Digging Deeper

The Smurfit-Stone name combination was created more than 10 years ago when two packaging companies merged. In addition to bringing together two containerboard companies, the 1998 merger of Jefferson Smurfit Corp. and Stone Container Corp. set the stage for Smurfit-Stone to become one of the world’s largest paper recyclers and recycling exporters.

Smurfit-Stone’s recycling business, based in St. Louis, operates 29 materials recovery facilities (MRFs) in North America that helped process and ship a combined 6.5 million tons of scrap paper in 2008.

Mike Oswald, senior vice president and general manager of Smurfit-Stone’s Recycling Division, says the company’s recycling operations provide a secure source of fiber for its 14 containerboard mills in North America while also helping to supply worldwide markets hungry for scrap commodities.

Smurfit-Stone has been expanding its capacity this decade to serve a customer base that includes retailers, manufacturers, grocers, printers, municipalities and waste haulers.

The Recycling Division of Smurfit-Stone has grown in recent years, according to Oswald, by taking advantage of new technologies to help speed the sorting process and by forming strategic partnerships with communities and waste haulers to recover valuable materials from the waste stream. NEAR AND FAR

Smurfit-Stone seeks recovered fiber, Oswald points out, as a way to ensure supply for its own mills. "Our recycled paper business is very sustainable because our own Mill Division consumes more than 40 percent of the recycled fiber for use in making containerboard." DECISIONS TO MAKE

BEYOND MATERIALS

Whether the company owns a MRF or manages it, Oswald says a common denominator is maintaining good customer relationships at every location.

"A trusting relationship is particularly important as the recycling business is always changing, and the buyer and seller often trade roles," he says. "We recognize that and work at maintaining a mutually beneficial relationship with our customers. If a customer feels you’re unfairly exploiting an advantage in the market, they’re not going to trust you, and likely won’t want to do business with you for very long."

Oswald says that while the company measures its results in tons and dollars, both the bottom line and the work experience benefit when people are prominent in the equation.

As it has expanded its Recycling Division to move beyond mill supply, Smurfit-Stone has had to consider its market approach in order to maintain the ability to feed its containerboard mills while also profitably expanding.

Oswald points to Smurfit-Stone employees, ongoing efforts at continuous improvement, investments in technology and the MRF partnerships as keys to its success.

"Our people are what have made us successful," he states. "We’ve been able to attract top talent from both within and outside our industry, and as a result we’ve been able to expand our services and effectively manage our expanding capacity."

Continuous improvement or operational excellence, by Oswald’s definition, includes not only plant productivity and efficiency but also safety. "Smurfit-Stone has led the industry in safety every year since 2001, and our Recycling Division has achieved a recordable case rate [RCR] at or below 1.0 for six of the past eight years. Last year, our division set a new record with a 0.61 RCR or less than one injury for every 100 employees. That’s the lowest ever of any division in our company."

Other factors on the operations side include paying attention to costs and staying informed about processing technology. "We aggressively manage our costs and the cost to our customers; improve on-time delivery; reduce hauling, downtime and maintenance costs; and ensure quality for inbound and outbound materials and commodities," says Oswald.

As the Recycling Division has grown, the company now handles amounts well beyond the needs of its own mills. According to Oswald, the company has established a depth and breadth of business that allows it to diversify its customer base on the buy and the sell side.

"We buy recovered products from a variety of sources," he comments. "Two of the key sources are waste management companies and municipal recycling centers," Oswald continues. "Retailers, such as grocery stores and discount retail chains, are another key source for recycled paper."

On the commodity selling side, Oswald says, "We consume approximately 40 percent of the paper we recover in our mill system. Of the remainder, approximately 70 percent is sold to domestic customers and approximately 30 percent is exported, primarily to Asia where we’ve had an office in Shanghai, China, for more than a decade, as well as long-established customer relationships throughout India, Indonesia and elsewhere."

In 2008, Smurfit-Stone’s mills consumed about 2.4 million tons of fiber; about 3 million tons of recyclables were sold domestically, and Smurfit-Stone exported nearly 1.1 million tons—including approximately 1 million tons of paper, according to Oswald.

In 2009 the percentages could change, he says. "While domestic demand for recovered fiber declined significantly in the first half of 2009, export demand has been growing, and this has roughly offset the domestic decline," notes Oswald.

"Demand from China, which is our primary export customer, is increasing, and the outlook for sales of recovered paper to India remains positive."

"All of our MRFs have a role in the collection, processing, baling and sale of recyclable materials," Oswald comments. "Our plants are full-service facilities, capable of handling multiple grades of paper and non-paper recyclables, including nonferrous metals and plastics."

Recently, Smurfit-Stone has started forming partnerships with waste haulers to manage MRFs at transfer stations. "We’ve formed partnerships with Waste Services Inc., an integrated waste services company that serves commercial, residential and industrial customers, to operate its Taft and Sanford MRFs near Orlando, Fla., and recently entered another partnership with them in Miami," Oswald says.

"We’ve also partnered with Advanced Disposal Services, a waste management and recycling company, to operate its MRFs in Jacksonville, Fla., and Atlanta. We’re in the process of opening another new MRF with Advanced Disposal in Marietta, Ga.," Oswald says. "That plant is scheduled to begin handling material in October."

The expansion of the company’s MRF network and the establishment of partnerships help Smurfit-Stone cultivate more material for its mills and for brokerage purposes.

"These partnerships are critical as we dig deeper into the waste stream to recover recyclables, which is good for our business, good for the waste management industry, good for the environment and good for communities that are working hard to become more sustainable," says Oswald.

Smurfit-Stone’s roots in containerboard make certain grades of recovered fiber a key part of the equation, but as MRF operators, Oswald says the company takes the handling of all materials seriously.

"Our multi-materials sales group is one of the largest buyers of plastics, nonferrous metals, glass and other non-fiber materials in the United States," says Oswald, adding that the company is looking into several ways to expand its presence in the plastics recycling sector.

"We’re working on several projects with our large national retailers that involve grinding and compounding plastics to prepare them for remanufacture into various new products in the housewares, lawn and garden and automotive segments," says Oswald. "We buy most grades of plastic, including HDPE (high-density polyethylene) color bottles, HDPE natural bottles, PET (polyethylene terephthalate), clear and colored polyethylene films and LDPE (low-density polyethylene film."

Among the metals the company handles, aluminum used beverage containers (UBCs) are the most prominent, along with copper and additional aluminum grades, such as litho plate, siding and sheet.

"While we are seeing growth in these non-paper materials, the majority of what we handle is recycled paper, including old corrugated containers, double-lined kraft, old newspapers, mixed paper and other grades," says Oswald.

Another major growth area for Smurfit-Stone’s recycling division, according to Oswald, is waste services.

"We manage recycling and waste solutions services for some of the largest companies in the United States," he notes. "We are continually looking for new and innovative ways to serve our customers. Our teams of waste management experts are working to create 360-degree sustainability programs for our customers that include turning scrap into new products."

Oswald adds, "We’re also working closely with our Container Division to bring our waste services capabilities to our packaging customers. The waste services programs we provide assure our packaging customers that their waste streams will be properly managed, reduce their costs and improve the sustainability of their operations."

CRITICAL MASS