Top Billing

Almost 25 years ago, when Al and Anthony Metauro first dreamed of going into the garbage and scrap paper collection business, they found the cost of
admission to be too much for their wallets. Today, thanks to an entrepreneurial spirit, a hands-on approach and a major alliance forged early last year, the Metauros preside over what is almost certainly the largest scrap paper recovery company in Canada and one of the dominant players in the industry in North America.

"We started with the two of us—we were 18 and 21—and one pick-up truck collecting cardboard from Toronto garbage bins," says Al Metauro, the president and CEO of Toronto-based Metro Waste Paper Recovery Inc.

Since that humble debut, much has changed. "With the purchase of Norampac Inc.’s and ETL Recycling Services Inc.’s western Canadian business, we have extended our business across Canada and tripled the number of plants we operate to 15. We have over 400 employees and last year we recorded gross sales of $140 million (about $90 million U.S.)," Al comments.

"Our growth has been unbelievable over the past 10 to 12 years," adds Gary Sexton, the company’s vice-president responsible for materials and marketing. "We have continued to grow both through acquisitions and revenue from end markets. We need to make money regardless of market conditions, and we do. We adjust our buying and selling accordingly, as long as the margins are reasonable.

"The business environment has been stable over the past few years," he notes. "The last major spike was in 1995 when some commodity prices went off the charts. Since then, there have only been small movements up and down."

Sexton reports that Metro Waste anticipates greater sales this year thanks to the acquisitions and to the company’s new on-line buying program. Www.cashforbaledpaper.com, he says, is both a marketing tool and a commodities buying site. It allows customers to check prices in a given area and to sell commodities online to Metro Waste at the posted prices.

"If an individual has cardboard to sell, for example, and likes our prices, all he or she has to do is push the sell button," Sexton says. "We pick up the load and pay the customer within seven days. Our industry is still somewhat old-fashioned in the way we do business. Our Web site takes us into the 21st century."

When the Metauro brothers began in 1979, their first customer was Atlantic Packaging, Toronto. After a time, they bought a small waste hauling company. Then in 1983, they took over a defunct Toronto-area scrap paper dealer.

"Recycling wasn’t such a big deal yet," says Al Metauro. "We saw an opportunity to make money collecting paper."

Thus was born Metro Waste Paper Recovery Inc. The new company collected paper from print shops and other Toronto businesses, sorted and baled it. "We figured out the market," Metauro says. "We ended up selling our material to Scott Paper in Quebec. We couldn’t find many customers for our high grade paper in and around Toronto."

In the mid- to late-1980s, Metro Waste developed a relationship with Paperboard Industries. The latter began buying increasing volumes of scrap paper in a variety of grades for use in making boxboard. With the increased demand and sales, Metro Waste was able to move to larger premises.

"Paperboard Industries agreed to have us do all the baling," Metauro says. "We bought a larger baler. By the late 1980s, we were picking up new accounts almost every week. We established our own industrial blue box program. It was a good fit for the landfill dilemma."

Gary Sexton came aboard in 1989. A friend of the Metauro brothers since high school, he had been involved in sales and marketing. "I could see how Metro Waste was growing," he says. "I thought it was a good opportunity and we would be a good fit."

By the early 1990s, Metro Waste had eight trucks. The company also had started an office paper pick-up program with many of the office towers in downtown Toronto among its clientele, selling most of these grades to tissue mills in Quebec.

In 1993, Metro Waste started an operation in Ottawa with the encouragement and assistance of Peter McMahon, currently the president of the company’s Ottawa division. McMahon got to know Al Metauro while each was working in the recycling industry in Toronto.

"I was familiar with Metro Waste as a buyer and a competitor," McMahon says. "I knew Al and liked his business philosophy."

"We started from scratch in Ottawa," Metauro says of the Ottawa division. "There were some long established companies there who collected materials from the federal government offices. We snuck our way in slowly and built our operation. The competition in Ottawa wasn’t as fierce as it was in Toronto."

McMahon notes that Metro Waste’s Ottawa office processes from 10,000 to 12,500 tons of material per month. Through its contract with the city and its Black Box program, the company collects all the curbside recyclable material. Metro also contracts with the federal government to recycle office paper generated in government offices in the Greater Ottawa region.

"One of our strengths was our ability to find ways to divert other material, as well as paper, from the landfill," Metauro says. "Our principal focus is still paper, but you need to deal with other waste material as well."

McMahon notes that the Ottawa division is negotiating with other municipalities in eastern Ontario.

CAPITAL INFUSIONS

In 1995, Metro Waste sold a partial interest in its business to Paperboard Industries, a subsidiary of packaging products company Cascades Inc., Kingsey Falls, Quebec.

In 1999, Cascades and forest products company Domtar Inc., Montreal, formed a joint venture, establishing Norampac, the largest corrugated box manufacturer in Canada and one of the top 10 in North America. Subsequently, Metro Waste gained control of recycling plants in Toronto, Rochester and Buffalo by trading Norampac a 27.5 percent interest in Metro Waste.

"That was our first big leap," says Metauro. "We almost doubled in size as a result of those acquisitions. It made us a dominant player in the industry."

Steve Dewey, general manager of Metro Waste’s American operations, reports that the company will expand the Rochester and Buffalo plants within the next year and is on the lookout for further acquisitions in New York State.

An additional deal between Norampac and Metro Waste in January 2002 left Norampac a 46 percent owner of Metro Waste while Paperboard Industries and Metauro Group Holdings Inc. each retain a 27 percent share. Metro Waste’s subsequent purchase of the Norampac and ETL plants in western Canada has strengthened the company’s position and gives Metro a Canada-wide presence from Ottawa in the east to Victoria, B.C., on the Pacific Coast.

The arrangement also closes the loop in the industrial chain in that Metro Waste and its partner companies now collect the waste paper and turn it back into paper and packaging products like tissue and corrugated boxes.

Bill Stitt, vice-president and general manager of Metro Waste’s new western operations, reports that the market in western Canada (like in much of North America) has been a little soft, but adds that overall business has been very good.

Now that Metro Waste has taken a year or so to digest its most recent expansion, Metauro says, the company is on the lookout for further acquisitions, particularly in the U.S.

At the same time, Metro is preparing to become the principal processor for the City of Toronto’s expanded Blue Box program. The contract, which is worth $6.5 million (about $4 million U.S.) per year, goes into effect on August 1, 2003. To meet the terms of the contract, Metro is currently building a new $12.5 million ($8 million U.S.) sorting facility and system that will be one of the largest such installations in North America.

"Toronto is going to [convert to] a single-stream system where the paper and containers are mixed together," Metauro says. "The fact that we have taken on this project shows our ability to keep up with the times. Recycling traditionally has been a labor-intensive business. To achieve a higher recovery rate now requires more advanced technology."

Metro Waste’s new facility will be equipped with disk screens to separate the paper from the container streams then separate the different commodities farther down stream. The paper stream will be further separated into paper and corrugated material. The company is expecting to hire 60 to 65 new employees for the new plant.