Eric Schweitzer, ALBA Group
Release Date: 2009-12-14
Interview with ALBA: Dr Eric Schweitzer (Chairman of the Supervisory Board of INTERSEROH SE, Member of the Executive Board of ALBA AG and President of the Chamber of Commerce and Industry Berlin) and Dr Axel Schweitzer (Chairman of the Board of Directors of INTERSEROH SE and Member of the Executive Board of ALBA AG)ALBA is a family owned company that was responsible for the development of recycling in Berlin as well as Germany; could you give us some insight on the story behind the company?
This company was founded 40 years ago by our parents. My father was a civil engineer and at this time waste management wasn’t very structured in Germany; there were constant ‘not in my back yard’ complaints about landfills or incineration stations. It’s slightly like the current situation in China where the cities are growing and the waste management is becoming a clear issue. The initial idea behind ALBA was to reduce the amount of waste by taking out the raw materials; as you know Germany does not have a lot of natural resources so we have to depend on buying them so our waste is actually an important resource. We started in the field of paper and continued into glass, plastics and scrap; today we are active in every kind of waste and recyclable material.
Having started early in the sector ALBA can serve as a model to others in the industry; what is at the core of the ALBA philosophy?
The main focus is to extract the raw materials out of the waste and bring those back into the production circle. Currently we operate in all the parts of the value chain; at one end we trade materials to production companies a lot of which are in China while at the other end of the chain we have collecting and sorting processes. Additionally we work in the licensing of packaging; in the early 1990s Prof. Klaus Töpfer helped introduce the packaging recycling law which states that producer of waste is responsible for it and has to pay for it, so today this is calculated for in the total cost. Our policy at the end of the day is one of nearly zero waste.
Do you think that it is coincidence that family owned businesses dominate this industry?
Remondis is the only other large family owned company in Germany in this field but I think that there is a high attention to family philosophy in both. Veolia is another large player in the market but they are a public French company, after these three large companies there is a large disparity from the other smaller companies in Germany. Family owned companies are more sustainable and this is not an industry for short-term orientation; over the past 30 years we have become one of the leading companies in the world for sorting and recycling technology, this is possible by investing with a long-term outlook. If you were only concerned about the next quarter you would not be able to successfully develop in this industry.
The price of raw materials is very important for your business and the rise of China’s economy has contributed a lot of the success of this industry in the past few years; do you consider China as an opportunity and do you foresee directly engaging the market?
In China there are about 1.3 billion people with an increasingly good economy; they inevitably need more resources to continue the growth of the economy. Price and quality will be the determining factor between extracting these necessary resources from waste or from primary sources; if you can produce secondary industrial materials of a high quality then there is an opportunity to sell. China is a very big market and will continue to be.
There is often a lot of debate in the media here in Europe on the exportation of waste and the roll it plays in the relationship between countries; where does ALBA stand on this?
This is not what we are doing; we are not exporting waste we are exporting secondary raw materials in a high quality and this is an important issue to us because we do not believe in sending waste to other countries with lower dumping laws. The growth of the Chinese economy and the rise of the infrastructure programs demand a lot of metals such as copper; last year it was around €6000/ton which of course has decreased significantly but the price still relies heavily on Chinese policy for buying raw materials. I think it’s important for China to think about developing these technologies because there is a lot of waste that contains a lot of potential resources; we have the technology to extract these secondary materials out of the Chinese waste.
We have seen that in recent years the international expansion of ALBA has been focused on Eastern Europe; how difficult would it be to enter China with facilities and investment rather than as a trading partner?
We’ve been a trading partner in China for several years; it’s important in every country, whether its here, Eastern Europe or China, to understand the rules of that country: we want to be in China as a Chinese company not a German company in China. Wherever we start business we always try to find employees from that region; it would not make sense to start in China with German people because you need local understanding and people who can think in that culture. This is especially true in China since it is more complex than most European countries.
I can imagine eight years ago you did not have a lot of experience dealing with China; what have you learned at the personal level as a business leader over this period?
The main point for cultural understanding in China is that you need to think in a circle; German culture is more straightforward so we need to learn how to think like this as well as be patient.
What do you believe are the greatest complementarities between the technology and knowledge of the ALBA Group and the needs and ambitions of China?
We started with collecting and trading and in the future enter using our technology but it is important to do this as a Chinese company with the correct structure and right partners. As ALBA Group we are not in a hurry, we are convinced that our technology is good and we have had 40 years to develop it and this experience should pay off in China where it is very applicable. There are a lot of parallel issues and developments in China at the moment but in the next 10 maybe 20 years China will invest in these technologies to deal with their waste. It is also important to consider the movement of people from the rural regions to the cities which will increase urban populations as well as the environmental impact: waste is just as much an issue as water and electricity in China’s future. I myself have been in China and if you see waste collection in parts of Beijing it is a person on a bicycle who sorts the waste right there; you can do this on a small scale but with a growing infrastructure doing this on a bicycle will not be feasible. It’s difficult because the economy is coming from lower standards, first the economy has to grow so that the people get jobs, and after this the environmental standards will be a concern. You never have a country where you have high environmental standards with a low monetary base; this is clearly changing in China with a growing economy and the debate on waste management infrastructure is coming in the next five to ten years. They have the big cities but there is also the issue of the economic crisis for which a solution has to be made and it will likely take three years to see if the result was good so the case for high technology waste management is probably a few years off.
Do you think it is feasible for a developing country like China, India or Brazil to jump from a basic level of waste management to a German standard?
Not in the first step; it’s the same as if you take a local football team and propose that next year they play on the same level as FC Barcelona: they never will be able to. However, these developing nations maybe will be faster, they won’t need 40 years and you can see how fast things are moving in China today but the main question will be the political will and the sustainability of this because in this industry demands investments that you will not bring payoffs for 10-20 years. It is important to have stability guaranteed for the long-term otherwise companies will not invest or demand higher returns to compensate for the risk of losing their investments.
What will be on the top of your agenda to make ALBA Group the leader in the renewable energy waste management sector?
In the last five years we have grown very rapidly: we have enlarged our international exposure as a trading partner in South East Asia; we took 75% stake in INTERSEROH giving us a lot of European exposure and we created the ALBA Group. Today, in the face of the economic crisis we can consolidate our strategic jump and plan our further internationalisation in the coming years as a lot of things are already done in Germany. Raw material prices will rise in the coming years; it’s not a question of if but more when it will happen and currently we handle 10 million tons of resources each year throughout the group. The standard of our know-how and facilities will meet the need of many other countries as well it just depends on the political climate of each location; if there is no corruption, a proper legal system and a high understanding of environmental importance then there is an opportunity we are well positioned for.
This is a second generation family business; your father left it to you as a German company and you have transformed it into a European company looking further a field. What is going to be the company that has to be run in the future?
We are already a European-wide company and a main exporter to Asia for secondary raw materials where the growth is tremendous; if you see the figures for this year in the crisis even with a worldwide slowdown China is showing 7.9% growth in the second quarter and the infrastructure program totals over $500 billion. If you look at worldwide steel production it is around 100 million tons per month and out of this 50% is made in China where as a decade ago it was only around 15%. If we look in the next decade China’s influence on the Western world will only increase while Europe’s industry will likely struggle; in our generation we are already facing the difference. When we went to school everyone learned English, gradually the second or third language will become Mandarin; if you arrive at Berlin Airport now you can see the Chinese signs at the gate.
What are the ambitions of ALBA Group to contribute to the development of the waste management and recycling industry in China in the future?
I think we can influence the development based on the idea of ‘urban mining’ by taking secondary raw materials out of the waste and moving toward a zero waste policy. Berlin’s waste is transformed by ALBA into refuse derived fuel (RDF) for power generation; this can have a practical application in China where they have to import coal and have a lot of waste making this a fantastic model to change a problem into a solution.
| Company: | ALBA Group |
| Position: | Member of the Executive Board of ALBA |
| Country: | Germany |