Circular Logic

TIERED APPROACH. To accomplish this, the company uses a two-tiered approach. One segment, called the Services Solutions and Raw Materials Trading portion, includes not only transporting of packaging, handling scrap electric and electronic equipment and recycling out-of-use products, it also provides for the trading of recovered paper, secondary wood and plastics.

Interseroh’s other division, which constitutes the majority of the company’s business, is its Steel and Metals Recycling Business area. This portion includes processing and brokering of ferrous and nonferrous metals. Through this division, Interseroh operates an expansive scrap metal recycling arm, which has roughly 40 locations throughout Europe, primarily in Germany and Poland.

Along with the company’s own locations, Interseroh boasts that as a part of its Transport Packaging Recycling Solutions program it has developed a Germany-wide network with more than 6,000 industrial customers, 100,000 collection locations, 600 audited waste disposal companies and 300 processors to collect and transport discarded packaging.

Interseroh presently handles roughly 5.5 million metric tons of recyclables per year, of which more than 60 percent is ferrous and nonferrous metals. The company also handles more than 1.1 million metric tons of recovered fiber; 650,000 metric tons of scrap wood and wood residues; 124,000 metric tons of plastics; and around 50,000 metric tons of other types of recyclables per year.

In addition to handling a wide cross section of recyclable materials, Interseroh is on a fast track to grow its business. While the company formed in 1991, its involvement in steel recycling began in 1994 with the purchase of Hennings Group.

After that initial acquisition, Interseroh began acquiring waste management and recycling companies, including the French firm CDI Group; MAB Rostock; Repasack and Die Grune Umwelt Box; Hansa Recycling Group; and Erwin Meyer Metallrecycling of Bremen, Germany.

These acquisitions have propelled Interseroh into the position of a top three recycling company in Germany and one of the 10 largest recycling firms in Europe.

While Interseroh is a full-service recycler, the various commodities it handles have unique trends.

Michael Block, head of communications for Interseroh, says that the company’s two operating segments are able to realize some synergies from some of the materials it handles, notably material generated through the WEEE (Waste Electrical and Electronic Equipment) Directive, which is treated at the same locations as other metals.

In addition to Interseroh’s organization as more of a "one-stop" center for disposal and recycling services, the company also operates under a number of legislative and regulatory responsibilities in Germany as well as in the European Union, which help to set the direction for the company.

"EU legislation and the resulting national laws are very important for our business and build the framework of our activities," Block says. "The Packaging Directive and the WEEE Directive are the basis of many of our services in the Services and Raw Materials Segment. Other important directives for our business in general are the Closed Substance Cycle and Waste Management Act, the Landfill Directive and the REACH-Directive (Directive on Registration, Evaluation and Authorization of Chemicals)."

MARKET DRIVERS. The European approach to recycling may vary from the North American market; however, because the materials handled are highly traded global commodities, the drivers often are the same.

"The metals industry [in Europe] is strongly influenced by the large demand in secondary raw material from Asia—mainly China—and the resulting high prices," Block says. "Simultaneously, the steel and ferrous industry is presently experiencing a process of concentration, leading to a stronger market position of the buyers. This development is happening on an international level and, therefore, likewise affects the European metals recycling industry as a supplier of raw material." (For more information on consolidation among ferrous consumers, see "Bulking Up," p. 108 in the April issue of Recycling Today.)

On a parallel track, similar to the growing movement by U.S. scrap recyclers to acquire other operations, a similar trend is taking place among European scrap recyclers according to Block. While Interseroh has grown to be one of the dominant players in the German (and European) recycling industry throughout its last 16 years in business, there is a noticeable uptick in the move toward consolidation in the German recycling industry, especially among metals recycling firms.

Block says that despite a flurry of acquisitions, there is still a "relatively large number of waste management and recycling companies in Germany, in contrast to other countries. Therefore, we are presently experiencing a process of concentration and consolidation in this industry, particularly in Germany."

Block explains he feels that consolidation of this type will continue for the foreseeable future. "The market will be divided between a few large companies with international business. Therefore, our strategy is one of growth through acquisitions. In Germany we are already among the top three scrap recyclers and we plan further expansion in Poland and the Baltic states."

BREAKING OUT THE BUSINESS. The acquisition opportunities, while teeming in Western Europe, also look possible in parts of Eastern Europe that are less developed. Block notes that the company’s strategy is to increase tonnage and to grow the business in two ways. One way is to grow organically by improving efficiencies at its existing operations. The other way is to grow through continued acquisition.