August, 2007

Finding Cash in the Corners

Recycling scrap isn’t just good for the environment—it’s good for the bottom line.

By Bob Heidenreich

If you look around your business, there’s a chance you’re throwing money in your trash. It’s paying attention to the little things like that that can keep you in business during slow times.

At my decking and lumber company, we’re committed to active recycling not only because it’s the right thing to do, but because it saves money. Instead of paying someone to get rid of something, you’re getting paid to get rid of something.

I started recycling through necessity when I first started out because I lived in a very small house. I didn’t have any space to store materials so I’d bring home all my scrap, sort it into piles, and then take those to the local recycler. With very little work, I could separate my cardboard, aluminum, and steel and it actually put some money in my pockets. I received a few dollars for recycling product, but more importantly, I saved space in my dumpsters.

In our first lumberyard, our dumpster bills were tremendous, so I set up an employee bonus program to fix that. Cardboard, for instance, was a huge issue for us because everything comes wrapped in cardboard. While recycling that doesn’t pay very much, it takes up a huge amount of dumpster volume.

I took the bills from our first year’s dumpster history and told the employees that they would get a percentage of everything that was subtracted from that.

For example, in our first year, we used 12 dumpsters. The next year, we only used six dumpsters. We cut our use by six dumpsters at $500 each, so we gave that $3,000 to our employees. We also added on the value of the recycled materials, and they got a check for that at Christmas.

Today our current employee-driven recycling program is a hybrid of that first one. Our recycling happens in the warehouse when we take in returns, but we always found that some employees would pile everything in a dumpster. Today, whenever we get a substantial load in of aluminum or cardboard or steel, we recycle it, and then we give that money to the person who was most successful at making that pile and then he divides it out as he sees fit.

Doing “Good” Pays Off

We go even further in our company and recycle wood scraps, too. First we pull out any of the wood that’s salvageable, and then we turn the small cedar scraps into cribbage boards. I bought a simple $1,800 machine at Sears that allows us to make promotional items out of scrap material. We give the boards away as advertising.

We also take our scrap composite posts and turn them into birdhouses. It seems like such a simple thing but there’s a huge demand for them. We mix all three colors of our Geodeck on it, and people love it. Plus, hollow composite takes up a huge amount of dumpster value, so instead of paying to get rid of it, we recycle it.

Finally, when we sell our customers products with salvage value that we know they’re going to have to cut, such as aluminum railing, we tell them they can bring that scrap back and throw it on our recycling pile. That adds to our recycling value and makes customers feel good, too. And sometimes, even when customers didn’t buy a particular product from us, they remember that we’ll recycle their scraps and bring those in to us. It doesn’t hurt to have that extra traffic at the yard, because they often find something here they decide to buy.

Once you start looking for money in your yard, you’ll find it everywhere. For instance, when manufacturers ship us material, a lot of times we get charged for the pallet. It’s important to let employees know which pallets we’re charged for so that we don’t ship them out to job sites. If we get in a pallet that we’ve been charged $15 for with 40 bags of concrete on it, and then we ship that directly to a site, we’re giving up $15 of our profit right from the start.

When you multiply that by 100 jobs, that’s a lot of money.