A Maturing Infrastructure

As recycling markets boom, processors are expanding and investing money.

In the recycling industry today, we are seeing healthy revenues for private recycling processors being reinvested as the recycling infrastructure matures and heads for long-term sustainability. Collection programs are changing, too, as communities expand the range of materials being picked up and seek efficiencies in solid waste and recyclables collections.

Let’s review and examine these issues to get a better understanding of just where the post-consumer recyclable market is trending.

FACILITIES GROW

To start, paper stock dealers and MRF operators are expanding facilities or upgrading equipment around the country. Some firms are being assisted by public sector programs, while others are self-financed.

High price levels and demand for paper fibers, for instance, are spurring paper stock operations from Los Angeles to New York to add processing lines or upgrade existing equipment. "Prices are fueling expansion in the private sector," says Joan Edwards, now in private consulting but formerly head of the Los Angeles Integrated Waste Management Board and director of the New York City recycling program.

Balers and conveyor systems have been hot sellers, according to manufacturers like Mayfran International, Cleveland. "Business has been fabulous, and we’re looking for it to continue to grow," says Dick Merrill, vice president for sales and marketing.

"Demand for fiber from mills is driving the demand for recycling processing systems," continues Merrill. "We’re providing systems to merchant MRFs and are working with Waste Management to supply the equipment for Chicago’s blue bag co-collection facilities."

"Everything is going nuts," says Tracy Proulx, director of marketing for the Marathon Equipment Co., Vernon, Ala. Marathon products have found their way into several large MRFs and paper stock generators. "If we could produce more we’d be able to sell it," says Proulx.

MRF expansions include Prins Recycling, Fort Lee, N. J. Since its public stock offering in 1993, the former paper brokerage company has built a 500-ton-per day MRF in Charlestown, Mass., near Boston and has entered into MRF management contracts in Pittsburgh, New Jersey and Maryland. Most recently, the company acquired a paper stock firm, Paper Chase Exchange Inc., in the Chicago area.

"We’re definitely in an expansion and acquisition mode," says Marc Shaener, Prins’ chief operating officer. "We have the capacity to handle about 50,000 tons per month right now, and we plan to at least double that in the next two years." Currently, the company’s focus is on the East Coast, but Shaener says Prins hopes to go nationwide as opportunities present themselves.

"We aren’t limited geographically," continues Shaener. "Our formula of high-volume operations and a range of service options meets the needs of residential recycling programs around the country. We see untapped materials such as mixed paper, aseptic containers and aerosols that communities can collect and we can process."

State and local governments are directly and indirectly aiding these expansions. In Virginia, a five-year-old program to provide tax credits for recycling equipment has approved potential credits of more than $12.8 million to 141 companies on equipment purchases worth $128.8 million. The credit on a company’s state income tax is equal to 10 percent of the original total capital cost of the equipment, according to Bob Nicholas of Virginia’s Department of Environmental Quality.

"The credit is offered as an incentive to reward the processing of collected recyclables or the manufacture of products with recycled content," explains Nicholas. "Companies taking advantage of the program have come from all over the state and represent the wood processing, scrap metals, steel, paper, tobacco, carpet, paper, plastics, automotive, poultry and asphalt industries.

"Dollar-wise, I’d have to say paper equipment has received the most credits, though plastics has been coming on strong lately," continues Nicholas. Applications pending as of May 8 totaled more than $45 million, and eligibility for the program has been extended by six months, to cover purchases to July 1, 1996.

Localities can piggy-back on the state program and also offer a tax credit of their own, Nicholas says. "Five counties have passed ordinances allowing for an exemption from personal property taxes at the local level, and several more are interested in this element of the program."

Not all states use tax credits. California and Indiana have low-interest loans available, while Minnesota, Wisconsin and Illinois provide grants, primarily to local government. In Minnesota, for example, increasing volumes at the Ottertail County MRF in the northwestern part of the state required a new, larger facility, and the state stepped in with $975,000 from its CAP grant program.

"CAP grants can cover up to 50 percent or $2 million of eligible project costs, whichever is less," says Chris Cloutiur, market development specialist with the Minnesota Office of Environmental Assistance. "For Ottertail County, the processing capacity more than doubled from 2,000 tons per year to about 4,700 tons per year with the new $2.1 million MRF," says Cloutiur. Only county-owned processing plants are eligible for the grants, but these facilities may be privately operated, according to Cloutiur.

Through a 6.5 percent state tax on refuse collection, the 87 counties in Minnesota have another vehicle that can strengthen the recycling infrastructure. "Proceeds from the tax are passed through to local governments based on population," says Cloutiur.

Totaling $16 million every two years, counties "can use these funds in any way related to recycling and household hazardous waste management," Cloutiur says. One method used by some counties is a revolving loan fund for local businesses.

PAPER COLLECTIONS EXPAND

Prices may have softened from the high levels reported earlier this year, but "the demand is out there for paper from municipalities," says one East Coast paper dealer. "Mills today depend on municipalities for supply. This is a market that has been created and is here to stay."

Interest by mills in using more paper collected by localities is also strong in the Northwest, according to Andy Sloop, market development associate for the Portland Metro solid waste department. "There’s strong demand for all types of fiber, and this is magnified in the Northwest by the offshore market and the low U.S. dollar."

"A year ago, nothing was being done in North Carolina with old magazines (OMG) or mixed paper," says Bobbi Tousey, manager of North Carolina’s Recycling Business Assistance Center. "Today, there is demand not only for the office grades, but also continued pressure on the lower grades – newspaper, magazines and corrugated – and we’re seeing some expansion in collection."

"For local governments and other generators who are tied to a price index, the financial benefits are there, and they are helping to cover the cost of recycling programs or actually making money," continues Tousey. "For example, the Eastern Carolina Vocational Center projected revenues of $800,000 in fiscal year 1995, and the actual figure is about $2.6 million," she says.

MIXED PAPER

The change in municipal thinking about what paper to collect is best illustrated by the increase in communities accepting residential mixed paper (RMP). While definitions vary, there is considerable activity to go beyond old newspaper (ONP)-only programs.

"Mixed paper is hot," according to Harvey Gershman, principal of the solid-waste consulting firm GBB. "We studied five communities – Cape May County, N.J.; Islip, N.Y.; Napierville, Ill.; Seattle; and Baltimore County, Md. – from 1992 to 1994, and saw significant increases in material being recovered per household. The number of programs targeting mixed paper has definitely grown. In 1992, there were probably 30 communities operating some type of RMP program, and now that number has to be much greater." Some industry analysts put the number at more than 100.

Examples of some recent programs expanding the types of paper collected can be found across the country. In Orlando, OMG and gable-top containers were added in June; while in Texas, 12,000 to 15,000 households in Houston will be recycling RMP by late summer. In the Midwest, Milwaukee included OMG in June of 1994 and added OCC six months later. Back east, the University of New Hampshire began marketing mixed paper from classrooms and offices in February, using the cooperative marketing program of the North East Resource Recovery Association (NERRA).

North of the border, metropolitan Toronto is reported to be expanding its curbside program, and "some, if not all the things called ‘mixed paper’ will be included," says Jeffrey Morris, president of Sound Resource Management Group in Seattle.

DROP-OFF PROGRAMS

For many curbside programs, RMP is an add-on to the existing materials collected. Space in collection bins and trucks is available, and can be used to divert more material from disposal at little extra cost. Drop-off programs sponsored by the private sector are also part of the RMP wave.

In some cases, the demand for more fiber by mills has led to a broadening of paper accepted. Ed Chen, deputy assistant director of the recycling division for the City of Houston says that "in the greater Houston metropolitan area, Champion Recycling has placed more than 800 collection boxes and accepts ONP, OMG, paper bags, catalogues and other paper types.

"The bottom line is that they [Champion] need the ONP and OMG to feed their deinking mill in Houston," he continues. " They’re prepared to accept these other materials and pay the same rate that they did when only ONP was allowed."

Other drop-off programs are serving the traditional fund-raising function, now that market prices are up. In San Diego, a pilot program of 42 drop-off sites at parks and recreation facilities has proved successful in generating $60,000, which is sent back to local community councils, according to Kip Sturdevan, recycling program manager for the city. "We’re pleased with the revenues that have been generated in the pilot program, and are now discussing a similar program with the fire department."

An initiative supported by the Baltimore-based Canusa Corp. in Washington, D.C., combines paper recovery and fundraising. "We are looking at drop-off sites as a new source of fiber," says Margaret Abbot of Canusa. "In D.C. we have three sites where the site sponsors get the proceeds and we market the paper."

NEW RECOVERY METHODS

Paper mills, processors and public officials are also looking beyond conventional curbside and drop-off programs to increase fiber available for industry and divert additional material from disposal.

The Ohio Institute of Advanced Manufacturing Sciences (IAMS) has been working in a combined effort with paperboard mills, haulers and local governments to get more RMP and office paper to the mills.

"There are 10 mills within 100 miles of Cincinnati that make paperboard and need more supply," says Ken Stern of IAMS. "We’ve facilitated three meetings during the past year in Columbus and Cincinnati to get the parties together to focus on how to create a win-win solution. We have mills that need paper, we have communities that want to recycle more but can’t afford to pay more, and we have franchised or contracted private haulers who are looking for profitable collection programs.

"We’ve made a lot of progress and I think that the significance of the issue is underscored by the presence of mill managers at our meetings," continues Stern. "We think we’re on the right track. In fact, we’re encouraged enough to be planning to take the program to other cities like Dayton and Toledo."

At the individual mill level, companies are initiating new arrangements to obtain more fiber. Speaking at the Wastepaper VI conference in Chicago last May, Larry Harris, president of Converters Paperboard Co., Rockford, Mich., stated that his mill is looking at several strategies to help deal with high prices and demand for paper. One approach focuses on local collection efforts. "We are exploring community collection programs, dealing with local charities and various civic groups that collect the types of recovered paper that our mill can use," he says.

"This could be beneficial from a logistic standpoint," continues Harris, "due to the close freight proximity to our area, while at the same time educating the local community as to the needs of recovered fiber for a recycled paper mill."

BULKY MATERIALS

Communities are also seeking creative ways to improve recovery levels at low or zero cost. Bulky items such as lumber, tree limbs, small appliances, white goods and other types of scrap metal have the potential to add tonnage – if they can be collected cost-effectively.

A pilot program to collect scrap metal items in the Flushing/Bayside area of New York City began in May and has so far "worked out quite well," according to Robert Lange, the city’s recycling program director.

"The pilot is in a sanitation department district that uses side-loading collection vehicles for refuse. Historically, residents have called in to request a pick up for items that are too large to be handled by the side-loaders, requiring a dedicated truck to be scheduled," explains Lange. "Now people are setting out ferrous and non-ferrous scrap such as bed frames, appliances and lawn furniture to be collected with the bottles and cans on the recycling truck. We haven’t had any operational or processing problems and we’re getting an extra 1 to 2 tons per truck on the recycling side. We’re also cutting down the number of calls for bulk service."

Another big-ticket item is scrap wood. Houston’s recycling program found that it could divert about 50 percent of its heavy and bulky item waste by having wood sorted from loads at the private landfills where city material is disposed.

"Our woody waste recycling program will be diverting wood for use as mulch, compost, soil amendments and boiler fuel, without costing us anything more," says Houston’s Chen. "The city doesn’t have its own landfill, and has contracts with three vendors to take our heavy or bulky materials.

"Since this past April, our vendors have been pulling out tree limbs and other wood, and we are paying the same tipping fee as before," continues Chen. "In a climate like ours, we have a year-round growing season and this program will divert 40,000 to 50,000 tons of recyclable wood per year. It could raise our recycling rate from 6 percent to maybe 15 percent or 20 percent."

THE TOUGH STUFF

Continued attention has focused on improving the management of household hazardous waste (HHW) and on developing programs for the harder-to-recycle materials, such as tires and construction and demolition debris.

"We’re considering different materials, and want to help local governments innovate," says Minnesota’s Cloutiur. "This year our county grant and loan program, for instance, specified HHW and problem materials. Through a competitive process, we are spending $113,000 to fund three projects. These focus on HHW, antifreeze and latex paint. This type of program will help build an infrastructure to manage these materials that counties might not be able to develop any other way."

Scrap tires, another perennial problem area for municipal waste managers, are being attacked from both the collection and market development sides, as a grant program in California attests.

California’s Integrated Waste Management Board recently announced awards of $700,000 to businesses and $657,000 to local governments. Ten companies are to receive grants that will assist in the research and development of new products and technologies. Twenty one local governments, on the other hand, are being funded to establish clean-up events and collection programs, purchase equipment, provide education and develop markets.

Recovery of construction and demolition materials is limited by markets and collection issues. "Unlike paper markets, we still need plenty of end-users for C&D materials," says Tousey in North Carolina. "We’re working with a recycler of gypsum wallboard, for example, since a number of companies here manufacture modular homes. This company makes soil amendment and cat litter products from the wallboard."

PLASTICS CHALLENGE

Like scrap paper, post-consumer plastic resins have seen high prices and tight supplies. Collecting and getting HDPE and PET to markets, however, has proved more difficult than dealing with ONP or RMP.

"Higher prices for virgin and recycled resins aren’t resulting in increasing supply," according to Michael Alexander, policy analyst with the Northeast Recycling Council (NERC). "I haven’t seen a significant change in collection programs here in the Northeast. We have an over capacity to process but an under supply of plastics being collected. I think that the plastics industry has a way to go to convince municipalities that they’re committed over the long term."

"Plastics is like gold," Tousey says in North Carolina. "Several companies want to come in, but the supply is not up there where we want it to be."

Part of the problem for post-consumer plastics recycling is the very attribute that makes plastic a favored packaging material: it’s lightweight. Members of Virginia’s Recycling Markets Development Council have looked at plastics recycling, according to Van McPherson, chair of the council. "Our plastics subcommittee found that the most critical barriers are logistics, geography and the high cost of collecting and moving non-compacted recyclables in waste management vehicles rather than baled materials in tractor trailers or railcars."

Some communities "have bitten the bullet" in plastics collection, says Peg Boyles, marketing manager for NERRA. "Collection has always been a problem with plastics. Our members have done it and we’ve seen a steady growth in volume." However, she adds that, "it’s too early to say whether the increases in price are flowing through the system."

An innovative project in the mid-Atlantic states hopes to tackle some of the stubborn barriers to PET recovery. The Mid-Atlantic Consortium of Recycling and Economic Development Officials (MAC/REDO) is planning a model program of collection, processing and end-use, according to plastics committee chair Vince Tarentino.

The group has applied to EPA Region III for assistance, and has been planning the project since late last fall, says Tarentino. Through a demonstration project, MAC/REDO hopes to establish a model of efficiency for communities to use in adding PET or other materials to collection programs. The model will be developed by bringing together local recycling officials, plastics reclaimers and end-use manufacturers. The need for stronger public education and more effective inter-municipal cooperation are key issues, according to Tarentino.

INFRASTRUCTURE EFFICIENCIES

Higher revenues from the sale of recyclables are helping recycling budgets, but local officials need to find ways to reduce costs, says New York City’s Lange. "High collection costs are a real impediment. To the extent we can keep down costs, the long-term health of municipal recycling programs will benefit," says Lange. With higher rates of diversion for recycling, some municipal refuse collection costs have gone down. Other programs have privatized services and seen lower labor costs.

In New York, possible privatization of city services, including solid waste management, was an issue in the last mayoral election in 1993, but to date the city hasn’t pursued this strategy, local observers say. Instead, the recycling program is seeing gains through such programs as the bulk metal program, and a streamlining of refuse and recycling routes.

For instance, in October the city plans to trade a trash pick up for a collection of RMP. "One of the city’s 59 community districts requested that the city reduce their trash pickup from three times per week to two, and add RMP to the recycling stream," says Lange. "And the program is going to be largely self-funded."

By using automated one-person refuse collection trucks, Houston is increasing its yard trimmings collection service from 12,000 households to 72,000. "Going from having two or three workers per truck to an automated system for trash is allowing us to operate separate yard materials collections," according to Chen.

Los Angeles studied the impact of recycling collection and has conducted a major re-routing exercise, which has saved the city money, Edwards says. "The potential for additional communities to see productivity gains is a real one. Recycling collection is getting more mainstream and more efficient. I think that there are a number of cities out there that have implemented automated truck programs over the past five years that could take advantage of the fact that recyclables are being diverted from trash collection."

GBB’s study on RMP programs identified this area as part of a larger trend in solid-waste management, which recycling is also experiencing. Traditional approaches to refuse collection are being challenged by demand for increased services, economic factors, new technology, added regulatory controls and separate management requirements for specific components of the waste stream, according to the firm.

"Conventional recycling programs are also going through a similar transition, as more cost-effective collection methods are being demanded, and more materials are being added to recycling programs, resulting in greater diversion from disposal," says Gershman.

PRIVATIZATION

Most of the attention for privatization has been on refuse collection operations. In its third annual report on recycling in the nation’s cities, the Municipal Waste Management Association (MWMA), an affiliate of the U.S. Conference of Mayors, reported in March of this year that more and more cities are using alternatives to public trashand waste
collection.

"Of the cities that provided information about their residential collection systems, 39 percent indicated that residential MSW was collected by municipal crews. This represents a decline from 44 percent last year and reflects a shift to private collection," states the report.

In the same survey, however, MWMA found that the number of cities using public crews to collect residential recyclables had remained stable. According to the survey, about 30 percent of communities reported using public-sector workers, little changed from the previous year. Given that this is a lower rate than that reported for trash collection, perhaps privatization of recycling is already here.

The author is the recycling industry development project manager for the Maryland Department of Economic & Employment Development, Baltimore, Md.