As the U.S. metal shredding industry continues to expand, shredder plant builders and operators alike are growing increasingly aware of the importance of setting benchmarks to maximize return on such significant investments.

"Adding a shredder takes an operation to a brand-new level. You have essentially gone from a scrap processor to a manufacturer and are producing a product, and that is why you need to look at your shredder that way," said Bill Tigner, president of Trussville, Ala.-based U.S. Shredder & Castings Group.

With about 200 shredders now operating in 38 states, according to the Washington-based Institute of Scrap Recycling Industries, competition is fierce. The number of shredders in the United States has increased an estimated 10 to 15 percent during the past decade, with recyclers now shredding about 17 million automobiles and 45 million appliances annually, generating some 14 million tons of the approximately 80 million tons of ferrous scrap produced in the United States each year.

Given this level of growth, benchmarks—standards allowing recyclers to compare their own business processes with industry norms—are essential, according to industry sources.

"It is critical to set standards and measures of performance," said Scott Newell, chairman and chief executive officer of Shredder Co. LLC, Canutillo, Texas, whose father was instrumental in developing the shredder in the late 1950s.

The recession also has increased the importance of benchmarking. "Two years ago things were really good. Now we are looking at how we can improve ourselves. It is important to see how things really are, and important to deal with things as they really are. And that was not an easy lesson for me to learn," Newell said.

Benchmarks that recyclers should assess include tons processed per hour, operating costs per ton, the shredder's return on investment (ROI), density of the shred, nonferrous yield,...