Editor's Focus--Obsolete but Still Wanted

Looking at the shredded grades as part of overall ferrous scrap production, the United States Geological Survey (USGS), Reston, Va., shows that in 1994, 9.7 million tons out of 70 million tons, or 13.8 percent, of domestic ferrous scrap consumed in the United States was shredded scrap. Fewer than 10 years later, in 2003, 10.9 million tons out of 61.3 million tons, or 17.8 percent, of domestic ferrous scrap consumed in the United States was shredded scrap.

During the past two years, more shredding plants have been built, as scrap recyclers seem to have reached a consensus: Old automobiles and appliances are the most dependable scrap sources.

The federal government estimates that about two-thirds of the U.S. economy is now driven by individuals at the household level. It should not be surprising that, just as the business-to-consumer segment now dominates the economy, the recycling of consumer goods may start eclipsing industrial and commercial generation.

Manufacturing in North America is by no means dead, but manufacturing for export seems to be increasingly relegated to a handful of niches. Even manufacturing for the domestic market has become a matter of holding enough logistical advantages to compete against the lowest-cost labor markets that can be found globally.

Scrap recyclers are in a position to judge the health of the manufacturing economy even before any monthly government figures are announced. Within their operating regions, they know when a plant is revving up, slowing down or shutting its doors permanently.

Conversations with scrap dealers for the past several years have unfortunately revealed an ongoing concern for their generating customers in many regions of the country. This spring, a recycler in the Chicago area remarked that "there are just fewer and fewer customers out there; more and more of these small industrial shops are disappearing."

Beyond the anecdotes and expressions of concern are the capital investments, when recyclers make their most important decisions. And during the recent run of prosperity, a lot of recyclers decided that increasing their shredding capacity was the best capital spending decision.

Shredding obsolete goods and separating the various metals requires a significant investment, but recyclers increasingly see it as a necessary way to stay in the game.