Scrap Expo 2024: Tips to reduce operating costs

While maintaining a clean facility comes at a cost, it drives down operating costs for metal recycling yards in the long term, said John Sacco, president and owner of equipment supplier Sierra International Machinery and vice president and co-owner of scrap yard operator Sierra Recycling & Demolition Inc., Bakersfield, California. Sacco shared his advice for reducing operating costs at metals recycling facilities in a Sept. 18 session at Scrap Expo 2024 in Louisville, Kentucky, in mid-September.

Sacco said much of what he was going to present was commonsense, reminding yard owners and managers to consider maneuverability when examining the layout of their yards. Trucks and mobile equipment must be able to move freely throughout a yard. Material should be neatly piled to avoid flat tires, while dirt, potholes and other obstacles should be kept to a minimum.  

He cautioned companies to avoid amassing excessive inventory, saying large firms like SA Recycling, headquartered in California with more than 140 locations in 15 states, and Alter Trading Corp., headquartered in St. Louis with more than 70 locations in 11 states, make money by shipping material. (A Scrap Expo session Sept. 17 titled Creating Value for a Metals Recycling Business featured SA’s CEO George Adams and Alter’s President and CEO Jack Grundfest and touched on what they look for when expanding through acquisition.)  “Ship down to the ground daily.”

Sacco asked attendees to consider what the Occupational Safety and Health Administration (OSHA) or the Environmental Protection Agency (EPA) would see when they visit their yards, adding that even in the cleanest facilities, “If they are in your yard, you’re getting fined.”

He offered an example from Sierra Recycling when an employee was found unconscious this past January. The cause was unknown, but an ambulance came to the facility. Not just one but three OSHA inspections followed, Sacco said, resulting in a $400 fine because Sierra did not have a cold weather prevention plan.

However, he said, “If regulators see a clean operation, they are less likely to snoop around."

Regular equipment maintenance and upkeep also help to reduce operating costs and attract and retain employees, Sacco said. “People want to work for people whose operations look professional.”

He shared photos of his forklift fleet, noting that the 34-month-old machines looked like new. These forklifts are wiped down daily in addition to undergoing recommended preventive maintenance.  

Sierra Recycling changed its culture by communicating its expectations with employees and holding them accountable. “You have to hold yourself accountable before you can hold other people in your yard accountable,” Sacco said. “When you have set the expectation level, you need to articulate that to employees.”

He also recommended that companies have spare shear blades on hand, enabling immediate installation so the old blade can be ground when it’s more convenient and stored for the next time. “Downtime in a falling market is expensive,” Sacco said, and should be kept to a minimum.  

Additionally, he advised facility owners and managers to watch their shears when they are operating to ensure they are not cutting air rather than steel, which happens if the blades are outside their tolerances. “I bet you a buck a lot of you are cutting air.”

Sacco also said shear operators should avoid allowing material to build up around the shear’s throat as it keeps the machine from cutting freely and leads to excessive wear. “It’s a simple thing, but it’s mandatory for the efficiency and the health of the machine.”

Instead, material should be moved immediately from the throat of the shear to the truck or rail car.

Sacco also advised against overloading and underloading the shear’s preload table, noting that production could increase by as much as 20 percent per day with proper loading.

If yard owners or managers note that a machine is leaking fluids, for example, immediate action is warranted, he said. “If you see a problem with that piece of equipment, you can afford to take it out of service and fix it because it will only get worse and take more time if you let it go.”

Sacco also said that safety should be paramount in metal recycling facilities. He asked attendees to consider the cost of losing operators because of injuries that could be prevented by using proper protocol and training. “Accidents cost downtime and key employees.”

They also increase insurance premiums, which already are high, Sacco noted.  

Tons in and tons out are the most important metrics for yard owners and managers to track, he said. “If I’m buying 1,000 tons and selling 800 tons, I have a problem.” Once a yard has determined that these figures are in balance, Sacco said, it should address maintenance considerations next.

Attendees should not be afraid to share operations data with employees, Sacco advised, as it gives them buy-in and makes them part of the solution for lowering operating costs.

Scrap Expo was Sept. 17-18 in Louisville, Kentucky, at the Kentucky Exposition Center. Scrap Expo 2025 will return to that venue Sept. 16-17.