Recycling Advances in the Northeast

Recycling is standing up to close scruntiny by budget-conscious elected officials, thanks to improved prices and strong demand by local mills.

With its high solid waste disposal costs and aggressive legislative mandates for recycling, the Northeast region has been at the leading edge of recycling-related industry initiatives and government problem-solving for several years.

This is, after all, the part of the country where the infamous Mobro garbage barge set sail in 1987, raising public awareness of solid waste issues nationwide. And after battering the storms of weak markets, economic recession and an inadequate recycling infrastructure, post-consumer recycling in the region boomed during the past year.

And all of this occurred despite the relatively mild economic expansion in the Northeast, compared to other parts of the country.

The region’s higher than average tipping fees, densely populated states and substantial reservoirs of commercial waste paper give the Northeast’s recyclers some advantages.

"Many companies using recycled materials as a feedstock are operating at or near capacity," says William Ferretti, director of New York State’s Office of Recycling Market Development. "They’re scraping the barrel for supply, a situation that was hard to imagine a couple of years ago."

"Among our 10 member states, recycling is in the best shape it’s been in since the wave of state recycling laws were passed in the late 1980s," echoes Michael Alexander, policy analyst with the Northeast Recycling Council.

But the dynamics of the marketplace and the political scene are keeping everyone on their toes. The need to find ways to recover more material and a changed political landscape are just two of the factors the recycling community in the Northeast has to look out for in 1995 and even beyond.

MARKETS. The Northeast followed national trends of steadily rising prices for paper commodities and peaks in the prices for PET and HDPE. "The fundamentals for all materials look good," says David Weitzman, senior vice president for Resource Recycling Technologies, Inc., a material recovery facility operator based in Vestal, N.Y.

"The need for raw materials was up across the board, and end-use manufacturers are operating flat out," agrees NERC’s Alexander. Indeed, one of the hallmarks of a rising market is its lack of boundaries.

"Paper markets are North American. When a mill in Quebec needs fiber, prices in Dallas go up," according to one paper industry consultant in the area. "It’s hardly a regional market anymore.

"Markets in the Northeast are typical — supply is tight, and efficient collection programs are reaping the rewards," the analyst adds.

In New York City, the Department of Sanitation saw the impact of rising prices on its budget for processing the City’s 700-ton per day stream of old newspaper, old magazine, old corrugated container and telephone directories.

"In July, the city was paying paper dealers approximately $25,000 a day for processing our paper collected at curbside," says Robert Lange, acting assistant commissioner in the Bureau of Waste Prevention, Reuse and Recycling. "Thanks to an index-linked contract, by October, the city was receiving $5,000 a day, and it has gone up from there."

From the collector’s perspective, residential mixed paper is a grade "that’s finally paying its way," according to Peg Boyles, marketing director of the Northeast Resource Recovery Association, Concord, N.H.

"We were ahead of the curve in providing a market to our participating municipalities for mixed paper. Our market accepts a loose mix of newspaper, old magazines, junk mail, boxboard — basically anything that’s not covered with foil or plastic.

"We’ve been producing it for two years, and now it’s paying its way," Boyles says.

Due to the demand for fiber, collection programs are broadening their intake. The Chittenden, Vt., MRF, which serves 16 municipalities, has recently expanded its operations to include direct mail.

"We checked with our market to make sure this wasn’t a flash in the pan, and the answer was no," says Barbara Winters of the Chittenden Solid Waste Authority. "Since January 1, when we started the program, we are getting $100 a ton."

High-density polyethylene led the plastics commodities. "Prices for HDPE went up over 100 percent in the last six months," says Weitzman.

"Natural HDPE prices have gone through the roof," according to another MRF operator in the region, Peter Karter, president of Resource Recovery Systems, Essex, Conn.

Aluminum — primarily used beverage cans — was collected at a record rate nationally, topping 100 billion cans. "I don’t see much difference in UBCs in the Northeast, except that the bottle bill system is the infrastructure for collection," says Andrew Rapkin of Wise Metals, Linthicum, Md.

"I think that the recycling industry in the Northeast did better than other industries as economic growth picked up in the region," says NERC’s Alexander. "Paper mills in the Northeast had growth rates of about a percentage point higher than other manufacturers," he continues.

Glass and ferrous metals were "very steady, dependable markets for our facilities," observes RRS’s Karter.

Glass consumers, according to Karter, are looking to improve the quality of feedstock they accept. "We’ve had no problems, but the specs are definitely tightening up. To stay ahead, we’re always looking at ways to improve the efficiency of our systems, and that includes moving with our customers’ requirements."

HIGH PRICES. Several market observers are concerned about the very cause of the joy among processors and municipalities: higher prices.

"No one can take these prices for granted," Boyles says. "Although they look like they are going to fluctuate at higher levels than in the past, in this market the competition is fierce. Hopefully, the destabilizing effect won’t be worse than in the past."

"The high prices for fiber are unsettling and perhaps unsafe," RRS’s Karter adds. "With OCC at $130/ton, I’m concerned that there is a false sense of security among municipalities and other processors. Higher prices may force paper companies back to virgin pulp."

Smaller companies may face a disadvantage in this climate, says Alexander.

"The small independent boxboard mills in the Northeast are finding that their raw material — OCC, number 6 news or mixed paper — has gone up in price as deinking and linerboard mills have come on line," he explains. "These companies may not be able to effectively compete for fiber."

Plastics recovery stubbornly refuses to increase, despite the soaring prices. Municipal governments, one state official says, are hesitant to add plastics. "The plastics industry has a long way to go to convince municipalities that it’s committed over the long term."

High raw material prices may have the unintended effect of shrinking the marketplace. "I suspect there will be a shakeout — a few plastics companies have folded already," says Karter.

"The [plastics recycling] system could starve itself to lower levels," Alexander adds.

With the nation’s second most active port -- the New York/New Jersey harbor, and several other major ports in the region, the export market is a significant — if unpredictable — element in the movement of recyclables. "We carried less recovered paper in 1994 than we did in 1993," says Rian Nemeroff, Account Executive in Conrail’s Forest Products Group.

"The reason is the impact of the export business," he explains. "We’re looking for modest growth in 1995 as the spread between trucking and rail costs widens, especially in the long haul market as truck prices escalate more than rail."

Exports of non-ferrous metals historically are felt first on the west coast, according to Wise’ Rapkin. "Prices east of the Rockies are usually two cents per pound lower, but due to export demand from Japan, prices have evened up in the last two months."

MORE RECOVERY. From plastics to paper, the resounding theme in the region is how to recover more material from the waste stream.

Future supplies for most paper grades indicate the need to find previously untapped sources of fiber and to more effectively collect material from existing generators.

For example, NERC’s Alexander has been tracking the region’s ability to meet voluntary agreements and laws in several states that require newspaper publishers to use increasing levels of recycled fiber in their product.

From 1988 to 1994, newspaper deinking capacity in eastern North America increased from .61 million tons to 2.49 million tons, according to NERC’s November report, Northeast Publishers’ Commitment to Purchase Recycled Newsprint: Status Report.

"This is a growth of over 400 percent," Alexander says. "Yet our analysis shows that by 1997 there may not be enough recycled content newsprint to meet the existing voluntary agreements and state mandates."

To address this concern, NERC convened a meeting in December with all the stakeholders, including state governments, publishers and newsprint manufacturers.

"That was a very good dialogue," says Alexander. "The state officials are committed to increasing ONP and OMG recovery, and will be looking at rural areas, areas that don’t have access to a curbside or drop off programs ... There is also an interest in focusing on commercial establishments like hotels and transportation hubs such as train stations and airports."

According to Andover International Associates, a paper industry consulting group, demand-pull from the mills is not to get ONP collected. "Recovery rates have to go up," says an analyst with Andover, "but we don’t see initiatives at the municipal level to do it."

Another paper sector in for a supply scramble may be office waste paper.

"Office waste paper is very interesting," says the Andover analyst. "With new deinked market pulp mills going up in Fitchburg, Mass.; Northampton, Pa.; Auburn, Maine; Hagerstown, Md.; Sanford, W.V.; and Perth Amboy, N.J., things are really going to get shaken up around here."

CO-OPS FACE CHALLENGES. Cooperative marketing, which got its start in New Hampshire 13 years ago, continues to be a strong factor in regional markets, though several failed co-ops in New York State offer lessons for how fragile such arrangements can be.

"Day to day, it’s one problem after another," notes NERRA’s Boyles. "But in our history, we’ve never had a load rejected due to the lack of a market and we’ve never charged a tip fee, even in the down times."

And while the NERRA cooperative is a voluntary one, Boyles feels that it benefits the marketplace as a whole. "Our members get clout — we represent a market of 780,000 people — and independence. No one has to use our services, and by our very existence those who don’t have greater flexibility and access to a more competitive environment," Boyles says.

In New York, the state Office of Recycling Market Development provided seed money to three multi-jurisdictional marketing cooperatives, only to see all three dissolve.

"Cooperative marketing can work, and does have a role," says New York official Ferretti. "We’re looking at our experience, and there are some lessons to be learned.

"The recycling managers with the co-ops were all competent, committed people. It seems to have a lot to do with local politics."

COURSE CHANGE. In contrast to the demand side legislation of the early 1990s, some state governments are now concentrating on supply side issues, looking at the most efficient methods to collect the materials that the expanded end-use markets need.

Other strategies include focusing on hard-to-market materials. New Hampshire’s recycling market development task force, in a report pending at presstime, concentrates its recommendations on three materials: source-separated food waste, glass and construction and demolition materials.

Massachusetts is dedicating resources to a wide range of market development programs. In the past year, the state was authorized to use half of approximately $10 million in unclaimed container deposits for market development. This doubled the funds available, according to Jeff Lissack, Director of Market Development for the state of Massachusetts.

"We’re developing a loan fund to assist recyclers leverage financing, starting with $350,000 this year and hopefully greatly expanding it next year," Lissack says.

Massachusetts remains committed to state buy-recycled efforts, with two staff positions in the state purchasing agency being funded through the market development budget.

Lissack also sees the need to work with existing recycling companies. "The newly-announced projects always get a lot of attention, but we have 34 small paperboard mills in the state, and some are troubled by the rising cost of raw materials. We’ve got to make sure this base of existing manufacturers stays stable."

In New York, Ferretti wants an emphasis on public/private partnerships to "optimize the system," as he puts it.

"As much as we can, we want to facilitate changes in the collection, processing, manufacturing and design of products. Costs need to be lowered and each of these stages can be made to work more efficiently," Ferretti says.

Other states in the region are also looking at specific waste streams and working toward cost-effective collection systems, says Alexander. He also sees a trend to direct more resources to existing businesses.

"In the past, when demand was low, most attention went to ways to stimulate new capacity. Now states are approaching the manufacturers and asking, ‘what can we do to assist you in effectively sourcing a supply of material?’" says Alexander.

POLITICS AND LEGISLATION. November elections produced mixed results for recycling and environmental issues. In several states, the national Republican landslide carried over, with long-time Democratic governor Mario Cuomo losing in New York.

"We don’t know what the new administration plans, exactly," says Ferretti. "In his state-of-the-state address, he did mention an interest in regulatory reform, improving the business climate and eliminating unfunded mandates, topics that may affect our market development programs."

Most legislatures — and governors, too — seem unlikely to place recycling legislation at the top of their political agendas.

"In Vermont, after we got a mandatory recycling law in 1993, legislators haven’t wanted to deal with solid waste," says Chittenden’s Winters.

For the time being, however, many sectors of the region’s recycling community are actually looking forward to 1995.

"The increases in prices — particularly for paper — and the improvements in recycling technologies are here to stay," according to NERRA’s Boyles. "And this is putting recycling on a better footing at the local level."

"1995 is starting off great," says RRT’s Weitzman. "Let’s hope it stays that way for a while."

The author is project manager of recycling industry development for the Maryland Department of Economic Development.