Setting Priorities for Aluminum Recycling Research

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Setting Priorities for Aluminum Recycling
Research

• Subodh Das
• Executive Director
• Center for a Sustainable Aluminum Industry
• Presented to International Scrap Recycling
  Institute
• New Orleans, LA
• April 14, 2005

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I want to pick your brain about

• Understanding the recycling stream.
• Enhancing the beverage can recycling rate.
• Increasing the efficiency of automotive
  recycling.
• Understanding the impact of auto recycling on
  other product streams.

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Sloan Foundation Industry Centers

• The Alfred P. Sloan Foundation was established in
  1934 by Alfred P. Sloan, Jr., then president and
  CEO of General Motors Corporation. Sloan
  Industry Centers form the nucleus for the
  Industry Studies program.
• Sloan Industry Centers draw their leadership from
  economics and business disciplines to manage a
  research and education portfolio focusing on
  economic, business management, and policy issues
  pertinent to a single industry.
• A Sampling of Other Sloan Industry Centers
• University of California-Berkeley Semiconductor
  Manufacturing
• Harvard Textile and Apparel Research Legal and
  Professional Services Managed Care
• MIT International Motor Vehicle Global
  Airline Industrial Performance Pharmaceutical
• Georgia Tech Paper Business Trucking
• Carnegie Mellon Steel Software Electricity
• Vanderbilt Retailing Industry

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A little bit about CSAI

• Founded in Jan. 2005
• Funded by several sources
• Sloan Foundation Industry Centers Program
• A consortium of Aluminum Producers
• The Commonwealth of Kentucky
• The University of Kentucky
• Have about 800,000 in funding for research over
  the next two to three years.
• Faculty in Economics, Business and Engineering
  are members of CSAI

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Major Research Foci

• Developing and getting the most out of a
  world-class workforce
• Supply Chain Management
• Encouraging Recycling

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Agenda Setting

• Plan is to develop a white paper on research
  priorities in each of these three areas by Fall
  2005
• To do this we are
• Reviewing the existing literature to determine
  what we already know in each of these areas.
• Interviewing practitioners and other stakeholders
  to get their views and opinions about the most
  pressing research needs.
• We are looking for how to get the greatest bang
  for the research buck.

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Remainder of Talk

• Spend a few minutes laying out what we know.
• Share some preliminary thoughts on places we
  might make a difference.
• Open it up for your input and discussion.

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Figure 1. NUMBER OF PRIMARY SMELTING PLANTS IN
THE U.S.
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Figure 2. U.S. TRENDS OF RE-MELTING VS.
SMELTING(000 METRIC TONS)
SOURCE SECAT, INC.
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U.S. Aluminum Markets
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Secondary Metal Supply

• Two-thirds of all aluminum ever made is still in
  use!
• Two largest areas of secondary market are cans
  and autos
• Can recovery reached 67 in early 1990s now
  at less than 50 cultural, societal and
  economic issues
• Auto metal recovery 90 aided by regulations,
  shredders and lack of individual choice.
• Recovery of Al from autos will exceed all other
  scrap sources beyond 2005
• It takes 9350 cans to get the same amount of
  recovered aluminum as is in 1 car.
• Question Are we better off focusing on
  automotive recycling, can recycling, or a
  combination of both?

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Studying Big Content Items

• More aluminum in transportation and durables than
  cans.
• More aluminum per site and fewer sites to reach
  than householdsthe target of can recycling.
• EU mandates on product design are likely to spill
  over to US anyway. This should aid recycling
  efforts here.

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Reverse Logistics

• Reverse logistics channels research examines how
  products move from a large set of origins to a
  relatively small set of destinations.
• Such flows commonly characterize reuse, recycling
  and disposal activities (Carter Ellram, 1998).
• Goal is to develop benchmarks and diagnostic
  tools that can be used to improve recycling
  efficiency and maximize the amount of recyclable
  material collected.

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Possible Reverse Logistics Study

• Apply and extend Data Envelope Analysis to
  aluminum recycling by studying the reverse
  logistics systems associated with a sample of
  twenty or so aluminum recyclers.
• Detailed financial and operational data would be
  collected through personal interviews with the
  person responsible for reverse logistics
  management at each facility.
• Heterogeneity among facilities would be evaluated
  through regression analyses.

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Issues in Big Content Recycling

• Scrap dealers can engage in speculative
  behaviorholding their stock until the price is
  right.
• Recycling big content items may make up for the
  loss in recycling cans.

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So What About Can Recycling?

• Cans are the great recycling success story.
• We recycle more cans than any other type of
  packaging
• Cans 45-50
• Glass Bottles 20-30
• Plastics 20-25
• Recycling of all types of packaging declined
  during the 1990s.

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A Familiar Picture
Percent of Containers Recycled

• What this tells us
• Unlikely to learn much from studying
  experience of other containers. They are doing
  worse!
• Uniform declines in recent years suggests that
  there are global causesnot something unique
  about the material.
• Declines have occurred even as curbside recycling
  programs have increased.

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The Main Suspects for Decline in Can Recycling

• Economics of Supply
• Takes 34 cans to get a pound of aluminum today,
  this is up from 22 cans in 1972.
• As real incomes rise, the value to people of
  recycling cans will fall.
• Changes in Lifestyle
• People are consuming more cans away from home.
  Average employee consumes 2.5 cans day at work.
  How do recycling programs capture this?
• Ignorance about the problem and its costs
• Most people believe the recycling rate for cans
  is above 70, true even of industry experts.

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Potential Solutions for Can Recycling

• Advocates of Mandatory Programs
• Rise in curbside recycling has corresponded with
  a decline in recycling rates.
• Studies of mandatory curbside recycling suggest
  it does not raise rate above voluntary programs.
• Push for a national bottle bill requiring a
  deposit on cans/bottles.
• Note ten states that have this have recycling
  rates above 70. Same is true for other
  countries that have bottle laws.

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Potential Solutions Can Recycling

• Advocates of Voluntary Recycling
• Bottle laws not in the cards.
• Three key elements
• Convenience curbside is convenient and increases
  recycling, but not so important for aluminum
  because it is frequently used as fund-raiser.
• Incentives Some evidence coupon programs work,
  but mostly for people already predisposed to
  recycle. (what about other types of incentives?)
• Attitudes ultimately must change peoples
  attitudes which in turn will change behaviors.
  This requires education and better marketing of
  recycling.

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Proposed Study of Sustainable Communication for
Can Recycling

• Sustainable Communication Continuous and
  consistent exchange between the organization and
  customers to reinforce a cooperative green
  mentality.
• Having a curbside program is not enough you must
  combine it with the right marketing program to
  change behavior.
• Requires studying how to best establish
  credibility and trust with the target population.
• Some evidence that direct personal contact and
  regular newsletters to consumers enhance
  participation and yield from curbside recycling
  programs.
• Need to do a set of longitudinal case studies
  working with local community-based recycling
  programs to determine the types and frequency of
  communication that most influence peoples
  recycling behavior.
• Could take the results and provide education and
  perhaps a grant program to municipalities to help
  them increase effectiveness of their curbside
  programs.

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Main Issues for Auto Recycling

• EU Mandatory Recycling approach. Would that
  happen in the US?
• Secondary impact on US production.
• Multitude of wrought and cast Aluminum alloys.
• Multiple materials to separated and sorted.
• Little experience in recycling automotive
  aluminum.
• Different materials have different values.
• Lag time is ten to fifteen years?
• Lack of infrastructure not many places equipped
  for sorting and recycling different materials.
• Can we turn recycled aluminum into beverage cans?
• What is a viable business model?

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Final Comment

• So one basic choice we face is whether to put
  more money into studying how to increase can
  recycling by studying household behavior or to
  put more money into studying how to enhance the
  yield through better reverse logistics of big
  content products like cars and consumer durables.
  
• Or is a combination of both, recycling
  transportation and packaging products the best
  way to go?
• Or, do we study how to co-mingle the two
  recycling streams (cans and cars) to sustain the
  aluminum recycling industries.
• Comments?
• Suggestions?
• What have we missed?
• Where would you put your money???