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Metal Recyclers Face Tough Times

Manufacturers are not selling as much of their products, reducing the demand to buy scrap metal from recyclers to make items such as cars and appliances.

HAGERSTOWN, Md. (AP) -- Given the tough economy, you might think growing numbers of people would be taking recyclable metal materials to Conservit Inc. just to make a few extra bucks.

But company President and Chief Executive Officer Jack Metzner said that has not been the case, and like many companies, Conservit is dealing with a decline in business in a down economy.

The amount of metal recyclables taken to the recycling facility off Sharpsburg Pike south of Hagerstown has declined by 30 percent to 40 percent, Metzner said.

Business is down because manufacturers are not selling as much of their products as they have in the past, and that in turn reduces the demand to buy scrap metal from recyclers such as Conservit to make items such as cars and appliances. And because people are holding onto those items longer instead of buying new ones, there is not as much metal being turned in at Conservit, he said.

The downward trend is being felt throughout the metal-recycling business, said Billy Johnson, director of political and public affairs for the Institute of Scrap Recycling Industries Inc., a Washington, D.C.-based trade association for the recycling industry.

When manufacturing is down, the scrap-metal business drops, too, Johnson said.

He said the scrap metal-recycling business is a "lagging indicator," meaning when the economy picks up, so will metal recycling.

A spokesman for Maryland Metals Inc., a scrap metal-recycling company on West Church Street in Hagerstown, said business is down for his company, as well. Materials being taken to Maryland Metals has dropped by about one-third since the economic downturn started two years ago, President Bob Kerstein said.

Kerstein said it's hard to tell when things might get better.

"There are no signs this quarter," he said. "I wish I knew."

Conservit and Maryland Metals specialize in ferrous and nonferrous scrap-metal recycling.

Generally, ferrous metals are those that are magnetic, and nonferrous metals are nonmagnetic. Nonferrous metals usually are more valuable and include copper, brass and aluminum, Metzner said.

Huge machinery at the Conservit facility, which is across from the Westfields housing development, is used to tear apart items such as cars, buses, trucks, electric motors and farm machinery. Although Conservit has large corporate clients, individuals also can go there to recycle items such as aluminum cans, which Conservit now is buying for 55 cents a pound, according to its website,

"We just turn someone's trash into a new material," said Metzner, explaining that the metal stripped out of an item at Conservit can be turned into a new product such as a car in less than a month.

Besides dealing with a downturn in the economy, Metzner said his company also has had to become more vigilant about people who try to recycle stolen material.

Last year, stolen aluminum concrete forms used in the construction industry were taken to Conservit for recycling, Metzner said. Not knowing the forms were stolen, Conservit paid a large amount of money for them, Metzner said.

It later was determined the forms were stolen, and police asked officials at Conservit to separate them from other materials. The forms were returned to their owners and Conservit was not reimbursed for its losses.

Since July 19, people taking material to Conservit have been required to present their driver's licenses, which Conservit workers copy. Previously, people only had to sign in when bringing materials in, and they could have said they were anybody, Metzner said.

Kerstein said his company also has been making copies of driver's licenses when materials are brought in.

Conservit workers also record the Vehicle Identification Numbers of any vehicles taken in and send the numbers to federal and state authorities, Metzner said. That information can be used to investigate cases of stolen vehicles, Metzner said.

Within the next six months, Metzner said he plans to have a camera system installed that will take photographs of materials being brought in.

Scrap-metal theft has been prevalent and was a particular problem a couple of years ago with copper, which has surged in value, Johnson said.

To combat the problem, the Institute of Scrap Recycling Industries Inc. set up, a website where victims of scrap-metal theft can post information online, Johnson said.

After the information is posted, it is sent out to all scrap yards within a 200-mile radius to warn them about the stolen materials, Johnson said.

State laws controlling scrap-metal theft vary, and as a result, material sometimes is stolen in a state that has strict laws and taken to a state that has weaker laws, Johnson said.

"The thief will shop around," he said. "That's why we think the 200-mile radius will catch them."

When you walk into Conservit Inc., you're seeing an employee-owned business, a rarity in the community, officials say.

Every year, more than 50 employees at the Hagerstown-area recycling facility receive stock and cash as part of the company's employee stock-ownership program, said Jack Metzner, president and chief executive officer.

The amount of stock and cash distributed to workers is not set, and it is up to the company every year to decide how much to hand out, Metzner said.

When workers reach retirement, they are able to cash in their stock. And when the company buys back the stock, it is redistributed to other workers, Metzner said.

Explaining how the 100 percent employee-owned company works, Metzner used as an example a hypothetical person who proposes to buy the company for $100 million. If the sale were made, the $100 million would be added to each employees' stock based on each person's equity in the company's stock-ownership plan, Metzner said.

The amount of stock given to employees each year is a certain percentage, and the amount distributed is based on a person's salary, Metzner said.

Conservit workers often are made part of the decision-making process on day-to-day operations, and Metzner said he believes the employee-owned environment gives them an incentive to make sure the company succeeds.
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