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Allegiant finding treasure in clients' trash: Local firm helps manufacturers set up cost-saving recycling plans

June 16, 2008

In 2000, gasoline cost 99 cents a gallon, you could barely give recyclable plastic away and the idea of manufacturers "going green" was a pioneering thought.

Allegiant Global started that same year as Heritage Interactive Services, with one client and little market awareness of what industrial recycling and reuse initiatives meant.

Heritage Interactive was started by principals of locally based Heritage Environmental Services, which was-and still is-involved in more traditional waste-disposal services.

When one of Heritage Environmental's clients, Michigan-based Lear Automotive, asked if the local firm could handle all of its waste-disposal, hauling and recycling needs, Heritage Interactive was born. Though it took a while to catch on, the recent green movement, along with the ignition of lean manufacturing, helped spur Heritage Interactive's growth in more recent years.

In the eight years since its founding, gas prices have quadrupled, markets for recyclable plastics, steel and other products have grown significantly, and Allegiant is projecting $100 million in revenue this year with a footprint that spreads across the United States, Canada, Mexico and South America.

Later this year, the company based at 3719 W. 96th Street on the city's north side, hopes to expand into Europe. Next year, the company plans to expand to Asia. It will likely do so through acquisition, Allegiant officials said.

Allegiant's current client list reads like a Who's Who of Fortune 500 companies including Subaru, Ball Corp., Delphi, Johnson Controls, Avery Dennison, Goodyear and Federal-Mogul, among others.

Its services now go far beyond mere waste removal and recycling. Allegiant finds ways for clients-usually large manufacturers-to streamline operations, reduce the amount of energy and raw materials they use while helping find markets for recyclable materials and ways for the company to otherwise "go green."

Allegiant, which has 100 employees at its offices in Indianapolis, Texas and Brazil, has no haulers or recyclers on staff. Instead, its MBAs and program managers analyze a client's operation, find out what's salvageable, what can be re-used and where the strongest recycling markets exist. Then, they line up the specialty contractor that helps carry out the tasks. Allegiant also helps clients find suppliers that facilitate reuse and reduction on the front end. About 70 of the company's employees are located in Indianapolis.

"Most of the staff is involved in managing accounts and data collection," said Ken Wolfe, Allegiant's director of compliance. "There's lots of environmental science behind what we do."

The company has seen its revenue grow from $30 million in 2005 to $56 million in 2006 to $66 million in 2007 to a projected $100 million this year. Successful expansions in Europe and Asia, Wolfe said, could easily lead to revenue doubling.

Officials at West Lafayette's Subaru plant are not surprised by Allegiant's growth. Subaru was one of its first clients and now boasts a "zero landfill operation."

"We put nothing in any landfill and haven't since May 2004," said Tom Easterday, Subaru of Indiana Automotive senior vice president. "They do things manufacturers might not think of or have time to handle, like assisting with the process of getting suppliers to use recyclable materials. They simply provide a tremendous service."

The benefit to Subaru is two-fold, Easterday said. It has been a great marketing tool, and led to several TV and print ad campaigns. It's also saved the company a lot of money, he added.

Though Easterday wouldn't say what the total savings to Subaru's West Lafayette plant has been, he said it's easily more than $10 million. "We save more than $1 million a year by using recycled containers alone," he said.

Before beginning to work with Allegiant, Subaru produced 459 pounds of waste for every vehicle it built in West Lafayette, and much of that was landfilled. Now, Subaru only creates 251 pounds of waste, and all of that is recycled or reused.

Allegiant officials said each operation is different, but generally the company can save a large client 10 percent to 15 percent of its operating expenses.

That savings doesn't come overnight. Most clients usually realize a 5-percent savings in the first year, and 15 percent by year three. Allegiant figures its fee based on the amount it saves a client.

"What you've seen is a paradigm shift," said Rodney Handy, a former Ford Motor Co. engineer who is now an associate professor of mechanical engineering technology at Purdue University. "Environmental compliance has always been thought of as something that comes off the bottom line ... as an initiative that costs you money. Now companies see these initiatives can be used to create a competitive advantage in the global marketplace."

While the green manufacturing movement started in the automotive sector, Handy said it has rapidly expanded to such sectors as medical, textiles, food and beverage, electronics, defense, and materials handling and packaging.

"In 2006, 90 percent of our business came from the automotive sector," Allegiant's Wolfe said. Now, more than onefourth of the company's business comes from other sectors. Allegiant recently added such clients as Coca-Cola and Pepsi Co.

Despite the green movement, there still aren't many U.S. firms doing what Allegiant does. "There are maybe a handful nationwide..." Handy said.

Amazingly, the company only has a four-person sales and marketing staff. As the operation goes global, that will change.

"I think you'll see our sales efforts becoming more aggressive," Wolfe said.

Allegiant's owners are as unique as the company's services. Heritage Environmental, which is part of the industrial holdings of the wealthy Fehsenfeld family of Zionsville, brought on Carmel entrepreneur Albert Chen as co-owners in 2006.

Chen, a Taiwanese native, is the founder of Telamon Corp., a firm that serves telecommunications giants. Chen helped bring in Eric Tate, a former recycling executive in Los Angeles at Veolia Environmental Services.

Tate, who is black, and Chen comprise the majority ownership, which makes Allegiant a minority-owned enterprise.

"People asked how I got involved with Allegiant," Chen said. "I explain that the philosophy of this company and Telamon is the same. We troubleshoot and manage industrial solutions. We've put together our team here with that in mind."
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