Technology doesn’t replace a handshake

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ABC Recycling, based in Burnaby, B.C., finds that, despite the technological developments in the industry, the trust needed to do business effectively requires a face-to-face approach.

 

There is the world of today, of business relationships conducted wirelessly, sometimes across vast distances. And then there is the supposedly old-fashioned world of face-to-face trust, deals settled in person and sealed with handshakes.

 

But ABC Recycling sees the latter as today’s reality in its business.

 

No matter how much communication quickens and logistical systems modernize, no matter how fast metal prices rise or fall on trading screens, face-to-face interaction still holds sway in the global scrap metal recycling business.

 

The reason is quality assurance, says David Yochlowitz, chief executive officer of ABC Recycling, now in its fourth generation of family ownership, and based in Burnaby, B.C. It’s a sentiment heard throughout the industry.

 

There are industrial standards and specifications for metals. Yet buyers still need to know exactly the origin and processes used for the metals they purchase, especially given the huge tonnage of materials bought and sold in most transactions.

 

“We wouldn’t deal with somebody we haven’t seen face to face and where we haven’t seen their facility. At the same time, we wouldn’t expect them to deal with us without knowing who we are,” Mr. Yochlowitz says.

 

The innovation in the industry receiving the most attention has been the physical machinery used for tearing apart and recycling materials, such as the car shredders feeding a fascination on YouTube. Yet, software has also had to advance to track shipments in ever more sophisticated ways throughout the shipping process.

“And then most of these guys are checking the markets, checking the commodities price index fairly frequently, so they’re on their phones all the time.” So, new applications are developing to offer dealers ways to keep track of prices more effectively, says Tracy Shaw, president and CEO of the Canadian Association of Recycling Industries, a trade association.

 

Despite the technological advances, she agrees that the industry has its idiosyncrasies. “It’s a unique industry in several ways. There is quite a mixture of that old-fashionedness,” she says, “and that comes down a lot to trust. You want to know that you’re getting quality material from someone.”

 

However, a pivotal new strategy at ABC Recycling, which has been operating from the Lower Mainland for 105 years, came in 2005 when the company started its expansion from two yards (in Burnaby and Campbell River, B.C.) to nine throughout B.C. and in Grande Prairie, Alta. The need was an old-fashioned one: to reduce shipping costs, hence the reason for being closer to scrap sellers.

 

“When the markets went too low, we couldn’t service Northern B.C., for example. So, we set up in Terrace, Prince George, Fort St. John and Grande Prairie, and put rail lines in and got our own rail cars, so that even when the markets go lower, we can service each area,” Mr. Yochlowitz says.