Scrap Industry News

GOLDCAN ENTERS SHOPPING CENTER ALLIANCE

GoldCan Recycling Inc., Englewood, Colo., will soon be placing automated aluminum beverage can recycling machines at malls and shopping centers owned by the Simon Property Group Inc., Indianapolis, Ind.

GoldCan will place the machines at Simon properties over the next three years, with an initial roll-out taking place in late 1998 and the first two months of 1999. The machines—described by GoldCan as “visually distinct” and “high-speed”—will occupy approximately one parking space at each Simon property. The machines can process more than 120 UBCs per minute and have a storage capacity of 50,000 cans, or more than 1,650 pounds of aluminum.

“A tremendous amount of cans are thrown away each year,” says Mark Barrow, GoldCan’s director of marketing. “Our relationship with Simon allows us to bring the inherent environmental benefits of aluminum recycling to the 100 million people who visit Simon malls on a regular basis.”

Simon shoppers will have either a convenient way to receive cash back for their aluminum cans or will have the option of donating their cash redemption value to one of several charities displayed on the machine’s exterior.

“By forming an alliance with GoldCan, we can continue to expand the value-added services available to Simon shoppers,” says Dennis Cavanagh, senior vice president of Simon Brand Ventures, a Simon Property Group subsidiary. “Bringing recycling services to our properties provides shoppers with a convenient way to perform an environmental-saving service with the opportunity for immediate cash back or a donation to the charity of their choosing.”

Simon Property Group Inc. owns or has an interest in more than 240 properties in 35 states.

METAL MANAGEMENT POSTS 2ND QUARTER LOSS

Metal Management Inc., Chicago, a once-aggressive consolidator of scrap metal companies, has reported a $15.7 million dollar loss for its second quarter, which ended September 30, 1998.

The company was hit hard by declining prices in the ferrous scrap market, writing off $12 million in “inventory adjustments” as a result of the steep price declines. Chairman T. Benjamin Jennings says Metal Management grew to become the “largest scrap metal company in the country in July, which coincided with the worst pricing environment for the industry in the past 50 years.”

Adds Jennings, “with these unprecedented market conditions, our inventory position was subject to substantial valuation adjustments. We have responded by substantially reducing our buy prices over the last 90 days.”

President and chief operating officer Al Cozzi states that, with Metal Management being a volume leader, “once the market stabilizes, we will be positioned as the most cost-effective processor of scrap metals in the industry.”

TEXAS AUTO RECYCLERS MERGE

Auto Recyclers Inc., Fort Worth, Texas, has acquired three other Texas auto recycling firms to become one of the largest auto recyclers in the southern U.S. Acquired in late November were AAA Small Car World in Haltom City, Texas; First Choice American & Import, Dallas; and Budget American & Import, Kennedale, Texas.

“This industry is ripe for additional consolidation, as the most sophisticated operations combine to gain synergies while increasing sales and profits,” says Paul Parker, president of First Choice American and Import.

With the completion of the mergers, Auto Recyclers Inc. has 110 employees located in seven different cities. “Our combined inventories of 150,000 parts, generated from over 5,000 recycled vehicles annually, will allow the highest order fulfillment rate in Texas,” says Paul Wadley, sales manager of Auto Recyclers Inc.

FRACASSI BACK AT PHILIP SERVICES HELM

The board of directors of Philip Services Corp., Hamilton, Ontario, has re-appointed Allen Fracassi as its CEO. He replaces John G. McGregor, who was named interim CEO last fall.

McGregor has agreed to remain with Philip as its chief restructuring officer. He is a principal of Jay Alix & Associates, Southfield, Mich., a firm specializing in addressing turnaround and restructuring situations.

McGregor himself had replaced Felix Pardo, who was appointed president and CEO in May of 1998. Pardo was appointed in place of Fracassi, who stepped down amid quarterly losses and shareholder lawsuits. Pardo has remained on the company’s board of directors during an undefined transition period.

Shortly after Fracassi re-assumed the helm, he removed the two top officers of Philip’s U.S. ferrous scrap operations. Both John T. DiLacqua, former president, and John Heenan, former chief financial officer, worked for Philip out of the Luria Brothers offices in Cleveland. Long-time trader Richard Jones has also resigned from the company.

The company is also reportedly reconsidering its decision to sell off its scrap metal holdings in order to service a significant debt load.