired a lawyer to look at patents and a New Mexico engineering firm to create a prototype. A project that was supposed to cost $300,000 and take three months dragged out beyond a year. The company began testing the unit in February of 2005 and sells them commercially today.
In 15 minutes, with just one operator, FasTek can load 21 metric tons into a 40-foot sea container compared with up to four hours and four men it used to take, according to Frankel. “Plus, FasTek eliminates the use of traditional backhoe loaders,” he says.
Safety is a major issue, too. There is always risk when people or loaders have to enter a closed container as part of the loading operation.
Making the switch
The move to a loader is not an inexpensive prospect. But the savings in time and labor offer a payback that anyone filling containers would be advised to consider. It certainly is worth the time to push a pencil (or pound a computer keyboard) to look at the possible return on the investment (ROI) in automation.
It certainly paid off at Pacific Steel, which is considering installing a second unit. Other recyclers are intrigued by the possibilities, too.
Several patent issues have put the container loading industry into the legal spotlight.
FasTek, Rancho Cucamonga, Calif., has filed a successful lawsuit against Steco, a company that made a machine similar to the FasTek loader. FasTek maintained that Steco had built a machine that was just too similar to its own. Steco ceased production and excited the container loading business.
“There are many copycats. People latch onto what they see as a good idea,” says Nathan Frankel, president of Advanced Steel Recovery (ASR) and FasTek. “We are dedicated to protecting our intellectual property.”
FasTek currently is pursuing legal action against Acculoader, Loomis, Calif., for similar reasons, Frankel says.
The company also is involved in a patent issue with Al-jon Manufacturing LLC of Ottumwa, Iowa. John Portwood, vice president of sales at Al-jon, says no lawyers are involved presently and the companies are trying to work things out amicably. “We are in negotiations,” Portwood says.
So far, only one of the Al-jon units has been sold, and that was to a company in Australia.
“I don’t like to do it. It’s expensive,” Frankel says of the lawsuits. “But you have to protect what you’ve put your heart, time and money into developing.”
“If I were setting up another loading facility, I’d definitely put in another loader,” Meyer says.
His company’s container loading system happens to be diesel powered.
“Interest has been steady as recyclers look to move toward more automation and less manual systems,” says John Poplawski with Hustler Conveyor Co., O’Fallon, Mo.
“Containerized shipment of scrap is now a part of this industry and it’s not about to disappear any time soon,” says Greg Bushong, president of X-Body Equipment/Acculoader. He agrees container loading systems have the interest of recyclers.
For many steel mills, containerized shipments represent a serious financial advantage, as they tie up less of their funds than bulk shipments would.
Although market fluctuations change customers’ buying patterns, Bushong says he expects the overall demand and need for such systems will remain strong for years to come. He says container loaders level the playing field for the small to medium-sized scrap producers as they compete with larger companies.
One of the advantages Frankel sees is that container loaders allow a small yard to grow. A recycler doing 1,000 tons per month will have a long payback on the equipment versus using a wheel loader. However, Frankel says automation has allowed every one of his customers in North America, Mexico and Puerto Rico to expand their volumes. “There is value beyond lower labor cost,” Frankel says.
“Loading containers for export for all size companies keeps domestic prices competitive,” Bushong continues. “Loading scrap in containers serves the end user who can’t afford and or handle the size of orders that bulk shipment produces.”
It is a lot easier for buyers of recycled scrap to order 100 containers or 2,500 metric tons of material than it is to order a bulk ship that has 60,000 metric tons of material.
Bushong says buyers need a machine or system that will improve their operation and save them time and money. He suggests buying a system that will require less staff and man hours to load a container and that has a short ROI. “And, of course, find a system that will not damage the containers during loading,” he says.
Hustler Conveyor offers a super-heavy-duty oscillator with a three-quarter-inch deck and sides, a 3-foot bolt-on nose and a large capacity freestanding infeed hopper, Poplawski says. The company’s high-speed flat idler conveyor uses three-ply 330 belting.
He recommends that recyclers give serious consideration to both the belt scale and the adjustable supports when shopping for such systems.
Additionally, Poplawski says buyers often opt for remote handheld controls and infeed hopper sensors that feature photo eyes.
FasTek offers two models: one is stationary and the other is mobile. The units have hardware and software designed to make the loading process seamless, according to the company.
ASR buys HMS and sells steel, and Frankel says he has found the company’s customers also benefit from having a FasTek unit in their own yards. A computerized system is tied to the user’s website and allows the company to book containers. Online, the user can confirm the booking. As the machine loads the container (in about 10 minutes), it confirms the weight and the shipping date. Three days later, the sellers have money in their accounts, according to Frankel.
|A scrap handler loads oversized cast into the container loader at Pacific Steel & Recycling.|
Recyclers should look for physical loading speeds per container of 15 minutes or less, Bushong suggests. He says it is possible to load 20- to 40-foot containers in as little as 10 minutes with the Acculoader.
Bushong adds that recyclers should look for hardened wear surfaces and upgraded electronic packages that will allow users to interface with the Internet. Acculoader also offers a mobility package. At 41 feet, the unit has the smallest footprint on the market, the company adds.
Sources also suggest that buyers should ask questions about the manufacturer that is building the units they are considering and the prospective supplier’s history in the industry.
They also advise shoppers to ask suppliers for references who can discuss their experiences with the equipment and, perhaps more important, with the company that sold and serviced the equipment. If the references provided used another container loading system previously, suppliers advise shoppers to evaluate the reasons behind the recyclers’ switch and to ask about any preceived shortcomings their previous container loading systems might have had.
The author is a freelance writer based in Cleveland and can be reached at firstname.lastname@example.org.