How to profit off your garbage

Nearly every manufacturing waste and by-product stream can, and should, be recycled.

By Russ Kratowicz

Every manufacturing plant generates excess inventory, unwanted by-product and scrap. In most cases, the responsibility for making this space-consuming material disappear is the lot of the plant management staff. Some of the material can be sold; some of it requires a cash outlay before anyone will remove it. Waste classified as hazardous requires careful handling. What options do managers have for keeping the plant from being inundated with trash?

According to the Institute of Scrap Recycling Industries Inc., Washington, D.C., approximately 120 million tons of material was recycled in 1998. This includes:

  • Iron and steel (60 million tons).
  • Paper and cardboard (47 million tons).
  • Aluminum (5.1 million tons).
  • Copper (1.7 million tons).
  • Stainless steel (1.1 million tons).
  • Lead (1.4 million tons).
  • Zinc (248,000 tons).
  • Glass (2.3 million tons).
  • PET plastic (745 million lb.).
  • HDPE plastic (734 million lb.).

What drives recycling?

For waste materials, the short answer is environmental regulation and the decreasing availability of landfills. For scrap, the answer is more complex. There are the normal events in the business world. Plants close, buyers go bankrupt or default on contract sales, soft markets do not consume an entire production run, technology changes—the reasons are endless.

Many of these items are liquidated through on-site auctions. Others change hands through outright sales or on-line auctions. Just like the clearance rack in the clothing department at the local store, recycling saves money.

Take aluminum, for example. Producing the metal from bauxite requires enormous amounts of electrical energy. But it is possible to obtain equivalent aluminum ingots by reprocessing existing aluminum scrap, a much less energy-intensive approach. In this case, recycling the scrap saves not only the cost of mining and extraction; it reduces energy consumption as well. If you accept the proposition that there is value in scrap and waste material, and you are willing to make some procedural changes in the way you handle it in your plant, there is a potentially profitable opportunity to be seized.

Segregation is good

The old adage is true: If you put a drop of fine wine in a barrel of sewage, you’ve got sewage. And if you put a drop of sewage in a barrel of wine, you’ve still got sewage. Waste streams--even if they consist of toxic or hazardous chemicals--have potential market value only as long as they are uncontaminated by extraneous material.

In addition to making them more difficult to recycle, commingling liquid waste streams can lead to unexpected chemical reactions that can explode into a litigation nightmare. Mixing solid waste streams also makes it more difficult to move them into the recycling infrastructure. Instead of a revenue stream, however slight, there is a cost associated with moving mixed and contaminated scrap.

The idea of ensuring the segregation of the many waste streams in a plant can seem daunting. Look at it this way. In some measure, the financial performance of your plant is judged superior to the extent it reduces operating costs. Reducing operating cost by simply scaling back on production rates is not a viable solution. There is still an obligation to make scheduled quantities of product and, in terms of raw material, manufacturing takes what it takes. If, on the other hand, you could find low-cost raw material that meets your specifications, it would be wise to purchase it.

Another manufacturing plant may have something it considers to be excess inventory, unwanted by-product or scrap. And the material might fit your needs quite nicely, especially if there is some assurance of a constant supply. But no purchasing department will take a chance by purchasing mixed, contaminated raw material. The same logic that keeps your plant from buying mixed material prevents you from being able to sell it to others.

Everything must be negotiable

The waste tank in back of your plant may be holding 25,000 lb. of 99.99 percent pure trimethyl flubdub with a market value of $123 per hundredweight. Eventually, someone out there will want this chemical. You may have several tons of scrap cast iron chips with an expected value in the marketplace--if there is anyone willing to buy the lot. When a market is relatively illiquid, it can take some time to empty that tank and clear out the chips and make a profit at the same time. Getting rid of clean, uncontaminated scrap material is sometimes difficult--supply and demand in its finest form.

Regardless of market liquidity, disposal can be like horse trading with its haggling, bargaining and negotiating. Some factors that affect price are purity, quantity, timing and a feeling for what the market will bear. Just as it is harder to dispose of material of lower purity, it is harder to unload small lots. Consider the timing and seasonality factors, too. If you are trying to unload tons of rock salt, your luck will be much better in late fall than in late winter. Any middleman or broker you use will need to be compensated, usually through some sort of commission. When charged with the responsibility to rid the plant of waste and scrap, be flexible. Prepare to negotiate, but don’t give it away if there is some value to what you offer.

Additional help

You can get current prices for scrap from at least two online sources. The first is MetalPrices.Com (http://www.metalprices.com/), a site that posts prices for metals only. If you have scrap metal, plastic, paper or glass, Recycling Manager (http://www.amm.com/ recman/recdata/reccomp.htm) can be a good starting point.
Chemsources Inc. in California will facilitate the transfer of excess chemicals from source to user. You can contact this company via phone (707-823-4331 or 805-269-7070) and by e-mail (mailto:paulp@sonic.net).

On the other hand, if you have other forms of scrap, excess stock or waste in a broad variety of categories, you should know about RecycleNet Corp. in Richfield Springs, N.Y.. This company can be reached at 519-767-2913.

The domestic economy has been strong for eight years. So far, it has been buoyed by tremendous productivity gains, thanks to computers. But, there may be a practical limit to that approach to achieving continued improvement. Recycling and reuse could be the next industry movement for retaining the economic benefits we’ve already captured. Gather and inventory your excess material, unwanted by-product and scrap. Sell it and use the proceeds to buy some recycled material that you really need.

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