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Recycling industry adjusts to changes in marketplace (Central Valley Business Journal)

September 3, 2015

recycling

MODESTO — The United States has undergone a cultural shift in its waste habits over the last 20 years. Lowering the amount of refuse headed to landfills and increasing the percentage of recycled waste has become a governing principle in homes as well as businesses.

“When I am done with a water bottle, if I don’t see a recycling bin, I can’t just throw it away,” said Frank Ferral, program director for the Greater Stockton Chamber of Commerce.

That has become the prevailing attitude during the last two decades in which the ubiquitous blue recycling bin has become as common as trash cans once were. Education and government dictates have increased reusable materials and reduced garbage-cluttering landfills.

By almost every measure, recycling efforts in the United States have been a success. That success has been a boon to what has been a profitable enterprise for area businesses that specialize in dealing with recycled materials. That is, until recently.

“Business isn’t doing too good,” said Keith Highiet, assistant manager at Modesto Junk Company. “It is a highly cyclical business. There is not a big economic demand for production of new materials from recycled product.”

Modesto Junk Company deals largely with scrap metal but also takes bottles and cans from the public. The problem is that while the amount of reusable material is reaching all-time highs, the markets for that material have suffered through their weakest stretch during the last three years. That market weakness has had repercussions for area businesses.

“We pay $1.95 per pound for [aluminum] cans,” said Highiet. “A few years ago it was up to $2.20 or $2.30 for the same material. It’s still higher than the state minimum of $1.58 per pound, but we are having to pay less.”

The weakness in prices is an especially large issue for municipalities that have to deal with large volumes of various types of recycled waste. Waste Management is one of the nation’s largest recyclers and has refuse contracts with cities across the nation. Waste Management CEO David Steiner has said the entire industry is working under a “broken model.”

“We have seen progress in our recycling operations, but the issues are complex and there is not an overnight fix,” he said in a conference call with thestreet.com in July.

A big issue for municipalities is the sorting process that items have to go through before they can be reused. The process hasn’t changed much since the 1990s when California companies developed a system that used people and conveyor belts to separate paper, plastic and cardboard based on the weight of each object.

Today, lightweight plastics can end up mixed in with paper and glass.

The system was also built with handling large amounts of newsprint in mind. Thanks to the explosion of the Internet and mobile devices, the amount of newsprint sent to recyclers has fallen from 15.81 million tons to 7.89 tons in the last 20 years.

In addition, residential customers often fail to separate recyclable items from those that can’t be reused.

At the same time that this cross contamination of various product bundles has grown, those buying bulk recycled materials have become more selective.

“We do have to think about being smart about what we bring in,” said Linden Coffee, senior sales representative at American Recycling. “Buyers are pickier about what they buy.”

American Recycling, with operations in Stockton and Modesto, deals largely with commercial operations. Canneries make up a large portion of its business.

“Anyone will take clean plastic,” Coffee said. “Usually they will take dirty plastic too. Now, they will say, ‘We won’t take that dirty bucket with tomato paste.’ When you are servicing an industrial customer, they don’t care that the market is down or buyers are picky. They just want us to take the stuff away so they can focus on canning.”

The fact that most (75 to 80 percent) of the material collected for recycling goes overseas is another complicating factor for area recyclers. Issues like the recent West Coast port slowdown and lockout made an already tough situation worse.
“It stinks so much of our scrap material has to go overseas,” said Coffee. “There just aren’t enough mills in the U.S. to deal with all the material.”

There have been local efforts to address that issue by increasing the amount of recycled material that is kept and used in the Central Valley. Ferral and the Greater Stockton Chamber of Commerce have been at the forefront of that effort.

“I have a different perspective on commodities,” said Ferral. “We do a great job of diverting material from landfills. That means we’ve got more quantities to ship overseas. What we have to answer is how can we keep that content here in California and employ more Californians and reduce our air pollution.”

One answer is companies like Ecologic in Manteca. The company uses plastics, cardboard and old newspapers to produce new containers that can be used for a variety of items. Other area companies produce everything from bottles to landscaping items from recycled materials.

One of the biggest benefits of using that material in the Central Valley is in the energy and pollution savings that come from not shipping that material overseas.

“It would be better to keep that material to manufacture that stuff here in California,” said Ferral. “We have excellent, cleaner energy so why can’t we use that to our benefit?”

While it might be tough for some to believe that pollution produced in China can affect the Central Valley, that is exactly what scientists believe is happening. In March, UC Davis released a study that found that nearly 10 percent of ozone pollution in California’s San Joaquin Valley is coming from outside of the state’s borders, particularly from Asia.

Another report by NASA in February indicated that much of the reduction in West Coast ozone emissions, is being offset by higher emissions in China. All of these issues can be helped by keeping more of the Central Valley’s recyclables at home.

Educating people and businesses on the best ways to recycle is important, business leaders believe. Both the Stockton and Modesto chambers of Commerce have programs aimed at helping businesses operate efficiently when it comes to the environment.

“We have a lot of experts come in and speak to our members and some of those are experts on recycling,” said Modesto Chamber of Commerce CEO Cecil Russell.

He said that while the business cycle of recycling may go up and down, area businesses need to keep recycling efforts in the forefront.

“It does require constant reminders,” he said. “You have to keep up the conversation on the importance of recycling, and we plan to be part of that conversation.”

The original posting of this article can be found online at cvbj.biz.

2015-09-03T20:12:35+00:00 September 3rd, 2015|
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