Beyond borders

The Institute of Scrap Recycling Industries (ISRI), Washington, may have drawn a lighter crowd for its 2015 Convention & Exhibition compared with the numbers of attendees the organization has seen at its annual conventions in the recent past; however, according to a number of exhibitors and attendees, this allowed more time for quality conversations with key decision-makers at family-owned companies that form the backbone of the recycling industry.

Vancouver, British Columbia, was the setting for the ISRI 2015 Convention & Exposition. Chuck Carr, ISRI vice president of member services, says the trade organization recognized the global nature of the recycling industry by selecting Vancouver as the site of this year’s event, which marked the first time ISRI has hosted its annual conference outside of the United States.

Roughly 3,100 attendees gathered at the Vancouver Convention Centre April 21-25 for the convention, which featured the products and services of nearly 300 companies in the exhibit hall in addition to a robust schedule of workshops, educational sessions and interactive panel discussions addressing opportunities and challenges facing the recycling industry.

“The ISRI Convention is the one place, every year, that brings together the industry experts, top equipment manufacturers, world-class speakers and more, all with the goal of bettering the industry,” ISRI President Robin K. Wiener says in a news release issued in advance of the conference.

She adds, “This is an extremely critical time for the industry, and the high-quality programming at the convention this year will reflect today’s realities.”

Getting the most out of the event and the association, however, requires participation. And that is what ISRI Chairman Doug Kramer encouraged.
 

Participation encouraged

Welcoming attendees, Kramer asked, “Who could possibly know more about tough times than the people in this room?”

Kramer, president of Los Angeles-based Kramer Metals Inc., asked the question prior to introducing general session speaker Stan Slap, an author and consultant who spoke about managing a business through tough times.

Kramer urged ISRI members in attendance to get more involved in the association and to take advantage of the group’s benefits. “Weathering the tough times is not something you do yourself,” he remarked. Referring to the downturn of 2000 and 2001, Kramer added, “We survived that time by working together.”

He advised ISRI members to take advantage of the association’s safety programs and its access to Superfund Recycling Equity Act (SREA) reports on consuming destinations and to attend national and regional ISRI events.

“I’ve had the pleasure to work with industry greats,” said Kramer, “and what did they have in common? They showed up.”

ISRI Chair-Elect Mark Lewon, a vice president with Utah Metal Works, Salt Lake City, urged ISRI members to work with the association or independently to familiarize elected officials, the media and the community with how the recycling industry works. “Don’t manage public affairs by not managing them,” he advised.

Lewon called the ISRI government relations staff “best in class” and urged ISRI members and chapters to work with ISRI staff to project a positive industry image.

U.S. Defense Secretary Bob Gates addressed attendees during the convention’s closing general session.

When asked about the biggest problem confronting America, Gates responded: “I think the greatest threat to the United States can be found in the two square miles containing the Capitol Building and the White House. If they can’t figure out how to work together—and to be seen by the rest of the world to be solving our own problems,” then the U.S. will slowly sacrifice its leadership position. “Ugly partisanship is not new; what’s new is the paralysis. One year (as secretary of defense), I never got a budget at all.”

In addition to spotlights on the economy, ferrous, aluminum, copper, nickel/stainless, plastics, paper, electronics and tires, a number of sessions at the convention sought to address the issues and opportunities facing companies in the recycling industry, particularly as they relate to offshore markets.
 

China's evolving scrap industry

China is the world’s largest metals-producing nation and is unlikely to relinquish that title anytime soon. However, aspects of the nation’s economy and trade policies are causing uncertainties for scrap recyclers who export materials to the nation.

Presenters at the session China and Beyond: the Future of Copper Scrap portrayed China as having an economy in transition, one that remains a manufacturing powerhouse but that also is exporting some of its manufacturing work to nearby nations.

Freelance journalist Adam Minter, who formerly lived in Shanghai but now resides in Kuala Lumpur, Malaysia, said labor costs are rising in China and some manufacturing work is being shifted to the nearby ASEAN (Association of Southeast Asian Nations) region.

Minter told attendees the 10 ASEAN nations (Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam) have a “pretty impressive GDP (gross domestic product) and potential” and that when combined they will comprise “the fifth largest GDP in the world by 2018.”

Several ASEAN nations border China, which has helped to make them beneficiaries of the recent increase in Chinese labor costs, according to Minter. Escalating labor costs are keeping imported copper scrap demand suppressed in China, Minter said, because a common business model relied on intensive hand sorting that used numerous laborers.

With both market forces and government minimum wage requirements lifting wages in China, many of these operators are finding “cheaper labor just to the south,” such as in Vietnam, Laos and Cambodia, he added.

Chinese finished goods manufacturers have begun to deploy robots in large numbers, Minter said, and some recyclers likewise are investing in automation rather than relocating operations to Vietnam or another nation.

Presenter David Chiao of scrap trading firm Uni-All Group Ltd., Atlanta, listed labor costs as one of several factors affecting the inflow of red metal scrap into China. The average scrap sorter in China who was earning 1,200 yuan ($193) per month in 2010 is now earning 2,500 yuan ($403) per month and, because of a minimum wage law in China, will soon be making 4,000 yuan ($645) per month.

Higher wages are one factor causing some Chinese nonferrous recyclers to pull back from their scrap importing and sorting activities, Chiao said, as are environmental controls steering importers to bring in more intensively presorted materials.

Purity standards for mixed metals grades, such as zorba, are being rigidly enforced in Chinese ports such as Ningbo, he said, potentially causing overseas scrap traders to reconsider doing business with Chinese buyers.

A third disincentive for exporters is theft from sealed containers, which used to be centered in southern China but is now “spreading all over,” Chiao said. He added that recyclers are particularly dismayed by an attitude of “we’ve never heard anything about that” from police departments, which he interprets as an unwillingness by police to take on organized crime rings that likely are behind the thefts.

Despite the difficulties, China’s demand for copper and the scrap that feeds its copper and brass production facilities is unlikely to go away, Minter said. He pointed to government investments in the “new Silk Road” and by China’s emerging Asian Infrastructure Investment Bank as likely sources of future demand for copper and copper products.
 

Keeping a lid on container theft

The problem of theft from shipping containers was the topic of a second session, International Trade 101: How to Protect the Value of Your Scrap Exports.

Randy Goodman, a long-time scrap metal recycler based in Louisville, Kentucky, focused much of his discussion on a recent survey conducted for ISRI regarding theft from containers at overseas ports. The survey, he said, would go a long way toward supporting the scrap metal industry when going to the Chinese government for assistance in resolving such problems.

Goodman said the biggest problem spots for container thefts are Hong Kong and the Pearl River Delta, where containers from Hong Kong are transported to inland locations in South China.

Shanghai also has its share of container theft, though it is less prevalent than in Hong Kong, he continued.

Hong Kong accounted for 10 percent of copper scrap exports from the U.S. to China in 2014 at a value of $290 million. Goodman said the average cost of these thefts were roughly $10 million annually, with “upwards of 3 to 5 percent of container copper scrap at a risk of cargo theft.”

David Cuckney, manager of the International Maritime Bureau of the International Chamber of Commerce, London, concurred with Goodman that China continues to be the “hot spot” when it comes to theft. He added that South America and Africa also are areas of concern.

Cuckney said it appeared that copper scrap theft was tied to organized crime. “We strongly believe vessel agents, port agents [and] carrier agents are being bribed,” he said, adding that thieves knew which containers held copper scrap, which means it is an “inside job.”

Keith Lewis, vice president of operations for Jersey City, New Jersey-based CargoNet, a company that says it is dedicated to preventing cargo theft and to increasing recovery rates for stolen material, told attendees that scrap thieves are not unsophisticated amateurs. “They use GPS to track shipments,” he said of the thieves, adding that they “are pretty savvy” and also may run Internet scams, which include setting up phony trucking firms, getting payments up front and then never showing up for the delivery.
 

Life in the slow lane

North America’s transportation infrastructure also presents problems for companies exporting material from the U.S., according to presenters at the session International Trade 201: How Are Domestic Issues Reducing the Value of Your Scrap Exports.

Joseph Bonney of the Journal of Commerce (JOC) and co-author of a book on container shipping called The Box That Changed the World, said 21 of the JOC’s 2013 top 100 export shippers from the United States were “primarily scrap products exporters,” including 15 scrap paper shippers and six scrap metal companies.

Scrap products “are a big part of the cargo mix,” Bonney said, and as such the industry is greatly affected by recent events such as the Pacific Coast work slowdowns. That labor-management confrontation “has been a mess,” Bonney said, creating long lines of trucks and late shipments. “They are starting to dig their way out of it now, but it has been a tough slog,” he said.

With trade volumes “back to prerecession levels,” according to Bonney, exporters are looking for other options but also are encountering up to 2-mile-long lines of trucks in New York and New Jersey and, in many cases, may run into high costs to ship over-the-road or by rail to get containers to Virginia or to Savannah, Georgia.

Things may only get worse, said Bonney, because freight companies “are having trouble finding drivers [who] want to wait in these long lines.”

Ocean shipping companies have introduced larger container ships, but there are currently no U.S. ports that can accept the largest ships. “Infrastructure in the U.S. hasn’t kept pace,” Bonney declared.

Mark Mallory of St. Louis-based scrap company Metal Exchange Corp. said his company has “seen the good, the bad and the ugly of infrastructure.”

He said the clogged ports and driver shortage are not short-term issues caused by the labor issues on the West Coast but are long-term threats. Investing in infrastructure, however, is “not politically popular” with taxpayers, Mallory commented.

He urged ISRI to work with other organizations and “make it a priority [to] develop a port strategy.” Mallory urged ISRI members to get involved, saying, “There is power in numbers. The Federal Maritime Commission is looking for feedback from people who feel they have been harmed by demurrage charges and West Coast delays.”

Regarding truck drivers, Mallory said the current shortage in the U.S. is estimated at 35,000 to 40,000 drivers. However, by 2022 one study has estimated the shortage will swell to 239,000 drivers.

While attendance at this year’s convention was down compared with recent years, ISRI likely will see attendance rise for its 2016 convention as it is scheduled to take place in Las Vegas April 3-7 at the Mandalay Bay Resort and Casino, which is always a popular destination.

Recycling Today editors Brian Taylor, Dan Sandoval and DeAnne Toto contributed to this article.

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