Diverse And Conquer

With a great deal of elbow grease and an open mind, a stand-alone C&D recycling center can be not only profitable, but rewarding. The key word to remember is "diversification." If you diversify operations, you stay flexible. If you stay flexible, you remain in business.

Ocean County Recycling is a C&D recycling center located on 20 acres in Toms River, N.J. Currently, the company accepts three types of debris and manufacture 16 products. Integrating various facets of the construction materials industry into the business has helped the company evolve into a prosperous recycling center.

Opening a contracting company in 1978 proved to be integral to the C&D recycling center's success.

While this business expanded into a 150-person operation, the turning point occurred with

the purchase of a concrete crushing operation. This gave the company a competitive edge. Now, it was capable of manufacturing a product that could be used in the business, while it had a low-cost disposal method for all the mistakes.

Twelve years after the contracting business began, the Northeast's economy went flat, and it seemed as if every contractor in New Jersey was bidding on the same job at prices that were just over cost. The history of the construction business shows similar downturns nearly every six years. Finding new business niches became necessary to keep afloat. One area that was identified (that didn't have much competition) was concrete recycling and with some effort, this became a viable venture.

The company diversified in four areas: equipment, labor, product and business ventures.

Flexible Equipment Buying a specific machine and hiring labor for each different product manufactured can price a company out of the market.

Using one piece of equipment for a number of applications is more economical. By increasing equipment capabilities, a recycling company can avoid high capital investment and labor costs.

To increase our equipment capabilities, consider simple innovations such as combining different screen sizes in a machine to produce various products.

For example, in a tub grinder, two quarter-moon screens are at the bottom of the tub. By keeping two 2" screens in the tub while processing stumps, a uniform landscape mulch is produced that is accepted widely by nurseries and landscaping contractors.

By replacing those 2" screens with one 1" screen and one 51/48" screen, a material is produced that can be tilled into sandy soils in order to add organics to dead soil and grow grass or plant shrubs.

Also, integrating several pieces of equipment often increases the efficiency of the individual machinery. For example, place a trommel screen in tandem with a tub grinder to produce two completely different products, mulch and topsoil, without the burden of moving by-products twice.

Remember to consider logistics when setting up equipment, however. Keep the loaders at the facility close to every product that they are involved with, thus reducing travel time and the need for additional equipment.

For instance, when one loader is supplying the front-end material for topsoil and mulch operation, position it no further than 50 feet from loading a truck with the end product from your concrete crushing operation.

Cross-Trained Labor Training individuals to be knowledgeable about all of the facets of this business is the key to labor diversification - a practice defined as "cross training."

Employing individuals who are able to operate different types of equipment and handle various aspects of the business increases a company's efficiency and reduces the need to hire additional labor as it expands into new areas.

Hiring individuals with diverse capabilities and business knowledge helps the operation run smoothly. This is vital when a position is vacated or left unattended.

When this situation occurs, the diverse labor force can be shuffled around to ensure that all bases are covered.

Product Expansion Beware: During certain times of the year, particular products are more in demand than others.

It is not a good business practice to use all of the profits from one manufacturing operation to drift through a period of slow sales and make it to the next peak sales period. Manufacturing supplemental products during this time produces added revenue and stable cash flow.

Seek new markets for your products. As the recycling market becomes increasingly saturated, such ventures are essential.

Business ventures The root mulch market is not your only option for the trees and stumps. When the company attempted to increase the customer base, the answers from end users were always the same: either "I'm getting this material for such-and-such dollars. How much cheaper is yours?" or "This is how much I'm going to pay you. Take it or leave it."

As competition increased, however, the company had to find new business ventures.

After sorting through a variety of information, the company discovered a Canadian firm that was producing a bio-fuel from bio-mass or wood-based material - a possible market for wood products.

At the time, it was only using bio-mass, but after negotiations, the company became its United States partner, guaranteeing at least 11 initial plants in the States.

We now had a new market for our tree stumps and wood.

However, a new problem arose. Although the one plant could meet the demand, it was doubtful that the other plants would provide enough material. In order to run efficiently, each plant required 100 tons per day (tpd) of bone-dry wood, which equates to between 150 and 175 tpd of clean stumps, trees or wood.

Through an agreement with New Jersey-based Stevens Institute of Technology, the company began using a method of decontaminating chemically-treated wood and returning it to its original state. It found a stable market - utility and railroad companies with telephone poles and railroad ties - and cultivated a relationship with a major university that would provide knowledge and assistance in developing new products and ideas.

Within the last year, the company had entered into partnerships with three professionals who have expertise in distinct areas.

The first partner's expertise is in the waste industry; he has developed waste-to-energy plants in Florida and New York and is very knowledgeable about the co-generation field, an area to potentially sell the bio-fuel product.

His brother, with a financial and legal background, will assist in obtaining grants from the Department of Energy and the Department of Defense, both of which are interested in the company's technology to decontaminate wood.

The third partner owns a large environmental engineering firm. He will be a vital force in designing the machine needed to implement the company's wood-decontaminating technology.

And, after entering into an agreement with another Canadian firm that recycles tires, the company has adapted a machine that had been developed only to process tires into one that is capable of processing plastics, telephone wire and other materials into reusable products.

The Road To Success Each of the components has been integral to diversification: They interact and affect one another. For example, equipment diversification reduced labor needs, and product diversification was the catalyst for new business ventures.

Most of the ideas originated out of necessity. By applying ingenuity and industry savvy to new ventures, other companies can create their own diversification plans.

What does the Construction Materials Recycling Association (CMRA) do? Its board of directors held its initial meeting in Chicago in May and set these goals: * CMRA will gather all literature and research on recycled C&D products, identify the holes present in this research and instigate credible research, if necessary. This research will give recyclers the ammunition needed to prove their products' applicability.

* CMRA will investigate where - and if - C&D recyclers fit into the federal SIC codes. This determination will help entities, such as zoning officers and insurance companies, place the C&D industry in a favorable niche.

* James McElvenny, the board's vice president, will head the establishment of an industry web page.

* A survey will be conducted to record in-depth information on each member company, such as types of material handled, equipment and willingness to move the equipment and do joint ventures with other companies.

* The Construction Materials Recycling Seminar, which serves as the annual meeting, will be held October 5-8, 1997 in Minneapolis.