Scrap Metals-Recycling

The US scrap metals-recycling industry includes about 8,000 companies with combined annual revenue of $30 billion. Large national scrap metal processors include Schnitzer Steel, Rio Tinto Alcan, The David J Joseph Company, and Australia-based Sims Metal Management's US operations. Large companies that collect trash as well as recyclable products such as paper, plastic, and glass include Waste Management and Republic Services. A typical local scrap metal processor has annual revenue under $5 million. The industry is fragmented and local because the low value-to-weight ratio of most scrap discourages long-distance transportation. The top 50 companies hold generage about 50 percent of revenue.

COMPETITIVE LANDSCAPE

Demand from the steel, auto, and construction industries drives the scrap metal industry. The profitability of individual companies depends on cultivating relationships with suppliers and buyers. Most companies are small and compete by specializing in one type of material in their local market. Large companies have economies of scale in purchasing equipment and transportation. The industry is capital-intensive: average annual revenue per employee is about $350,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Scrap metals-recycling companies collect, process, and resell materials like metals, glass, plastics, and paper. Recycling iron and steel scrap comprises about half of the industry’s revenue. One company, Rio Tinto Alcan, recycles about 40 percent of all aluminum cans in the US.

The industry processes about 130 million tons of material annually, including 70 million tons of iron and steel (ferrous metals); 60 million ...