Realizing Aluminum’s Recycling Potential with Alcoa’s Kevin Anton

June 14, 2013

JOHN SHEGERIAN: Welcome back to Green to Good, and I am so excited and honored to have my good friend and just one of the best guys I’ve ever worked with in my life, Kevin Anton, here today. He’s the Chief Sustainability Officer of Alcoa. For a shameless plug, he also is a board member of Electronic Recyclers International, which I get the honor of being the CEO of. Welcome to Green is Good, Kevin Anton. KEVIN ANTON: Hey, thanks, John. I appreciate the opportunity to be here today. JOHN SHEGERIAN: Well, Kevin, you’ve been on before, and instead of me reading your amazing bio, besides all the great work you’ve done, last year you won the Charles Martin Hall Award as the Aluminum Ambassador Advocate for American Metal Markets. You’ve done so many things and been awarded so many great accolades. I want you to share your journey a little bit on how you became the first Chief Sustainability Officer at Alcoa in 125 years. KEVIN ANTON: Sure, John. So, as you know, John, I really have a financial background, so I’ve worked in metals and mining for some 30-odd years in various financial roles, anything from the most junior positions of paying my boss’s expense reports early on through merger and acquisitions and strategic planning, a short stint in commercial, where I ran the sales and marketing and trading operations for Alcoa’s commodity business, and then a return to finance. Through the financial crisis in 2008 and 2009, I was the leading finance organization for Alcoa’s commodity business. When we came out of that, and one the nice things we did at Alcoa through the financial crisis, is we didn’t take our eye off the ball on we need to solve for the short term, but we also need to be solving for the long term. During that time period, we launched a sustainability steering committee. Klaus Kleinfeld, our CEO, asked me to take the leadership role of that committee, and we did that for 2009 and into 2010. Klaus and I had a discussion, “Let’s take this and put even more focus on it at Alcoa, and Kevin, I’d like you to become the first CSO in Alcoa’s history.” We had a little conversation about it, so yeah, this actually fits really nicely for where I am in my career and what my interests are, and starting with Alcoa’s great sustainability reputation and track record, it’s kind of the perfect job. JOHN SHEGERIAN: It is, and you are the perfect person for that job. For our listeners out there, if you can follow what Kevin has done, he has a great Twitter account, @kevinanton at Twitter, and he is doing great things at Alcoa. He’s going to share them today, so I’m so glad you joined us, Kevin, and I’m so glad our listeners are out there, because this is going to be a special segment. Tell me a little bit about Alcoa and sustainability. It’s almost like peanut butter and jelly. These go so well together. Alcoa has always been into sustainability. Tell me a little bit about that whole focus there now. KEVIN ANTON: So, John, it’s really important to understand that we are the largest integrated aluminum country in the world. That means we start with mining and go all the way through to the products you see, like the aluminum beverage can, like wheels on trucks, so we have a very wide expanse here. Let’s talk a little bit about some of the products we make. So, aluminum in transportation is great, and we’ll talk more about that in a bit. But you think about the trucks you see on the road and how we can drive down the weight of those trucks and drive up the fuel efficiency. The aluminum can infinitely recyclable, so that aluminum can that you had yesterday afternoon maybe when you were out in the park or on the beach or at home with your family, you put that in the recycle bin yesterday afternoon, and we’ll have that back on the shelf before the 4th of July as a new beverage can. Then we recognize that we have stewardship obligation. We are a mining company. We do have large facilities around the world, and we take incredible pride that the areas that we’re mining today will be re-vegetated with original species by next year. JOHN SHEGERIAN: When you talk about infinite recyclable, can you just share with our listeners what that really means, and how much aluminum is recycled with regards to what you’re really doing? KEVIN ANTON: Yeah, and the nice thing about aluminum as compared to other materials, if you think about when you recycle aluminum, the basic material doesn’t lose any of its properties, so if it’s an aluminum can for the first time or the 50th time, it’s just as strong, just as resilient as ever. Same thing in automobiles, same thing in buildings. If you look at some of the other materials like the plastic, like the paper, like steel, they need to go through a major transformation to then have a second life, and often the second life is a downgrade of the first life. For us to recycle aluminum, all we have to do is use 5% of the energy that we used to make aluminum the first time, and then it’s back in place, ready to go for its second, third, fourth, fifth life. JOHN SHEGERIAN: So, when you recycle aluminum, it really sets the water market to 95% or so energy savings. KEVIN ANTON: Yeah. And then the other thing, John, we like to talk about is how much aluminum is recycled. 65% of aluminum cans get recycled, and the benchmark, if you look at glass or plastic, is probably closer to 30%. If you look at aluminum in buildings and aluminum in cars, they both have recycle rates approaching 90% or more. So, we’re keeping aluminum out of the landfills, so we’re proud of that, and there is a larger market for recycled aluminum than there is recycled aluminum available. JOHN SHEGERIAN: So, Kevin, you know, you were involved with finance for years, and you’ve been the CFO of many divisions, and now you’re the CSO, the Chief Sustainability Officer. Talk a little bit about where sustainability interacts and actually crisscrosses with finance, and is going green really good for the bottom line? KEVIN ANTON: Yeah, and that’s a great question, John. When I started in the sustainability role, a lot of the NGOs and a lot of fellow Chief Sustainability Officers who maybe had a different background, maybe more of a communications background, maybe more of an environmental background or a policy background than I did, they welcomed me. The sustainability folks understand that there’s a great business case for sustainability. What they don’t have is necessarily the language of the CFO. So, that’s kind of what I bring, and one of the joys of being in this position is I can bridge all of the great things that are happening on the sustainability front, help convert them to dollars and cents, and say yes, there is a business case for sustainability, whether it be projects that reduce water consumption, products that increase energy, or assessing new markets. JOHN SHEGERIAN: Got it, got it, got it. So, you know, Kevin, Alcoa is massive. I mean, it’s 61,000 people approximately across 30 different countries. How do you not only create these great sustainability programs and activities here in the United States, but how do you populate them and drive the message across your entire business? KEVIN ANTON: Well, if you look at how Alcoa has been run under Klaus, we really have a couple key strategic business priorities, and one of them is capitalizing on the Alcoa advantage. That’s the franchise of the parent company. What we do there is we’ve got lots of processes, whether it be human resources, procurement, financing, where we take the same processes and deploy them across the world. We’ve got mechanisms to identify new best practices and them make them standard practices, so we’ve got this infrastructure for doing everything and passing best practices across the world. So, when I came into this role, part of what I did was just build on that infrastructure. So, people asked me, “Kevin, what’s your sustainability strategy?” I said, well, we don’t actually have a sustainability strategy. What we’ve done is we’ve embedded sustainability into the business strategies of each of our operating locations and businesses, and just make it part of the fabric. And then, like any good manufacturing company, we’re very metrics-driven, so we’ve established the appropriate metrics at each of our businesses, so we then have a way to measure their performance. JOHN SHEGERIAN: So, when we talk about sustainability and aluminum, talk a little bit about, you touched on it earlier, in terms of cans and trucks and then transportation and cars. Talk a little bit about how, as the world becomes more sustainable and we all drive cleaner cars and want to fly in lighter airplanes with greater fuel efficiency, how aluminum plays such an important and critical role in the greening of the world. KEVIN ANTON: Yeah, thanks, John. I think one of the examples I like to use is truck wheels. When you drive down the interstate, keep an eye out. You’ll see a shiny, bright wheel passing you by. Odds are that’s an Alcoa wheel, and the way we go to market with that product is we’ve got a little online web tool we make available to the trucking companies. It’s a product called the Calculighter, and it allows the trucking companies to go in, put their own data into the system, and calculate out this is what I get in GHG savings, this is what I get in fuel savings, this is what I get in maintenance and tire savings, and allows them to see the whole value proposition aluminum brings. If you’re talking aviation, 90% of the alloys on airplanes that are flown started with Alcoa, and now carbon fiber is all the rage. That was the next step the airlines went to kind of get the next step change in fuel economy. Well, that drove Alcoa back into its R & D facility, and we’ve now come up with aluminum lithium alloys that are lighter and stronger than the carbon fiber, so we’re kind of playing hopscotch here with technology. JOHN SHEGERIAN: Let’s go back to the Calculighter. So, for our listeners out there that want to employ this great tool, they can just go to your website, alcoa.com, and find the Calculighter? KEVIN ANTON: Yes, they can. JOHN SHEGERIAN: That is awesome. So, you’re using the internet technology with regards to leveraging that for people’s greater good to understand how much they can save using your new technology with regards to Alcoa wheels. KEVIN ANTON: Yes, typically we do sell a premium product, but typically the payback is less than two years. JOHN SHEGERIAN: Wow. So, the ROI, if you’re going to use Alcoa wheels, is about two years. KEVIN ANTON: Yes. JOHN SHEGERIAN: Talk a little bit about, though, all these new cars that are coming out at Ford and GM and all these great iconic brands, the greening of the car industry. How does Alcoa play a huge role with regards to that? KEVIN ANTON: First of all, we’ve got the new CAFE standards in the U.S., which are driving the automotive companies to make their cars more efficient. But then we’ve just looked at some data that we had, a couple studies that recently came out, and as recently as 2008, slightly more than 50% of consumers put fuel economy as the number one driver in making a car choice or a truck choice. That number is now over 80% in 2012, so the consumers are now pulling for this, which is fantastic. It’s driving the automotives to see this as a competitive advantage. As a result, they’re looking at every option to drive fuel economy. We’ve been talking to the automotives for the last decade about all the things we can do with aluminum. Now, with this whole change in regulation and consumer demand, they’re knocking on our door. So, we’re getting phone calls from all three of the OEMS, domestically and around the world. All the OEMs are calling us. So, big things we’re going to be seeing in the future model years, more aluminum sheet in the products and doors and door liners and trunk hoods, trunks, lids, and hoods, the body and weight as the automotive folks call it. JOHN SHEGERIAN: So, that makes the cars lighter and makes them more fuel efficient. KEVIN ANTON: Yeah, it makes them lighter, makes them more fuel efficient, and we believe with an improvement in safety, too. We reduce the mass of the car, it’s quicker to stop than you can stop today. JOHN SHEGERIAN: For our listeners out there, if you just joined us, we’re so thankful to have Kevin Anton on with us today. He’s the Chief Sustainability Officer at Alcoa, and if you want to learn more about Alcoa and all the great things they’re doing with regards to the world of sustainability, go to alcoa.com. They have a great website. I’m on it right now. You click onto the Sustainability button, and it’s just a myriad of opportunities and thought leadership positions that they take that inspire us all. Kevin, talk a little bit about Alcoa and the Dow Jones Sustainability Index and your being included year after year after year, and why that’s so important and that’s such a great indicator of what you guys are about and what your DNA really is. KEVIN ANTON: Yeah. We’re proud of it. We are the sector leader for the Dow Jones Global Sustainability Index. We’ve been included in Dow Jones Sustainability Indexes for 11 years running, and that makes us a very unique company, to be able to say that. We like the Dow Jones Sustainability Index. They have a very, very rigorous process; a very database process. It drives to transparency; it drives to accountability, and those are things that are right in our sweet spot, so we really put a lot of time and effort into it. We think it’s a leading indicator of where the world is going because it’s not a static index; the requirements change and get harder and harder every year, and if you’re not on top of it, you can end up out of it. It’s one of the key measures. It comes out about 4 in the morning, and I will tell you, I’m awake waiting for that e-mail to see did we make it and where did we make it. JOHN SHEGERIAN: You’re like George Clooney waiting for the Academy Award nomination. KEVIN ANTON: Exactly. The media response, forwarding that note to our CEO because he’s also watching. JOHN SHEGERIAN: So, I’m going to take a little break from aluminum per se, and I also want to talk about some of your other great work in the communities that you do. For instance, Alcoa’s known for taking some plants and reinventing their traditional aluminum recycling properties into new and wonderful lives. Can you explain about what you’ve done in that sector? KEVIN ANTON: Yeah, and I’ll talk about two of them, John. One is in Troutdale, Oregon, which is pretty much complete, and another one that sits in Badin, North Carolina, which you have some firsthand experience in. So, first of all, in Troutdale it was a World War II vintage aluminum factory that Alcoa acquired when it acquired Reynolds in 2000. The plant was pretty much shut down or in the process of shutting down when we acquired it, so we worked with the Port Authority out there in Troutdale, the local government, the community, and we were able to redevelop the site, and now it is a FedEx distribution terminal, hundreds of millions of dollars invested, probably 1,000 direct jobs plus untold indirect jobs from that. So, we’ve been able to actually turn this into a phoenix, and we’re proud that the U.S. EPA-sponsored award for best brownfield development a couple years back is called the Phoenix Award, and we won it for that site. JOHN SHEGERIAN: That is so great. So, you took an old property, a legacy Alcoa property, and you recycled it. KEVIN ANTON: Yeah. Some people would think of these legacy properties as liabilities. We actually think of them as opportunities. They have great logistics, great workforces available, and we just have to find the match with the new use. The second one we’re working on is in central North Carolina, a site that Alcoa had operated for 100 years, and unfortunately a few years back we had to shut it down. So, we’re in the process now of repurposing the site, and we’ve got an engineering firm located there, we’ve got two or three folks who are talking about coming in, generally green tech-type properties, and then our base load tenant, John, as you know, is ERI. So, a 150,000-square-foot facility that used to cast aluminum, and now it is become the state-of-the-art modern electronics recycling plant. JOHN SHEGERIAN: Yeah, and that’s thanks to Kevin, a little truth in advertising here. Kevin, we were their first tenant in Badin, and it is one of the most wonderful properties we’ve ever been in. We’re so proud of it, and we’re going to become the largest southeast e-waste recycling facility, thanks to Alcoa and Kevin Anton’s vision in Badin, North Carolina. If you haven’t had a chance to go there before, go there now. If you’re looking for a great industrial place to open up your business, please contact Kevin, because that location is just one of the premier locations in the southeast part of the United States. Kevin, I’m going to go back to aluminum now. Talk a little bit about growth. We’ve talked a little bit about what you’ve done now with your R & D to combat the carbon with regards to airplanes. Talk a little bit about transportation, trucks, and where are you guys focused? Not where the hockey puck is today, but where is the puck going? KEVIN ANTON: Well, John, just to put a backdrop to that, as you know, I’ve been in the metals and aluminum business for 30+ years, and we’ve traditionally seen that aluminum grows at GDP rates. But there’s been a decoupling over the past five years. We’re now growing at double GDP. JOHN SHEGERIAN: Double GDP? KEVIN ANTON: Yeah. And why is that? That’s because of the great value proposition from the material, and very, very much a sustainability-driven and efficiency-driven one, so our big growth right now is in the automotive sector, and all conversations will come back to automotive because it’s so exciting for us. So, what we did, I talked before about how the OEMs called us up. We built an expansion on our Davenport, Iowa rolling mill about $300 million coming online later this year. When we put the shovel in the ground, the facility was already sold out. Since then, we’ve broken ground in Saudi Arabia at our joint venture company for another auto expansion. And then I’m really proud because I’m talking to you today from Knoxville, Tennessee. We’ve got a large rolling mill here, and over the last few days we just announced that we’re going to do a similar expansion to the one we did in Davenport here in Knoxville, and the growth is phenomenal. We will now see aluminum-intensive vehicles in the parking lot when you go to the mall. In the past, it’s traditionally been the high-end cars like the Jaguars or the Audi A8s. This is going to be run-of-the-mill inside everybody’s reach to have an aluminum-intensive vehicle. JOHN SHEGERIAN: That is awesome. You know, Kevin, we’re down to the last three minutes or so. I know there are many other Chief Sustainability Officers or Chief Sustainability Officers-in-waiting that listen to this show. Talk a little bit about what other companies can learn from the great activities that you’ve done and created and you’re driving over at Alcoa with regards to sustainability. KEVIN ANTON: I think there are two ways to look at it, John. I’ll start first with leadership. Alcoa has a Board of Directors that has recognized sustainability as an important success factor for our organization. Just last week, I met with the Board, and at every board meeting there is a time carved out to discuss what’s going on in the sustainability world, so I’ve got incredible sponsorship from the Board. I’ve got incredible sponsorship from Klaus. But that’s only part of the solution. So, we’ve done great top-down; but we also then do a lot of programs from the bottom up to get our employees engaged. We have a volunteer program that we work very, very hard on. Last year, 60% of the Alcoa employees took part in a volunteer activity related to the environment or education in their community. Right now, we’re working with our employees on wellness and trying to help create a structured environment to give our employees the opportunity to change their lifestyles and make themselves healthier. So, if you’ve got leadership from the top sending a message and lots of engagement programs from the bottom coming up, creating opportunities for suggestions, creating lots of opportunities for people to improve their community, their workforce, their product, it all comes together in the middle, and that’s what allows us to be on the Fortune Most Admired or the Dow Jones Sustainability Index or Maplecroft for Innovation. So, it’s great when you get some external recognition, but the real key is getting the bottom workforce engagement and getting everybody involved. JOHN SHEGERIAN: We’re down to the last minute, Kevin, and a couple things. What do you want our listeners to walk away with today about Alcoa and aluminum? What are the one or two highlights? KEVIN ANTON: OK. It’s a growth market. We’re running sustainable solutions. Aluminum is the ultimate recyclable product, and I think one of the things your listeners, and I think I’m talking to the converted already, but I just want to make sure that everybody recycles that aluminum can. For all the great statistics we have, there’s still a billion dollars worth of aluminum that ends up in landfills in the U.S. every year, and the U.S. is quite frankly lagging many, many other countries in its recycling rate and its recycling infrastructure. So, that’s my personal plea to everybody. Don’t throw it out. JOHN SHEGERIAN: Thank you, Kevin. And not only are you amazing, but you are a great friend of mine and a great friend to the environment. Watch Kevin more on Twitter, and you can go see more about Alcoa at alcoa.com. Kevin Anton, you are truly living proof that green is good.