Paper Recycling Supplement -- Side Orders

Recyclers don’t have to be in the business for very long before they experience a down market. Such a market is usually associated with falling prices, although the reduced generation of material and severely declining demand also are sometimes part of the down cycle picture.

It can be much tougher to make a profit during such markets, and the morale of both managers and the workforce can suffer.

Although it is far from a cure-all, one way some paper recyclers have tried to stabilize their companies through the down cycles is to create additional revenue-generating areas of the business.

At the 2002 Paper Recycling Conference & Trade Show, held this past summer in New Orleans, David Powelson, who is president of Tri-R Systems Corp., Denver, and director-at-large of the Paper Stock Industries (PSI) Chapter of the Institute of Scrap Recycling Industries Inc., moderated a session featuring speakers who discussed some of the different opportunities available to paper recyclers.

In his introduction to the session, Powelson noted that at the time, paper manufacturers were in a state of decline. Although recyclers were enjoying higher prices paid for secondary fiber, paper companies were unable to pass those cost increases on to their customers.

Given the troubled state of their mill customers, recyclers might be wise to look for additional sources of income by "diversifying into other profitable areas," Powelson remarked.

Cory Tomczyk, president of Industrial Recycling of Wisconsin (IROW), Mosinee, Wis., started diversifying his business when he began to offer industrial paper generators waste audits. "You’re not just looking for recyclables, but also to determine how effective their current [waste and recycling] programs are," Tomczyk explained.

An additional service Tomczyk provides is the re-filling of printer and copier toner cartridges. His interest initially was raised when he found one of the cartridges on the IROW paper sorting line, and then a few days later saw a magazine ad promoting a cartridge re-filling (also called re-charging) service.

Tomczyk subsequently started Image Charge, but eventually determined that the "drill and fill" re-charging method he was using had an unacceptable failure rate. "Eventually, we stopped doing our own work and contracted out."

The creation of the business has worked out well, says Tomczyk. "We can work our current IROW contact list for Image Charge customers, and we’re also getting paper recycling customers who started out as Image Charge customers."

For a reflection of one company’s efforts to branch out, one need look no further than the name. Balcones Resources, Farmers Branch, Texas, was until recently known as Balcones Recycling.

Kerry Getter, an officer with the company, noted that the company’s shareholders became aware of the fickle fortunes of the paper market after the fall 1995 collapse of secondary fiber prices. "We made a lot of money in 1994 and 1995, and then gave a lot of it back in 1996," he remarked.

Over the past six years, the company has entered several new ventures, including making recycled-content products, starting a paper-related Internet auction site and entering the hauling and transloading business.

In the manufacturing sector, the company currently produces several types of products from plastic materials and paper grades that are not wanted by mills. Getter noted that companies that make diapers and other personal care products have a byproduct stream that is extremely difficult to recycle in traditional markets.

The Balcones Innovations division has created markets by developing a method of separating the core ingredients found in diapers and using the reclaimed clean materials in custom products designed by Innovations. Those products include moistened towels used by the dairy industry to keep milking cows hygienic and absorbent products used to soak up small industrial spills.

"You’ve got to be willing to try new things," said Getter. "It’s clearly been well worth it. It has served us well and our customers well."

One of the most common side businesses for paper recyclers has been the document destruction business.

Tri-R Systems Corp. moved into this area with the creation of DataGuard USA. Mike Tingle, who heads up DataGuard operations for Tri-R, told Paper Recycling Conference attendees, "Hard times and diversification seem to go hand-in-hand. The need to adapt is clear; exploiting it is the test."

The emergence of identity theft and corporate espionage have helped fuel the growth of the document destruction industry. "Regrettably, criminals now mine our dumpsters," said Tingle.

The trends have not gone unnoticed, as the number of document destruction companies operating in the U.S. has grown from 545 in 1999 to 675 last year, according to Tingle.

Tri-R sees the division as a way to secure material that otherwise might not make it to the recycling stream. Recyclers in a position to capture that material through a document destruction division as generators understand their security obligations will benefit.

"With traffic snarls in major cities and a lack of qualified truck drivers, getting material the ‘last mile’ to the packing plant has become more difficult," he commented.

The author is editor of Recycling Today and can be contacted via e-mail at btaylor@RecyclingToday.com.