West Coast story: Allan Company has steadily worked its way up to number one in the West Coast scrap paper business - Company Profile - Cover Story

Recycling Today, Dec, 2002

From humble beginnings as a recycler of computer punch cards, Allan Company, Baldwin Park, Calif., has grown steadily to become the largest paper recycler in the Golden State. When Steve Young began his business nearly 40 years ago, he specialized in collecting computer punch cards (or "tap cards") from offices throughout the Los Angeles area.

With that business as a start, Steve and a growing team of key people (now including Steve's sons Jason and Steve Jr.) have expanded the business into a multi-location company processing virtually all paper grades and several other recyclable commodities.

FROM HERE TO THERE

As with many recycling companies, Allan Co. can trace its roots back to one individual with an idea and a lot of ambition.

"My grandfather worked for one of the larger paperstock dealers in Los Angeles, and my dad eventually began to service smaller computer punch card accounts for them," remarks Jason Young. "Eventually, he leased a small working area in Baldwin Park, about 15 miles east of Los Angeles."

That space in Baldwin Park remains the headquarters of Allan Co., but the elbow room required by the company has burst far beyond the walls of the Baldwin Park facility.

Growing, at first, one commercial account at a time and then entering into the processing of curbside commodities and California Refund Value (CRV) containers, Allan Co. facilities can now be found throughout southern and central California.

Additionally, the company has brokerage offices in Arizona and Illinois, and the company and members of the Young family have ownership interests in other recycling plants and businesses that do not carry the Allan Co. name.

The growth story has not been based on high-profile buyouts funded by debt or traded stock. "We don't set a plan or goal to, say, buy five plants in a given year," notes Don Rogers, Allan Co. vice president-marketing, who has been with the company since 1983. "We always have the desire to own more facilities, but it's a matter of an opportunity that fits what we want."

The company seems to have grown equally in all directions over the past three decades, taking on new types of accounts, new paper grades, new geographic regions, new materials beyond paper (such as plastic, glass and aluminum) and shipping to destinations beyond its original market reach.

"Originally, we exported all of our paper," says Jason, "and we didn't really have any domestic contacts. Things have changed a lot. Right now we're shipping about 50 percent of our paper domestically, and we do business with virtually every mill on the West Coast."

The company's volume of material Shipped is substantial enough that it still serves the hungry Asian export market. "In the Far East, we have a great reputation, and we are known for our quality and reliability of shipments" says Steve. Allan Co. has been providing recovered fiber directly to consuming mills overseas for more than 30 years.

Computer punch cards have, in large part, gone the way of the eight-track tape, but Allan Co. made the transition to all the other commonly traded paper grades, as well as taking in the beverage and food containers collected in California's household recycling bins and CRV buy-back centers.

The company now markets more than 1 million tons of secondary fiber each year, with old corrugated containers (OCC), old newspapers (ONP), pulp substitutes, ledger grades, mixed paper and office grades being its mainstays. "Our largest volume commodity is corrugated," notes Jason, who adds that the ONP grade and double-lined corrugated cuttings are next as volume leaders.

Beyond secondary fiber, the company's plunge into curbside and bottle bill commodities has helped it become a major player in aluminum used beverage containers (UBCs), plastic containers and glass cullet.

The company has accomplished this growth in a way that has not drawn undue attention to Steve Young or the Allan Co. name. Avoiding debt and risk have been lynchpins of the Allan Co. philosophy, as Steve Young told attendees of the Paper Recycling Conference & Trade Show in New Orleans earlier this year.

"Make no mistake, this is a tough, cyclical, sometimes non-cash flow-positive, risky, low-return business," he stated bluntly. But, he added, the growing demand for recyclable commodities, particularly in Asia, means that money can still be made by recyclers if they follow sound business practices.

CROSSING THE SINGLE STREAM

Although playing it safe is an Allan Co. trait, the firm has still been a pioneer when its leaders are convinced it makes sense.

One of the more capital-intensive risks has been the switch to the single-stream processing of materials collected through curbside programs.

"We've done numerous things to figure out the best way to process materials; we've tried everything under the sun," says Rogers. "The first curbside processing method was dual-stream, and all you needed was a straight belt with people to pick."

Allan Co.'s findings with single-stream have mirrored those of other companies: They have seen volumes collected increase, but have had to invest significantly to make sure the quality of finished commodities remains high. "We were one of the first to process single stream," says Jason. "Our tonnage went up. There were piles of material; we tried to throw people at it, but that became expensive. Subsequently, sorting systems have evolved tremendously--they are engineered to spec. The problem is the investment in sorting equipment is very significant, but the evolution of single-stream sorting equipment is rapid," he notes.