Due North

Len Shaw has served as the executive director of the Canadian Association of Recycling Industries (CARI), Ajax, Ontario, for more than a decade. CARI’s membership includes more than 260 companies in the recycling sector, from scrap processors to electronics recyclers to metal consumers. The association represents single-location family scrap yards as well as scrap processing companies with multiple yards throughout Canada and the United States.

In the time that Shaw has been with CARI he’s seen many changes that have helped to shape the Canadian scrap recycling industry. Chief among these are various laws and regulations affecting scrap recyclers, the growth of the electronics recycling industry and the ongoing need for safety awareness.

Shaw discusses the factors that are currently shaping the Canadian scrap industry and also shares his thoughts on things yet to come.
 

Recycling Today (RT): How would you characterize the last year for the Canadian recycling industry?

Len Shaw (LS): Simply, it is very similar to the United States. Our industries are integrated; we’ve got the same companies working both sides of the borders, the same materials, the same customer, everything. It was stronger than in the previous year and a reasonable year for the market.
 

RT: What federal government initiatives are affecting recyclers throughout the country? Are there any municipal initiatives that are affecting CARI’s members?

LS: One issue is mercury removal, and I think we’re talking about that later. That is ongoing.

The other standard initiative that we have regards the export and import of hazardous waste and hazardous recyclables. That is the regulation that was enacted for us to ratify the Basel Convention (the Canadian Environmental Protection Act of 2002 or the Export/Import of Hazardous Waste and Hazardous Recyclable Materials Regulations.) It essentially requires informed consent from both governments prior to shipment of certain materials, including some recyclables, that are considered hazardous under the Basel Convention. The regulation was enacted about 10 years ago and has a periodic required review.

The major issue that we have with municipalities is scrap theft. Not one single province has yet put a law in place, and it is not under federal jurisdiction. So we are left with municipalities—this city or that city—as they try various forms of gathering information, providing it to the police and tagging and holding material. We constantly fight against tag and hold because it doesn’t work for this sector. The approach won’t solve metal theft. We have been working on a number of other initiatives to address the problem.

You might be aware of the Scrap Theft Alert. That, in fact, was an idea CARI took to ISRI (Institute of Scrap Recycling Industries Inc., based in Washington, D.C.), and ISRI then promoted it. It is a joint effort between the two of us. Scrap Theft Alert is an automatic system whereby people who have had a theft, or even the police, can very quickly distribute information about that theft to scrap dealers within a 200-mile radius. And dealers, if they have material that is suspicious, can enter it into the system. They can contact the police through the system as well.

We, again with our counterparts in ISRI, have prepared an article to go into the Canadian Association of Chiefs of Police’s bi-monthly publication and we are also hoping to get on to the agenda at their annual conference in Windsor (Ontario) this August to give a joint presentation on how much more effective the industry’s approach could be to the problem of metal theft.

We have worked with a company called MicroDotDNA (Leduc, Alberta) that marks material. Sometimes the mark is visible, other times it’s not. Once you are able to specifically identify material, there is some chance of being able to get a conviction in court. Right now one of the major difficulties is that with pieces of copper tubing, one looks just like the other. MicroDotDNA has a system that [can help prove ownership]. It also is a major deterrent. For instance, a hydro substation would use posters to indicate that their material and their premises were protected by this system, and we in the scrap industry would have a similar poster that says we were investigating for MicroDotDNA on incoming material. Now it doesn’t stop all of the problems, because the larger the theft, the more likely in our opinion that it is going to be put into a container and shipped overseas; it doesn’t stay in the local economy or the North American economy.

In Canada, our privacy laws seem to be considerably stronger than they are in the United States. We cannot have finger printing of people who sell material [to scrap yards]—that is not likely to happen. A number of court cases have resulted in overturned regulations. For example, in Ottawa as the result of a court case, the privacy commissioner for Ontario wrote to the city of Ottawa and said the bylaw needed to be changed and told the police to destroy their database [on scrap sales]. I suspect there will be similar court cases because the rights of the individuals, one would argue, are very much being infringed on by co-opting our industry as an arm of the state by collecting data for police.
 

RT: The U.S. has left the matter of electronics recycling to the states to legislate, with the majority selecting the extended producer responsibility approach to funding such programs. What approach is Canada taking?

LS: Extended producer responsibility (EPR), absolutely. We probably have about 50 to 80 of these programs, not all for electronics, but the vast majority is for electronics. They are in five to seven of our provinces. The trouble is, we feel that they have missed a golden opportunity and they have the wrong focus and the wrong sectors doing the wrong things.

We have to ensure that they don’t put programs in place where they don’t have to. Electronics need such programs right now because they are not being collected properly and there is a great mountain of material being created.

However, we are hearing that they want to look at white goods—fridges, stoves, etc. We’ve been managing white goods for years. There is no need to introduce products that are already being managed properly. That is our first condition: when it’s necessary.

Next, I am unaware of any program that has come into place that has a “sunset” clause that says five or 10 years down the road, when this becomes a commercial operation, we don’t need this program [any longer].

Every program—and we have yet to see one that does this—should focus on designing the product at the front end so that it minimizes environmental impact and maximizes material recovery. Now, the manufacturers or first importers who become the stewards are getting together in groups and designing a collection or recovery program; they don’t have the expertise in that area and they are not consulting with the waste and recycling industries that do. They are wasting their own resources, i.e. their product designers and engineers, and they are not focusing on that side of it. There is not a single program that we’re aware of that gives an incentive for a manufacturer to come up with a better design. In fact, you could argue that it is actually the reverse—the incentive is to do nothing—because the greatest financial burden for recycling falls to the company that sells the most units. If a manufacturer comes up with a wonderful idea that doubles its sales because it is an environmentally improved product, that manufacturer ends up having to pay more into the system. The focus is completely wrong—these guys should be rewarded. The manufacturers are looking at the wrong thing, i.e. collection systems, and not looking at what they should be doing.

We have a major issue with regard to whether the cost of recycling is printed on the receipt when you buy a new computer. Our argument is no. One, it is another cost to doing business that should be internalized, just like transportation. The reason for that is twofold. People associate that cost with a tax. Taxes are not good, therefore recycling is not good. You are creating a stigma against recycling, which is not helpful. The second thing that we argue is, if you are going to put that cost on the receipt, then please put the cost of not recycling it, i.e. throwing that device into a landfill and then getting the same materials that you could have recovered through recycling out of the earth. You’d have to use primary materials, so you are going to have all the extra energy, all the extra effluents that go into the water, the creation of greenhouse gases, etc. So you are obviously going to get a much more massive fee for not recycling. At least then it would educate people on the benefit of recycling.

The last issue that concerns CARI is the government’s use of flow control—this is happening in Ontario in particular. In Ontario, the province has been split into four sectors. There is an 18-month bidding cycle and one to four winners will be announced, though there could be 20 companies that technically are qualified, have been audited and could handle material properly. The winner gets 60 percent of the pie, and No. 2 gets 30 percent and No. 3 gets 10 [percent]. Everyone else is competing at a cost disadvantage if they stay in the business. If you are a big company and you win this time, are you going to spend to double your production and put in a new shredder if in the next 18 months you could end up in third place with only 10 percent or even worse not win one of the three bids? This type of approach leads companies to manage a system … with no innovation and competition.

I use the automobile industry as an example. It was not Ford Motor Co. or any of the motor companies that came up with the [auto] shredder and all of the downstream systems to separate materials; it was the recycling industry. And if they would just set the scene, qualify people and let the marketplace work, you would find that the problem would be solved so much more quickly and better over time.
 

RT: How would you describe Canada’s electronics recycling infrastructure? Are there enough recyclers to service the need?

LS: We have that age-old problem of remote areas. But if you take those out of the equation, then 50 percent of all of our recycling in Canada occurs in the province of Ontario. That is generally concentrated between Hamilton and Oshawa and goes right across the top of Lake Ontario and through Toronto. That area is very focused. Then the next biggest would be Quebec, which accounts for 25 percent of Canada’s recycling, and that is in two major centers—Montreal and Quebec City. Next would be B.C. (British Columbia).
 

“In addition to consolidation on the part of consuming industries, particularly the steel industry, there also seems to be a thrust right now toward integration downstream into the scrap industry because their raw material is there.”

It is no different from the other industries that we have. We don’t have population in the prairie, we don’t have a large population in the Maritimes, etc., so they don’t have the industry to be able to recycle to the same extent as downtown Toronto. Certainly if you get into the very remote areas like Yellowknife (in the Northwest Territories) and whatnot, that is an issue. Right now the focus is certainly on the major population centers with the EPR programs. Then you’ve got the commercial side of it and the residential side. It is exactly the same as the States, except that I don’t think there are as many remote issues and they don’t have as many electronic product stewardship programs.
 

RT: What issues do you feel will most shape the Canadian recycling industry in the next five years?

LS: There are two that I think of when asked to do my crystal ball gazing. I still see consolidation going on in the industry on the consumer side. I don’t think we’ve seen the end of consolidation in the steel industry worldwide, and that impacts what goes on in Canada.

In addition to consolidation on the part of consuming industries, particularly the steel industry, there also seems to be a thrust right now toward integration downstream into the scrap industry because their raw material is there. We have seen this happen. I don’t think that is finished yet. You’ll see more of that rather than less.

I came out of the steel industry, and it goes through these cycles. A new CEO believes it’s necessary to go back to basics: “We make steel and that is it. We need to get rid of everything else.” And the next guy comes in and says, “No, no, no! We need to ensure that we have our supply and we need to ensure that we’ve got our customers. So they make acquisitions downstream as well as upstream. It is a constant in and out. I don’t think that is finished.

At the same time, I think that affects the ability of scrap dealers to deal with the steel mills. I think you are going to see more consolidation in our sector as well. Obviously, American Iron and Metal and Schnitzer out West are companies that have recently been buying other companies. I think you will see a move to fewer but larger scrap dealers.

Then the other major thing—again, it’s no surprise—is the changing trade patterns. A decade ago, I would have told you that 90 percent of our material was involved in south of the border trade, both import and exports. Now it is probably under 80. Even some of the material—and I have no way of knowing what that figure is—that goes down to the States is shipped offshore, in particular from the West Coast. And that is because of the emergence of China, India and other Asian countries. That is not going to stop any time soon. In fact, it is going to go on for quite a while before we hit another equalized level of activity.
 

Online Extras

CARI’s Initiatives

Len Shaw, executive director of the Canadian Association of Recycling Industries, talks about the initiatives his group is working on. Click here to read more.