When Ed Mamou, vice president of Royal Oak Recycling, a Royal Oak, Mich.-based recycling firm, is asked what his company’s motto is, he is quick to say, “underpromise and overperform.”

This philosophy has been the cornerstone of Royal Oak Recycling’s business throughout its 20-year history.

Royal Oak Recycling, under the ownership of Ed’s father, Habib, reflects its founder’s hard work and philosophy of developing partnerships with customers. As a result, the company has grown from a small paper stock plant into a diversified, multistate operation.

From the Ground Floor to the Top Floor
The story of Habib’s entrance into the recycling industry is familiar and yet unique. Habib immigrated to the United States from Iraq in 1973 after leaving the Catholic priesthood, where he served for eight years. Uncertain about what to do in the United States, he started taking classes at a local university.

While attending college, he worked sweeping floors at Great Lakes Recycling, a Roseville, Mich., recycling firm. He was named a vice president of the company in 1983, propelled by his ambition and determination.

Sandy Rosen of Great Lakes Recycling fondly remembers working with Habib. “At the time he left, I tried to keep him,” Rosen says. “I told him we could do great things together. However, he is such a shrewd, hard-working guy, I knew he had to go on his own. He just has that drive to create his own empire.”

Habib ultimately purchased a small paper stock plant named Royal Oak Waste Paper & Metal in 1992. While the company was established in 1935, it was bumping along, “handling a little bit of office paper, cardboard and some metal,” Habib says.

Habib, who has worked in the recycling industry for 39 years, saw great opportunities ahead for his new company. He says pursuing the American Dream means always being on the lookout for ways to grow his business.

Not content with the small 10,000-square-foot warehouse and its modest processing capability, Habib, with the assistance of a Small Business Administration loan of $900,000, purchased a high-volume shredder and baler combination from Enterprise Co., Santa Ana, Calif.

Soon after, Royal Oak Recycling acquired land surrounding its original location with further expansion in mind. In 1998 the company applied for a $4.4 million low-interest Industrial Revenue Bond loan, which allowed it to add a second baler, increase its warehouse space, pave the surrounding property and add a railroad spur.

In 2005, with the company starting to take off, Habib realized he needed more help. That’s when he called on his son Ed, who came aboard as a vice president.

Far from a novice, Ed says he grew up in the recycling industry. He has used much of his college education, which includes a masters degree in applied mathematics, to not only strengthen the company’s day-to-day business but also to help Royal Oak Recycling to position itself for the future.

Changing the Model
In light of the slowdown in generation of paper, especially from printers, the company has aggressively pursued corporate clients to maintain and grow the volume of material it processes. Royal Oak also has expanded the recyclables it handles, notably adding plastics. In 2007, reflecting its growth into other commodities, the company changed its name to Royal Oak Recycling.

“We are expanding and adding plastic separation equipment, which will upgrade and increase our plastic stream,” Ed says. “We are looking to add 100,000 square feet of warehouse space in Metro Detroit to process the volume that is already there. We are also working with local waste haulers, conducting trash audits to right-size and right-service their accounts,” he adds.

Along with expanding the focus of the materials it handles, Royal Oak also has broadened its geographic coverage. The company has opened locations in White Lake, Mich., Cleveland and Pittsburgh. Furthermore, Habib has taken small stakes in several other recycling companies, including Recycling Concepts of Grand Rapids, Mich., which has allowed it to provide even greater coverage.

Ed says, “We initially gained the processing contracts for Abitibi Bowater’s (now known as Resolute Forest Products) Paper Retriever program in Cleveland and Pittsburgh, which gave us the tonnage base and financial stability to enable us to grow.”

From this starting point, each of the locations now operates as stand-alone facilities, acting as drop-off sites for brokers, waste management and independent recycling firms—essentially any company that needs a partner to handle material, he says.

Additionally, all of the facilities provide secure, plant-based shredding services, trucking and collection services and can handle metal, plastic, fiber or electronic scrap. Hard-to-handle material is centralized at the company’s Royal Oak plant, which has unique capabilities, such as book cutting and additional metal and plastic processing.

Ed mentions the company’s partnerships with Recycling Concepts and Recycling Makes Cents, Windsor, Ontario, saying, “These businesses and partnerships have allowed us to work from other sites while growing our customer base, servicing national and international accounts, building a sustainable model for the future and providing basic services for contract corporate customers.”

To accommodate this growth, Recycling Concepts purchased a baler from Enterprise Co. as well as a 50,000-square-foot building in Grand Rapids.

Responding to Customers
Along with expanding the types of material it handles, Royal Oak Recycling also has found opportunities in ancillary businesses. It successfully entered the document storage industry to complement its document destruction business.

“The key to sustaining our business is being diverse and able to handle customer demands,” Ed says.

“In 1999, we assembled properties across the street from Royal Oak Recycling. In 2001, Royal Oak Storage opened based on customer demands for self-storage in the Royal Oak area and the needs of many current customers for records management,” he says.

“We now have more than 120,000 square feet of warehouse space dedicated to records management, self-storage and truck rental and warehousing,” Ed continues. “This has allowed us to grow our customer base by providing them with both document shredding and document storage as a bundled service. It is one more way we have been able to be a one-stop shop for our customers,” he notes.

The combined effect of adding to Royal Oak’s services, locations and materials handled is that the company currently processes more than 300,000 tons of recyclables per year.

Despite Royal Oak’s growth and diversification, it still faces challenges, perhaps the biggest of which is the long-term decrease in fiber products, Ed says.

“Since the printing markets have decreased, we have consequently gone after the corporate markets for fiber,” he says. “The challenge of this market is distinguishing our company from the competition when the customer views you as another trash hauler and simply wants to get the materials out of their building at the lowest cost.”

Ed continues, “We continue to increase volume in other materials, such as plastic, metal and electronics, to balance out the decrease in fiber while constantly looking for new fiber sources. Diversifying our locations and reaching out to a broader, national market helps to maintain our growth.”

The author is senior editor of Recycling Today and can be contacted at dsandoval@gie.net.

For more about this story, watch the video www.recyclingtoday.com/habib-mamou-interview.aspx.

Is gold the locomotive of precious metals prices? Or does it run on a separate track from other precious metals? And how does it compare with base metals, such as ferrous scrap?

There is little doubt that the lofty price of gold has affected scrap trading. One of the traditional rules of thumb cited in precious metals trading is the silver-to-gold price ratio. During the last 30 to 60 days of 2012, the silver-to-gold price ratio hovered just above 50:1, meaning it would take approximately 50 ounces of silver to equal the price of one ounce of gold. That ratio reached nearly 53:1 in mid-November.

Taken alone, it is a meaningless metric. In historic context, the silver-to-gold ratio throughout the past decade has been anywhere from a high of 83:1 to a low of 31:1. That would indicate that the ratio as of mid-November is roughly in a middle range.

Some observers scoff at the ratio. They maintain that the whole idea of a silver-to-gold ratio is a dated concept, going back to the days when the U.S. government’s currency was based on gold bullion and the mint issued silver certificates in place of dollar bills.

The absolute price of gold was floating in the range of $1,700 to $1,725 per ounce in mid-November, while the price of silver was in the $32 range. During that same time, platinum was selling at $1,537 per ounce, and palladium was in the neighborhood of $600 per ounce.

While recyclers typically hedge each purchase and do not stockpile metals to speculate on the markets, the question of price ratios is more than academic because many of those selling various metals have an eye on prices. Hoarded supplies from small-time generators and jobbers tend to show up for recycling when prices make headlines. Popular press articles trumpeting record prices for gold or platinum have a way of bringing other metals out of storage and onto the market—even if those other materials are not moving in tandem with the record-setter.

Think Small
Bill Rockett, vice president of M&K Recovery Group, North Andover, Mass., says the high price of gold has had a slight impact on prices for other metals. “But it hasn’t made things jump through the roof,” he adds.

He says people who run across precious metals in small volumes have been more aggressive in their pricing and processing demands. M&K’s regular customers, however, conform to the norm, riding each surge and dip in price as part of the normal cycle. “Our regulars are keeping to their business plans,” Rockett says. As a result, M&K has seen no major increase or decrease in the supply of material being shipped to the company for processing.

The scenario is similar at Universal Scrap Metals Inc. in Chicago, where Jack Whalen says he sees a preponderance of silver come through the company’s precious metals department. He says the flow of silver tends to be steady, coming as it does from busy medical facilities processing X-ray film and publishers who still use film for graphics. They are not speculating, he says, rather converting a resource to cash.

“That supply of silver is drying up since everyone is going to digital,” Whalen adds. That said, silver prices in the $32 range have attracted attention.

“Everything is at historic highs,” says the president of another Great Lakes-area metals firm. “Values are up across the board.”

Whalen says, “Every day is a different day. We have several jobbers who buy from the smaller places and sell to us.” Those customers are price sensitive, he says, but most of the larger generators of silver move their scrap material out the door as it is generated.

Some sources say more than 95 percent of all of the silver ever mined has already been consumed. That silver is gone forever, unrecoverable at any price. As virgin, mined supplies dwindle, there is more pressure to draw silver—and other precious metals—from the recycling stream.

The quality of the material in the recycling stream may not be everything a recycler could want, however. Volumes are up, in particular, in the lower grade materials. It seems that any of the top-grade material that was stockpiled was lured off for recycling long ago. However, as supplies got tighter for the top grades, the high value placed on any precious-metals-bearing recyclables made it worth the time and hassle to extract these metals from almost any source.

“The current prices make it viable to sell now because before it was not worth processing,” Whalen says.
 

Other Metals
Even the more prosaic metals—iron, aluminum and copper—are feeling the price pressure. The entire metals market seems to be buoyed by the high prices of gold and other precious metals.

“Ferrous, nonferrous and other metals have had more fluctuations [in pricing] than precious metals,” Rockett says. He points to the considerable volatility seen in pricing for metals such as copper and aluminum.

Yet, he says strong or weak precious metals markets are not necessarily a factor in the price swings of nonferrous materials. “I would not say they are related,” Rockett adds.

Whalen sees a similar situation. Universal does more business in the basic metals and colored metals than it does in precious metals. He sees those base metals reacting more to the price of a particular related commodity than to the sky-high levels of precious metals such as gold.

“We see a lot of copper, aluminum and brass,” Whalen explains. “When the market goes up, they sell off. If copper, for example, drops 40 or 50 cents a pound, they will sit on it.”

Someone with copper will keep an eye on copper prices—not gold or silver prices.

“After a year, if the market is still trading down from its highs, they will trade it off, if for no other reason than sheer space availability,” Whalen says. Machine shops, for instance, might hold copper or brass until there is an uptick in price. But, they can store only so much material because of space restrictions before they have to send it to market. Copper has been all over the map this year, starting in the $3.30-per-pound area, touching $3.90 in late winter, dropping back to the $3.30-to-$3.40 range in the summer and finishing the year somewhat healthier in the $3.50 range.

The copper run-up in March paralleled a rise in the price of gold, which hit highs near $1,800. The October jump in gold prices, again approaching $1,800, did not seem to have as much of an effect on copper the second time around, though copper did bounce one dime at the same time.

The value of the U.S. dollar can make more of a difference in gold and silver prices than in the prices of other metals. In early November, when the dollar hit lows against the Indian rupee, purchases of gold by Indian buyers jumped. India is the world’s largest consumer of gold.

At the same time, gold prices had fallen from October highs in the $1,800-per-ounce range to the low $1,700s and then into the upper $1,600s. If there ever was a “buy” signal for Indian consumers, the lower price of gold and the higher value of the rupee became a beacon for those looking to purchase gold.

Platinum paralleled silver more closely than gold in 2012, with the same run-up in March that most precious metals experienced. It topped off just below $1,700 per ounce before diving to $1,550 per ounce in May and continuing down to less than $1,400 in early summer. By August, platinum still hovered near $1,400 per ounce (with one spike). But the fall saw prices move to $1,700, again before dropping in November to the $1,550 range.

Palladium started 2012 down from its fall 2011 price range above $650 per ounce, dropping below $575. However, it bounced back to $650 in February and traded between $680 and $720 for most of the spring, with some minor exceptions. The price took a quick dive in May, dropping below $600 per ounce and trading near $575 for much of July and August. In September, the price nudged to $700, took a breather, then came back to $675 in early October before continuing to drop to the $590-to-$620 range as November progressed.

While platinum was setting lows in February, palladium was nearing an annual high. Both experienced declines into the summer months, however, and both showed real life, in terms of pricing, in October.

Gold, silver, platinum and palladium all experienced the late summer run-up, even though their industrial uses vary. (Platinum and palladium are used similarly in automotive catalytic converters.)

However, available supplies of recyclable metals fluctuated very little.

Down the Road
“I don’t foresee any softening in the prices of gold, platinum or palladium,” Rockett asks. His outlook for 2013 is that all of the precious metals will fluctuate in roughly the same price ranges that they moved in late in 2012.

“Will they all lose $100 an ounce?” Rockett says. “I’d say no.” He bases his outlook on supply and demand. “The market for precious metals, fundamentally, is economics driven,” he continues.

Rockett notes that there might be a dozen reasons for the price of gold—or any material—to move up or down. People can point to each or any of those factors and be correct in their analysis.

One of those factors is politics. Whalen notes that all metals will move one way or the other in the postelection climate. “Supply and demand plays a big role,” Whalen says, “but other factors like regulations [and] political outlook affect prices.”

Where the price of gold, silver, platinum and palladium go in 2013 is anyone’s guess. Most industry sources say that if they could pick metals prices with any accuracy and consistency, they would be on a beach somewhere sipping umbrella drinks.

For commercial recycling operations, the tried-and-true approach of being conservative in outlook and working the margin game remains the best approach in 2013. While it is fun to overlay charts of copper price movements on gold prices, or to compare silver price movement with that of palladium, the truth is that the market sets commodity-specific prices every morning and closes in the evening at a level specific to that metal. Trying to play a guessing game based on price movement of other commodities is for the speculator—not for the recycler, who is in business for the long-haul.

The author is a contributing editor to Recycling Today based in Cleveland. He can be contacted at curt@curtharler.com.

Electronics recycling has become one of the fastest growing segments of the recycling industry, attracting increased interest from strategic and financial investors. Positive dynamics that point to continued growth and consolidation in the e-cycling industry include:

• Heightened regulatory pressures and legislative support for e-cycling;
• Significant increases in e-scrap volumes driven by the proliferation and shorter lifespan of electronics; and
• Development of an innovative and cost-effective recycling infrastructure.

In light of recent growth and the highly fragmented nature of the industry, electronics recycling companies have become attractive targets for investors. The industry is in the early stages of consolidation, and considerable opportunities exist for new participants to make platform investments or for existing companies to supplement their growth through acquisitions.

Industry Overview
The e-cycling industry consists of companies that provide a variety of services dedicated to the responsible recovery, recycling, refining and remarketing of unwanted electronics. Globally, e-scrap represents the fastest growing municipal waste stream. It is estimated that from 20 million to 50 million metric tons of e-scrap are generated worldwide annually, representing more than 5 percent of all municipal solid waste (up from 3 percent in 2009).

Significant attention has been directed toward the effective management of e-scrap in recent years because of rising concerns about environmental pollution, high and volatile commodity prices and resource scarcity.

According to ABI Research, Oyster Bay, N.Y., global revenue generated from e-cycling is expected to reach $14.7 billion by the end of 2014, up from $5.5 billion in 2009, representing a five-year compounded annual growth rate (CAGR) of 21.7 percent.

While the e-cycling industry spans multiple continents, it remains a highly fragmented sector with up to 1,000 active companies, according to industry estimates. Companies tend to be local or regional, leveraging an understanding of localized market dynamics and supplier relationships. Very few e-cycling companies have established a global reach; however, companies such as Sims Metal Management offer integrated services across multiple regions/countries.

The fragmented nature of the market, along with positive underlying dynamics, makes e-cycling an attractive sector for industry consolidators looking to capitalize on strong organic growth.

Growth Drivers
Positive macro trends are fueling strong secular growth as the industry continues to rebound from the economic downturn. Awareness of the potentially hazardous effects of electronic scrap and the need for efficient and cost-effective disposal solutions are increasing.

The following key drivers are expected to contribute to long-term growth in the e-cycling market.

Heightened regulation and legislation. The e-cycling industry is largely dependent on legislation to act as the primary driver of market momentum. A patchwork of e-scrap legislation and mandated product take-back programs across different regions throughout the world has placed markets at varying stages of development. Europe maintains the strictest legislation related to the disposal of sensitive materials, which can largely be attributed to the Waste Electrical and Electronic Equipment (WEEE) Directive and the Restriction of Hazardous Substances (RoHS) Directive. These directives provide for producer responsibility for electronics and impose restrictions on the use of certain hazardous substances in electronic equipment. While this legislation has been well-received, studies indicate continued demand for enhanced regulatory reform that will drive further e-cycling efforts throughout Europe.

Outside of Europe, regulations continue to develop and change quickly in many countries. In most cases, the scope of these regulations varies. For example, the U.S. currently does not have a federal mandate to recycle electronics. However, as of October 2012, 25 states had enacted electronics recycling laws, according to the U.S. Environmental Protection Agency (EPA). Meanwhile, countries such as Japan, South Korea and Taiwan have made fast inroads into this sector.

Regardless of the region, the general global consensus is that the recent increase in the implementation of new and existing legislation for e-scrap will continue. This sentiment is expected to lead to a heightened regulatory environment that will largely determine the pace of market development in this sector. For the time being, the current diversity of legislation across regions will favor larger industry players that have the necessary resources to manage the various regulatory complexities.

Increase in e-scrap volumes. E-scrap volumes are poised for continued growth in light of the proliferation of new electronic devices and the increasing rate of product obsolescence. A strong indicator of this dynamic is the rise in global sales of electronics. According to Stamford, Conn.-based Gartner Inc., a prominent technology research firm, global unit sales of computers, tablets and televisions are up approximately 15 percent, 430 percent and 3 percent, respectively, from 2010 to 2012, while global cell phone sales were up by nearly 40 percent in 2011 alone.

In addition to the increase in volumes, the amount of e-scrap actually recycled remains a limited percentage of the total e-scrap generated, providing additional opportunity for growth. The recycling rate for electronics in the U.S. was only 19 percent in 2010, according to the EPA, up from 13 percent in 2008.

Developing recycling infrastructure. The e-cycling sector is a dynamic market in which services and solutions are constantly evolving. Top e-cycling providers are actively investing in collection and processing techniques that provide additional value to customers.

E-cycling companies also are increasing attention on, and investment in, obtaining industry certifications. Customers have begun demanding these certifications (e.g., e-Stewards Standard, Responsible Recycling Practices [R2], IDC G.R.A.D.E. and ISO 14001, etc.) from their e-cycling providers. Most customers—especially financial institutions and government agencies—want assurances that sensitive information stored on hard drives is not exploited by e-cyclers. In addition, customers want to ensure their electronics are being handled in a socially and environmentally responsible way.

Finally, electronics manufacturers are establishing e-cycling programs that promote the continued development of e-cycling and improved infrastructure. For example, Samsung Electronics promotes take-back systems to comply with global recycling laws and is expanding its voluntary take-back programs to reduce its environmental impact through recycling.

M&A Trends
Recycling M&A volume was relatively robust in Europe and Asia from 2000 to 2008; however, industry consolidation slowed from 2008 to 2010 as a result of weakening demand for e-cycling services and general economic uncertainty. With the recent market recovery, acquisition activity in the sector has increased globally with significant interest coming from strategic acquirers. Transaction volume is expected to be higher still in 2013, driven by expected tax regulation changes, the strengthening balance sheets of recycling service providers and improving debt markets for financial investors.

Transaction multiples measured as a multiple of enterprise value to LTM EBITDA (the rate of change in earnings before interest, taxes and amortization in the last 12 months compared with the prior 12 months) have been somewhat volatile in recent quarters. It is anticipated that transaction multiples will be reinforced during the next several quarters by the need for strategic and financial acquirers to deploy capital. Premium multiples will be paid for attractive assets in high growth segments.

Historically, e-cycling transaction volume has represented a small portion of overall M&A activity in the recycling industry. While recent increases in e-cycling M&A have come from larger industry consolidators and new entrants diversifying existing service offerings, the universe of potential acquirers for e-cycling businesses spans multiple sectors with varying degrees of strategic fit. For example, a competency in electronic product collection is attractive to a firm seeking to expand or acquire capabilities in reverse logistics. However, in instances where the e-cycler is reselling parts or remanufactured products, they also must understand forward logistics capabilities, such as customer service, merchandising and retail elements relating to the target’s customer base.

Several categories of strategic acquirers likely will continue acquisition activity in the e-cycling sector, including diversified waste and recycling service providers, electronic manufacturing service providers, recycling service providers and companies that provide technology life-cycle management and logistics.

Arrow Electronics Inc., headquartered in Englewood, Colo., has been one of the more active buyers in the sector, with the acquisition of four U.S.-based e-cycling companies and one European company in the past three years. As a distributor and reverse logistics provider for IT products, Arrow can leverage these e-cycling assets to provide coordinated, end-to-end services to its clients.

This is one example of an acquisition strategy that is expected to stimulate interest from other companies in the sector hoping to stay competitive.

A lack of e-cycling targets with reasonable scale has limited acquisition activity by private equity firms; however, recent consolidation has created an opportunity for investment in the sector. Further, private equity investors could consider buying or building a diversified services firm with an e-cycling and/or reverse logistics service offering, gaining exposure to the sector while increasing the overall value added to the end customer.

Complementing such building interest in M&A activity from private equity investors, we expect venture capital attention on the e-cycling sector to continue in light of the potential for significant industry growth and the improving visibility for near-term, profitable exits.

E-cycling is a fast-growing sector that should continue to attract healthy interest from domestic and foreign acquirers. Strategic and financial investors have access to capital, and competition for attractive assets will support healthy valuations for willing sellers. It is expected that favorable long-term demand prospects, supported by government regulation, significant increases in e-scrap volumes and further investment in the recycling ecosystem, will continue to drive substantial M&A activity in 2013 and beyond.

The author is a senior member of Chicago-based Lincoln International’s Business Services Group. He leads or assists in leading deal teams and is active in marketing the firm’s services. He also leads Lincoln International’s analyst recruiting activities. He can be contacted at smehta@lincolninternational.com.

High above the confluence of the Little Sioux and Ocheyedan Rivers, Thunder Bridge leads to the rural hub of Spencer, Iowa, and its historic streetscape. A beloved and essential natural resource for Clay County residents, the Little Sioux meanders through Spencer and, downstream, cuts across vast grain fields and rolling countryside as part of the Missouri River watershed.

Spencer’s City Manager Bob Fagen is busy working on plans to clean up the Little Sioux, a project that will become part of Spencer’s new EMS, or environmental management system.

“Part of our EMS plan will include an objective to clean up our rivers. It’s something we’ve always wanted to do. Even though they don’t run through our landfill, I believe it’s a priority and creates a positive environmental impact, not just in our city, but [in] the entire region,” Fagen says.

By embracing Iowa’s voluntary EMS law, Spencer joins more than two hundred communities in the state already operating under EMS with the added benefit of unhooking from the state’s waste diversion program with its limitations, regulations and penalties.

“EMS is a phenomenal tool for the city of Spencer that supports best environmental practices and also increases operational efficiencies,” Fagen adds.

The Problem
Cass County’s Environmental Control Director Wendy Wittrock experienced the limitations of waste diversion before making the switch to EMS.

“We knew back in the ’90s that the state’s diversion system requiring an annual 25 percent waste-reduction goal didn’t make sense, especially for smaller communities,” Wittrock says. “It wasn’t fair because we have limited control over what goes in our landfills. It also didn’t allow us to get credit for all the other good environmental programs and landfill management improvements that we were making.”

From the smallest agencies in rural towns like Atlantic and Pella to the sprawling suburbs and cities of Des Moines and Cedar Rapids, waste diversion requirements were dismissed as the sole measurement of a solid waste agency’s performance for a variety of reasons from those who have their boots on the ground. While waste reduction regulations had been good back in the ’90s, the system was showing its age.

Tom Hadden, executive director of Des Moines’ Metro Waste Authority, the largest solid waste agency in the state, is another EMS booster. “Diversion was starting to go stale because most of the low-hanging fruit of waste reduction had long ago been picked. It wasn’t unusual for landfill managers who couldn’t make the goal to just drop out and pay the penalties. Besides, it’s a kind of goofy system, because waste diversion is based on the landfill meeting goals that we [landfill managers] can’t control.”

Marie Devries, administrator for Cedar Rapids/Linn County Solid Waste Authority, an EMS designated agency, says, “Waste diversion alone was always something of a hit or miss. It didn’t take into account the entire waste-stream cycle and all its environmental impacts.”

Sara Bixby directs the rural South Central Solid Waste Agency. She participated in the early EMS committee work with state regulators. “EMS is a chance for us to take the next step,” Bixby says.

When state regulators took a good long look into the future, they came to the same conclusions as industry leaders in Iowa. “Instead of only looking at the waste diversion metric—disposal management—as the primary driver, we needed to start looking at resource management, because solid waste agencies and their interaction with the environment extend way beyond just putting trash in a landfill,” says Brian Tormey, chief of the Land Quality Bureau, Iowa Department of Natural Resources (DNR).

The Solution
The move to EMS began after Tormey vetted a white paper with industry members. Both regulators and solid waste managers agreed with the general premise that waste diversion wasn’t sustainable and committed to work together to find a solution.

Eventually, they discovered that an entirely new wheel didn’t have to be created because ISO 14000 was already in use by other industries and businesses. ISO-14000 is the foundation for an environmental management system.

The committee outlined the basic elements of EMS following the general ISO 14000 guidelines, focusing on six environmental areas from recycling and water quality improvements to greenhouse gases. It is intended to be a “holistic” approach to reducing waste based on continuous, small improvements in those environmental areas identified as controllable and measurable.

An alternative to waste diversion, EMS required changes in some Iowa regulations and laws. Therefore, the working committee reached out to State Rep. Donovan Olson, who was familiar with solid waste issues.

EMS Innovators
As a member of the Boone County Board of Supervisors, Olson experienced firsthand how easy it was for that county’s solid waste agency to meet diversion goals simply by taking credit for reductions at the Ames Recovery plant that burns solid waste. Even though the Boone agency was very involved in recycling, they could have stopped recycling and their other good environmental programs and still met their reduction goals.

“Conversely, I learned that other landfills were doing everything they could to recycle, reduce and divert waste, but couldn’t meet their reduction goals for a variety of reasons beyond their control,” Olson says.

After meeting with Tormey and the solid waste industry representatives on the committee, Olson says he recognized that EMS had the potential to drive innovation and creativity. “That’s when I decided to make EMS the focus of my energies. We began drafting a new EMS law together,” says Olson, who sponsored the EMS legislation.

Beyond Diversion
Iowa’s EMS law was designed to encourage responsible environmental management and solid waste disposal. It is a voluntary, nonregulatory approach. Designated EMS participants are allowed to set aside the waste reduction regulations and design activities and programs based on their specific community needs and goals. They also may qualify for financial assistance to implement their plans.

In 2008, the Iowa legislature unanimously passed HF 2570, also known as the EMS Law, that uses a radically different metric for environmental performance. Instead of continuing to strive only to meet the state-set landfill diversion goals, agencies designated as environmental management systems (EMS) set their own local environmental goals and measured performance in six areas.

Using a set of EMS management practices, solid waste agencies demonstrate regulatory compliance while identifying and engaging in activities that reduce environmental impacts and improve operational efficiencies through continuous and measurable improvement.

The DNR director also named a nine-member advisory council to develop the processes to implement the new EMS program and a two-year pilot phase with six participating agencies ranging from the smallest (less than 10,000 tons per year managed) to the largest (more than 550,000 tons per year managed). It also provided funding to pilot communities to implement their EMS programs.

Friends with Benefits
EMS benefits extend well beyond improved environmental compliance. DNR and the six EMS pilot solid waste agencies documented reduced environmental risks and employee accidents, increased operational efficiencies and conservation of natural resources as well as improved employee morale. By opting into EMS, solid waste agencies also can opt out of some regulations and penalties.

DNR also helps solid waste agencies start an EMS program by providing fast-start grants ($20,000), free training and software, webinars and on-site consultants. Of the state support given to EMS designated agencies, “the most important is providing them with an experienced EMS outside consultant,” Tormey says.

The language, metrics, planning and implementation of an EMS program can be daunting. “The advisory committee hired an EMS consultant firm, Gresham Smith and Partners (GS&P), to educate us,” Tormey adds.

A Kick Start
Starting an EMS program includes the plan, do, check and act cycle. EMS pilot consultant Laura Fiffick recommends starting small because the metrics can be challenging. “Small is really the way to go in the beginning,” she says. “However, you can’t shortchange the metrics, which are probably the biggest pains of the system, but that’s how you know you are doing better,” Fiffick adds.

“The first year can be overwhelming,” Wittrock says, “but now that we’re in our third year, EMS has proven to be a far better environmental management system for our community, where we are now getting credit for all the good environmental improvements that we are making. We now know what works based on the numbers.”

After a successful pilot project, EMS is now being offered to all solid waste agencies and permitted landfills. Iowa has chosen to take the more cautious approach, growing slowly so that each EMS designated agency is given the time and attention it requires before adding another to the new system.

Iowa’s solid waste management agencies’ creative and effective EMS programs ranged from “no-idle” policies that improved air quality in Cedar Rapids to attaining a near zero-waste household hazardous waste facility in Des Moines.

The author is a freelance writer based in Iowa and can be contacted at davisbeverly42@gmail.com.

Elemental Success
Laura Fiffick, an EMS consultant, provides advice for communities considering such an approach at www.RecyclingToday.com/rt0113-municipal-recycling-focus.aspx.