Deeply rooted

San Francisco-based Recology is an employee-owned company with a mission to rid the world of waste. According to the company’s CEO and President Michael J. Sangiacomo, Recology’s roots in recycling and waste diversion can be traced back to the Gold Rush era in San Francisco and to the city’s Italian emigrants, who scavenged through refuse to recover reusable materials.

ROOTED IN RECOVERY

Sangiacomo, a descendant of one of these emigrants, says loose confederations of these scavengers began forming in 1906 following an earthquake and fire that killed nearly 500 people in San Francisco. By the early 1920s, two companies dominated the field: Sunset Scavenger Co. and the Scavenger’s Protective Association (the predecessor to Golden Gate Disposal & Recycling Co., which emerged in 1965). In the 1930s, these companies were given exclusive refuse collection licenses by the city of San Francisco. (Recology still holds these licenses today.)

Sunset Scavenger changed its name to Envirocal in 1973, while Golden Gate Disposal adopted the name Norcal Solid Waste Systems in 1983. During this period, the companies also developed resource recovery techniques and expanded their services.

Norcal’s 570 employees bought the company in 1986 through an employee stock ownership plan (ESOP), continuing a 60-plus-year tradition of employee ownership. Envirocal also began looking into creating an ESOP around the same time.

Norcal acquired Envirocal in 1987, forming what it describes as one of the country’s 10 largest 100-percent-employee-owned companies. In 2009, Norcal changed its name to Recology, which the company says better reflects its culture and commitment to sustainable practices.

Recology offers refuse collection, recycling, composting, transfer station and landfill operations and environmental services to 135 communities in the western states of California, Oregon, Washington and Nevada. The company operates approximately 40 facilities, primarily in California and Oregon, many of which specialize in recycling and composting.

Throughout its lineage, Recology has claimed a number of waste and recycling industry firsts, including the first pilot curbside composting program in the U.S. in 1996; the first mandatory curbside compost collection program; the use of split-body trucks to collect recycling and garbage in 1999; the opening of a large-scale transfer station in 1970; and its Artist in Residence program, which it established in 1990. (See the sidebar “Resident Artists”.)

Sangiacomo says Recology and its predecessor companies always have prioritized recycling and waste diversion over waste disposal. “This company has always done a lot of recycling because that is how we started,” he says.

DIVERSION AS A PRIORITY

In 1989, California passed The Integrated Waste Management Act, which required each city or county to include an implementation schedule to divert 25 percent of all solid waste from landfill or transformation facilities by Jan. 1, 1995, through source reduction, recycling and composting activities. By Jan. 1, 2000, that figure was supposed to grow to 50 percent.

“We were well on our way to do that through recycling efforts,” Sangiacomo says of the communities Recology was serving at that time. “We were at 25 percent when they passed the law. But we knew that we had to do a lot of things differently to hit 50 percent.”

As a result of The Integrated Waste Management Act, Recology began looking into recycling construction and demolition (C&D) debris and composting food waste to further the diversion rate for the communities it served, he says.

Today, the company is known for being an innovator in the area of organic waste as well as in curbside recycling, having established San Francisco’s residential recycling programs in the late 1990s.

Regarding Recology’s initial foray into composting, which includes collection and processing, Sangiacomo says, “We learned a lot about how to do it wrong and finally figured how to do it right.”

He continues, “It is something we really led the way in in the waste business and probably do more of than anybody our size,” Sangiacomo says, adding that Recology is handling in excess of 2,000 tons of organics per day, five days a week. “That’s a lot of rotten food. It’s yard waste as well, soiled paper—anything that breaks down in a compost operation.”

He says the resulting compost is in high demand. It also is one of the innovations that Recology is proudest of, Sangiacomo says, noting, “It can replace a lot of chemical fertilizers.”

Composting is a necessary service for Recology in California, given the state’s diversion mandate. “Most of our California communities, at least, need us to do a lot of things,” he says. “Once we figured out how to do the composting operation and established some facilities where we could do significant amounts of it, a lot of communities wanted to add that activity.”

Recology offers composting services to the communities it serves in Oregon because of the level of interest it has seen in that state. “We are looking to do it in Washington, we just don’t know where and how yet,” he says.

The company’s Recology Products division markets all of the prepared materials, ranging from traditional recyclables to wood chips to compost (some of which the company custom blends for its customers), which amounts to more than 1 million tons annually. In total, Recology Products sells 40 to 50 different commodities, he says.

MARKET REALITIES

For some of the commodities Recology markets, Sangiacomo says, “Pricing isn’t as high as we’d like; it certainly isn’t as high as it historically was.” However, he adds that the company has no issue selling the commodities it produces.

“We buy very little for the purpose of reselling,” he says. “We are recovering material from residential and commercial bins, so anything we can take out and sell is a good thing for us and helps our communities achieve their diversion goals. But we are paid for picking those materials up in the first place. We need the revenue [from commodity sales] to cover some of our operating costs and some profitability, but we probably are not in as bad a shape as people who have to buy and who cannot find markets for material—that’s not us.”

The wood waste the company handles is a source of concern, however, Sangiacomo says, adding that the traditional biomass energy market is disappearing.

He says the biomass energy market is being affected by regulators’ changing preferences for alternative energy sources in a number of large states in the West. “California has been leading the way in solar and wind. The old standby of wood-powered energy plants don’t have the same regulatory preferences that they used to have, so people aren’t investing in keeping the technology up to date,” Sangiacomo says. “A lot of the plants are actually closing because people don’t think they can compete in the world of solar and wind.”

He explains how these biomass-powered energy plants originally were introduced to alleviate the in-field burning California’s agricultural industry engaged in to get rid of woody debris at the end of the growing season.

“Once the government out here realizes that farmers may not have a lot of options other than open-field burning again,” Sangiacomo says, “they will come back around. But it is going to take a year or two.”

Regarding traditional curbside-collected recyclables, he says pricing may soon improve. “I think we are going to see a little bit of recovery as we go into spring and summer,” Sangiacomo says, citing demand in the U.S. and other areas of the world.

However, he predicts that demand from China will remain softer going forward. “It is not going to prevent material from being sold, but it is going to keep pricing down from its previous highs,” Sangiacomo says. “And I think that is probably going to be the case for a while.

“We participate in a world economy for those products, and the world economy is in a different mode now than it was a couple of years ago,” he adds.

This brings up the larger issue of recyclers’ business models. Sangiacomo says, “Rates need to cover the costs of recycling services—there is a misconception that the service is provided through commodity sales; that has never been true. When we partner with our franchise communities, we work to ensure that rates reflect the true costs of recycling and anticipated revenues from commodity sales.”

He adds, “We have found that these partnerships are most successful in communities where there is an inherent environmental ethos. We are fortunate that this way of thinking is prevalent on the West Coast where we operate.”

Regarding global trade, Sangiacomo says Recology is tracking what is going on in China to determine if consuming industries there are going to be significant buyers for the long term. The company also is working to develop relationships with consumers in other countries to make sure Recology has outlets for the materials it produces.

“When you are in the municipal solid waste business, you don’t have the luxury of saying, ‘We don’t want your stuff today.’ Stuff is going to come, and we will need to do something with it,” he says.

“We will do our best to find the best markets we can for everything we produce,” Sangiacomo continues, “recognizing that some of the places might want stuff that is a little different than what our traditional markets have taken, and we may have to modify processing in order to accomplish that.”

DIGGING MORE DEEPLY

One of Recology’s guiding principles is to help like-minded communities find ways to put materials back to the highest and best use. That includes finding solutions for difficult-to-recycle materials. “We are constantly looking for things to do with more materials,” Sangiacomo says.

But the company’s efforts to help communities achieve a high degree of waste diversion don’t stop there.

“We are trying to do more processing of mixed waste to recover both recyclables and organics,” he says. “We are trying to get more municipalities as customers, which means we have to look at what their waste consists of and make sure that we can process it properly. And we have to look at who the buyers are. We have shifted a significant amount of material away from traditional purchasers into some other communities, and I don’t think we have had to make huge changes in the way we process material to deliver to those locations, but there have been some.”

Regardless of the consuming destination, Recology will continue to emphasize quality, Sangiacomo says. “Recognizing that if we don’t have good quality products, they might not sell, we want to make sure for the buyers of the material that we produce that we are the first choice. We are making darn sure that the product is really clean. We do spend extra effort to do that.”

He says this extra effort takes the form of placing an extra person on the final run to make sure all contaminants have been removed and taking the time to dress bales.

Sangiacomo says Recology continually is looking for ways to improve what it is doing. “You rest on your laurels and think you’ve got it all beat now,” he says, “and you won’t be sitting in that seat very long.”

The author is managing editor of Recycling Today and can be contacted at dtoto@gie.net